10-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2011
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                           to                            

Commission File Number 001-31558

BALLY TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

NEVADA
(State or other jurisdiction of
incorporation or organization) 88-0104066
(I.R.S. Employer
Identification No.)

6601 S. Bermuda Rd. Las Vegas, Nevada 89119
(Address of principal executive offices)

(702) 584-7700
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each Exchange on which registered
Common Stock, $0.10 par value per share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ý Yes    o No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes    ý No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý Yes    o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ý Yes    o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act). (Check one):

ý Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes    ý No

The aggregate market value of the common stock, $0.10 par value, held by non-affiliates of the registrant, computed based on the closing sale price as of December 31, 2010 of $42.19 per share as reported by the New York Stock Exchange, was approximately $2,227,000,000.

According to the records of the registrant's registrar and transfer agent, the number of shares of the registrant's common stock outstanding as of August 22, 2011 was 44,353,000, which do not include 17,322,000 shares held in treasury.

Documents Incorporated by Reference:    Portions of the registrant's Definitive Proxy Statement to be filed with the Securities and Exchange Commission no later than 120 days after the end of the registrant's fiscal year ended June 30, 2011, are incorporated by reference in Part III of this Annual Report on Form 10-K.

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	1
Item 1A.	Risk Factors	17
Item 1B.	Unresolved Staff Comments	27
Item 2.	Properties	27
Item 3.	Legal Proceedings	28
Item 4.	(Removed and Reserved)	28
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	29
Item 6.	Selected Financial Data	32
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	34
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	53
Item 8.	Financial Statements and Supplementary Data	54
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	54
Item 9A.	Controls and Procedures	54
Item 9B.	Other Information	55
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	55
Item 11.	Executive Compensation	55
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	55
Item 13.	Certain Relationships and Related Transactions, and Director Independence	56
Item 14.	Principal Accountant Fees and Services	56
PART IV
Item 15.	Exhibits and Financial Statement Schedules	57

BALLY TECHNOLOGIES, INC.
FORM 10-K
Year Ended June 30, 2011

Forward Looking Statements

Certain statements made or incorporated by reference in this Annual Report on Form 10-K, in our other filings with the Securities and Exchange Commission ("SEC"), in our press releases and in statements made by or with the approval of authorized personnel constitute "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and are subject to the safe harbor created thereby. Forward looking statements reflect our intent, belief or current expectations with respect to, among other things, future events and financial trends affecting us. Forward looking statements are typically identified by words such as "believes," "estimates," "expects," "anticipates," "plans," "should," "would" and similar expressions.

Although we believe the expectations reflected in any forward looking statements are reasonable, readers are cautioned that forward looking statements involve known and unknown risks and uncertainties, are not guarantees of future performance and that actual results, performance or achievements may differ materially from any future results, performance or achievements expressed or implied by such forward looking statements. These differences can arise as a result of a number of risks, including those described in Item 1A, Risk Factors.

Forward looking statements in this Annual Report on Form 10-K speak only as of the date hereof, and forward looking statements in documents incorporated by reference speak only as of the date of those documents. Unless otherwise required by law, we undertake no obligation to publicly update or revise these forward looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, we cannot ensure that the forward looking statements contained in this Annual Report on Form 10-K will, in fact, transpire.

Unless the context requires otherwise, the terms "Bally," the "Company," "we" and "our" as used in this Annual Report on Form 10-K refer to Bally Technologies, Inc. and its subsidiaries.

PART I

ITEM 1.    BUSINESS

General

Bally Technologies, Inc. is a diversified, worldwide gaming company that innovates, designs, manufactures, operates, and distributes advanced technology-based gaming devices, systems, and server-based solutions. As a global gaming-systems provider, we offer technology solutions which provide gaming operators with a wide range of marketing, data management and analysis, accounting, player tracking, security, and other software applications and tools to more effectively manage their operations. Our primary hardware technologies include spinning-reel and video gaming devices, specialty gaming devices and wide-area progressive systems for traditional land-based, riverboat, and Native American casinos, video lottery and central determination markets, and specialized system-based hardware products.

We previously owned and operated the Rainbow Casino, a dockside riverboat casino in Vicksburg, Mississippi. On April 5, 2010, we entered into a definitive purchase agreement to sell the Rainbow Casino. The sale closed on June 8, 2010. As a result of the sale, our Casino Operations were classified as discontinued operations in the accompanying financial statements. See Note 3 to the consolidated financial statements, Discontinued Operations.

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We were founded in Chicago, Illinois in 1932 as Bally Manufacturing Corp. The Company was incorporated in Nevada on September 30, 1968, under the name Advanced Patent Technologies. Following two other name changes, we became Alliance Gaming Corporation on December 19, 1994, and on March 6, 2006, we changed our name to Bally Technologies, Inc. Our principal executive offices are located at 6601 South Bermuda Road, Las Vegas, Nevada 89119; telephone (702) 584-7700. Our website is www.BallyTech.com. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and all amendments to those filings are available on our website, free of charge, as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.

Company and Product Overview

We derive our revenue from the following:

•       Gaming Equipment	—	Sale of gaming devices and related equipment, parts and conversion kits;
•       Gaming Operations	—	Operation of linked progressive systems, video lottery and centrally determined systems, and the rental of gaming devices and content; and
•       Systems	—	Sale and support of specialized systems-based software and hardware products and related recurring hardware and software maintenance revenue.

Prior to the sale of the Rainbow Casino, our business consisted of two business segments, the Bally Gaming Equipment and Systems segment and the Rainbow Casino ("Casino Operations") segment. As of June 30, 2009, our Casino Operations were reclassified as assets held for sale and liabilities related to assets held for sale in our Consolidated Balance Sheets, and for the years ended June 30, 2011, 2010 and 2009 were classified as discontinued operations in our Consolidated Statements of Operations, Consolidated Statements of Stockholders' Equity and Consolidated Statements of Cash Flows.

Our gaming equipment, gaming operations, and systems product lines have increasingly come together with the proliferation of high-speed networks. Ethernet-based gaming floors, downloadable and server-based games and applications, and the use of open protocols and common industry standards in game and system development, such as Gaming Standard Association ("GSA") protocols, are helping to drive innovation in the gaming industry. This convergence adds excitement to the player experience, increases customer-service solutions for gaming operators, enables new ways to communicate and market to the player, and provides operational efficiencies that can increase our customer's profits.

We are focused on the convergence of games and systems in four key ways:

•

The majority of our systems and network and server-based solutions are backwards compatible, which means that our newest technologies work on most gaming operators' existing gaming devices;

•

Our new Pro Series™ cabinets with ALPHA 2™ technology feature a library of downloadable game content and support network and server-based applications;

•

Our iVIEW™ Display Manager™ ("DM") in-game picture-in-picture style technology supports an array of network and server-based applications designed to add excitement and interactivity on the gaming floor; and

•

Our Bally Command Center™ is a powerful, server-based solution that enables download of game content, iVIEW DM™ content and events, and peripheral updates at the touch of a button, dramatically improving operating efficiencies and enabling gaming operators to respond rapidly to the current business environment.

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The following table sets forth the percentage of revenues from continuing operations for the periods indicated:

	Year Ended June 30,
	2011				2010				2009
	(dollars in 000s)
Gaming Equipment	$	246.6	33	%	$	273.7	35	%	$	357.0	42	%
Gaming Operations		318.6	42	%		287.0	37	%		275.0	33	%
Systems		193.0	25	%		217.5	28	%		211.8	25	%
	$	758.2	100	%	$	778.2	100	%	$	843.8	100	%

We innovate, design, manufacture, sell, distribute, place, maintain, and operate a full range of advanced technology-based gaming devices and related equipment, parts, and conversion kits for our customers (gaming operators). These devices include reel-spinning and video gaming devices, specialty gaming devices, and wide-area progressive systems for traditional land-based, riverboat and Native American casinos, video lottery and central-determination markets. The gaming devices we sell or place are configured to specific requirements based on a customer's particular order. Gaming devices are differentiated by a number of factors including, but not limited to, game theme, cabinet style, pay table, game layout, betting denomination, and minimum/maximum betting amount.

A gaming device consists of three elements:

•

The game cabinet hardware—the outside presentation cabinetry that houses the operating system and game content software and is the way the player interfaces with the game;

•

The operating system, or game platform—a set of software programs inside the gaming cabinet hardware that regulate the ways the game application software programs utilize the game hardware and act as an intermediary between application programs, the game content and the game cabinet hardware; and

•

The game content—individual game titles and features that drive the gaming experience for players.

We believe providing advanced, technology-based gaming devices, content, and networks with high entertainment value and key operational advantages, coupled with a high level of customer service, is the key component to gaining market share. Much of our product development for new and emerging technologies, including many of our network and server-based solutions, is led by the Bally Innovation Lab. This lab, which consists of Bally team members from around the world, focuses on emerging and paradigm-shifting technologies through research and development of new gaming technologies, features, and products and was designed to accelerate the commercial deployment of the most cutting-edge, technology-based gaming devices, content, and systems.

Game Cabinet Hardware

Our gaming devices include a variety of innovative features and layouts in both spinning-reel and video formats in several different cabinet styles. Some devices feature high-profile top boxes with various game features and in various sizes, each geared towards specific market niches. The game cabinet hardware we create is the result of comprehensive product development efforts that include extensive internal, customer, and end player testing.

The major areas of hardware development include cabinet style, technical capability, controller circuit board design and programming, as well as user-interface devices such as card readers, keypads, button decks, and displays. We have developed a modular and extendible hardware and software architecture which focuses development on achieving greater functionality, product reliability, ease of maintenance

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for our customer, and ease of use for the player. Hardware-development efforts are focused on player appeal, product reliability, common components, and ease of maintenance. Development cycles for hardware can vary between a few months for minor revisions, to more than a year for major design changes.

We offer a number of cabinet designs including standard upright and slant tops, dramatic tower units, and bar-top cabinets which are marketed under our ALPHA Elite™ brand and our new Pro Series brand that we formally launched in June 2010.

Pro Series Cabinets

We introduced the Pro Series cabinets, our latest generation cabinet design, in June 2010. The Pro Series cabinets, currently available in upright, slant, spinning-reel, curve, and V32, feature a number of cutting-edge features such as the groundbreaking touch-screen, interactive iDeck™, which replaces a standard button deck; a custom four-speaker high-definition ("HD") surround-sound stereo, designed to target sound to the player and cut through noisy casino environments; exterior cabinet lighting and a super candle light crowning the game which are both synchronized to game play; up to a four-monitor play experience; a shared single entry for currency, tickets, and cashouts; a 15-inch Digital Topper with game-synchronized LCD video display; and vertically opening doors that make it easier to service the game and eliminate interruption to adjacent games. Our Pro Series cabinets are available with a number of top-box configurations including upright wheel; hammerhead, with an oversize 32-inch cinematic display; and the commanding digital ladder 32-inch, high-definition video display.

The Pro Curve cabinet features a breakthrough video reel technology that delivers a remarkably realistic stepper experience through a 20-inch LCD display which is curved just like physical reels. The reels look, feel, and play like traditional reels but are actually video screens; creating an authentic stepper play experience.

ALPHA Elite Cabinets

Our ALPHA Elite cabinets features interchangeable video and spinning-reel configurations which are recognized for modularity, meaning that gaming operators can convert one game into another without having to invest in a whole new device. In addition to changing the cabinet from one game to another, the modularity of our cabinet series enables gaming operators to convert cabinets from video to spinning-reel games and replace top boxes, button decks, and other key parts, protecting gaming operators' previously invested capital. Also, the modularity of our cabinet series, combined with the use of common parts, makes maintenance easier for our customers, providing labor-saving benefits to gaming operators, while enabling a quicker manufacturing turnaround.

Key cabinets in the ALPHA Elite line include the V20/20, the S9E and the V32, with a 32-inch vertical touch-screen LCD display; the Digital Tower Series™ cabinets with vertical digital ladder displays and our Jumbo cabinets available in both video and spinning-reel configurations.

Game Platform

Each gaming device requires a game platform to manage the device hardware and deliver the game content. Game platforms and the related computer systems are updated and revised to keep pace with the ever-increasing complexity of modern game play requirements. The change in game-play requirements is driven by, among other things, changes in consumer demand, capacity, security, and regulation.

We currently offer two gaming platforms; the ALPHA and the ALPHA 2 platform, which was launched in June 2010 building on the success, and reliability of the ALPHA platform.

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ALPHA 2 Platform

The ALPHA 2 platform incorporates all the attributes of ALPHA, but adds significantly more powerful, faster, and richer features, including an INTEL® Core™ 2 processor; four gigabytes of dual-channel memory; Realtek™ HD audio; and leading video technology. This powerful hardware platform enables dramatic new levels of interactivity, visual quality, and performance, resulting in faster, richer, and more compelling games for players, including 3-Dimensional ("3D") graphics and animations. ALPHA 2 supports both existing and new game content and supports network and server-based applications and is operable with the Bally Command Center, discussed in detail below, which will allow downloadable access to Bally's game content via a central server. Although we have been transitioning to ALPHA 2 as our standard game platform for the majority of our game cabinets, we will continue to support the ALPHA platform.

ALPHA Platform

The ALPHA platform, which was our standard game platform until we released ALPHA 2 last year, features a layered architecture and modular design, which allows for adaptability and simplified requirement changes. ALPHA is designed to support industry protocols. ALPHA also supports various game bonusing, multi-denomination, multi-game and multi-pay table game configurations and can operate with stand-alone, local, and wide-area progressive products.

Game Development and Game Content

We have decades of experience developing entertainment content. We develop games for gaming operators, video lottery, and central-determination markets around the globe. Our game content features original themes, licensed themes using well-known brands, and adaptations of well-known Bally brands such as Cash Spin, Hot Shot®, Quick Hit™, and Blazing 7s™ that can be found on most casino floors in North America and in a number of international markets. Our game content is deployed across wide-area progressive, local-area, and near-area progressive slots, spinning-reel and video gaming devices, specialty gaming devices, and multi-suite games. We have worldwide game-development teams, with centers in Arizona, California, Nevada, and India to develop innovative content for the gaming market.

The software development process for new game content, including graphics development, is continuous and requires a significant commitment of human resources. Creativity in software development is a key element in the market success and player appeal of our game content and gaming devices. Innovations in our development process and game design are generated internally and with the support of customers, and third parties, many of whom have entered into strategic relationships with us.

We continue to add more compelling, entertaining, and complex play mechanics to our games, including features such as locking hot zone, free games with additional multipliers, rolling wilds, memory pay, multi-level progressives, free games, bonus bets, bonus spins, stacked wilds, mystery progressives, locked symbol bonuses, second-chance features, asset giveaways, multi-player, community play, and random bonus features.

With the release of our new ALPHA 2 platform and the new Pro Series cabinets, our game developers are able to develop even more exciting, entertaining, and interactive game content using HD surround-sound features, 3D animations that give the illusion of depth perception, player customization, gesture control, and the latest in touch-screen technology.

Game software development also includes gaming device operating systems and application development. This encompasses areas such as databases, interfaces, and protocols used in emerging technologies, including many network and server-based systems solutions, communication, security, and automated backup and failure procedures.

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Game Parts and Conversion Kits

Customers that utilize our gaming devices also typically purchase replacement parts, upgrades, game conversion kits, and other products from us to keep the devices in good working order and to enhance the underlying performance of the devices. Certain equipment within gaming devices such as video monitors, bill validators, logic boards, and printers are typically replaced as a result of wear and tear or new technology offerings by our suppliers. These sales may also include game conversion kits that provide our customers the opportunity to offer a new game theme or variant on the existing product without the necessity of purchasing a new gaming device.

Maintenance, Trade and Resale Market

We generally offer a 90-day parts, labor, and performance warranty/guarantee for new gaming devices. We provide several after-sale services to our customers including customer education programs, a 24-hour customer service telephone hotline, a website for technical support, field service support programs, and spare parts programs. Our historical warranty expense as a percentage of revenues has been less than 1 percent.

From time to time, we also sell used gaming devices, including products made by us as well as those produced by our competitors. Generally, we acquire used devices as trade-ins toward the purchase of new gaming devices. While a small secondary market exists in the United States, used devices are typically resold in international markets where new device purchases often prove to be too costly. Where appropriate, we incur costs to recondition used devices for resale or we may elect to destroy the devices.

Gaming Operations

Through our Gaming Operations division we offer gaming operators a wide range of rental (also known as participation or recurring revenue) options for our gaming devices and content. Operating gaming devices under a rental arrangement often requires us to invest capital in manufacturing the gaming device and related equipment, purchasing signs and seating, and, in certain cases, acquiring certain intellectual property rights. These rental devices are available as linked progressive systems, rental and daily-fee games, video lottery systems, and centrally determined systems.

Linked Progressive Systems

We offer our customers gaming devices featuring a common jackpot or prize award that can be linked (within a casino, in a local-area network, or among multiple casinos within a market or jurisdiction) in a wide-area network. Progressive gaming devices are typically offered to customers under a daily-fee arrangement based on a percentage of the money wagered on the participating gaming devices. In many cases, we use a portion of these revenues to fund the ultimate payment of the jackpot awards. We market our linked progressive systems under such titles as Instant Fortune™, Ultimate Tower of Power™, Quarter Million$™, Millionaire Sevens™ and 1,000,000 Degrees™. In addition, we introduced our Betty Boop Love Meter and Money Vault™ wide-area progressive games in the fourth quarter of fiscal year 2011. As of June 30, 2011, we had a total of 1,059 linked progressive systems.

Rental and Daily-Fee Games

We offer a variety of non-linked games and content on a rental basis for either a fixed daily fee or a fee based on the percentage of the net win generated by the gaming device. This category includes both gaming devices in which we retain ownership and charge a daily fee for the use of the gaming device, and gaming devices our customers purchase which are classified as game sales revenue. Gaming devices in which we retain ownership and charge a daily fee include rental and maintenance of the gaming device and licensing of the game content. For gaming devices our customers purchase, we provide the

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game content under a usage-fee arrangement that results in a lower daily-fee than leasing the entire gaming device. We market our rental and daily-fee games under such titles as Betty Boop Love Meter, Money Vault, Cash Spin, Hot Spin™, Vegas Hits™, Cash Wizard, Ultimate Tower of Power, Hot Shot Progressive Cash Wheel™, Fireball™, 77777 Jackpot™, Reel Money™, Hot Shot Progressive®, Quick Hit Platinum™, Reel Winners™, Hee Haw®^, and Monte Carlo™. As of June 30, 2011, we had a total installed base of rental and daily fee games of 14,315 units.

Video Lottery Systems

We offer video and spinning-reel devices that can operate as stand-alone devices or can interact with, or be monitored by, a central system maintained by governmental agencies. The financial model for this market requires us to build, deploy, and maintain the devices as well as provide the related equipment in return for a share of the net win generated by the device for a contractually fixed period of time.

Through a competitive bidding process, we, and prior to our acquisition thereof in March 2004, Sierra Design Group ("SDG"), were each awarded approximately 25 percent of the initial New York State Lottery ("NYSL") terminals to be installed at horseracing facilities throughout the state. As of June 30, 2011, we earned recurring revenue from our installed base of 6,688 video lottery devices operated by NYSL. We also earn recurring revenues from 1,662 video lottery devices deployed at horseracing and other gaming facilities under agreements with the Delaware State Lottery Commission and Maryland State Lottery Commission.

Centrally Determined Systems

We offer video and spinning-reel devices that connect to a central server, which determines the outcome of the game. These systems primarily operate in Native American casinos in Washington, Oklahoma, and Florida, as well as in Mexico. In certain of these jurisdictions, our customers purchase our gaming devices, in which case the purchases are classified as game sales revenues. In other jurisdictions, our customers rent the gaming device, in which case the rental payments are classified as gaming operations revenues. In each case, for the use of our central determination software, we receive either a fixed daily fee or a percentage of the net win generated by the devices connected to the system. As of June 30, 2011, the total installed base of gaming devices connected to our centrally determined systems totaled 50,754.

In December 2005, we began selling centrally determined gaming devices in Mexico. In the Mexico market, we sell gaming devices for an upfront fee, in which the purchases are classified as game sales revenues, and derive a daily fee equal to a percentage of the net win for providing a system network, gaming content, and monitoring, maintenance and consulting. As of June 30, 2011, 12,433 of the total installed base of gaming devices connected to our centrally determined systems were deployed in Mexico. Included in the total installed base of centrally determined games in Mexico are 9,109 iVIEW in-game player-communication units installed in non-Bally games, in which we charge a system connection fee. The total installed base of centrally determined games noted above includes the iVIEW units in Mexico.

Bally Systems

We offer core, world-class slot-management and casino-management systems, coupled with a comprehensive suite of cutting-edge technology solutions which provide gaming operations of every size with a wide range of marketing, data management and analysis, accounting, player tracking, security, and other software applications and tools to more effectively manage their operations. We also provide technologies to utilize a networked, server-based gaming environment including a command center solution encompassing several innovative features for centralized management and control. These technologies help our customers improve communication with players, add excitement to the gaming

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floor, and enhance operating efficiencies through greater automation, reporting, and business intelligence.

Our Systems business has evolved significantly over the past few years as we have taken significant steps to improve our core slot, casino, and table management systems. In fiscal year 2009, we released Version 11 of our core systems, a powerful platform re-engineered to world-class technology levels. Version 11 provides gaming operators with easy-to-use graphical interfaces; vertical and horizontal scalability; state-of-the-art distributed architectures; and support for multiple languages and currencies. Our development path for all systems products has been designed to develop all products on common naming conventions, Version 11 being the first. Today, there are more than 300 casinos who have installed Version 11. The improvements in our core systems platforms resulted in a reliable and scalable foundation of slot, casino and table management systems. This solid, world-class core infrastructure and a unified strategic product roadmap have enabled us to implement new and innovative solutions for marketing, bonusing, and server-based gaming. In fiscal year 2011, we also released several innovative products on Version 12 including new bonusing applications within our Elite Bonusing Suite™, predictive analytics within our Bally Business Intelligence™, intelligent way-finding within Bally CoolSign® and the Bally Enterprise Progressive System™.

We believe we are the only provider in the industry that offers such a wide selection of technology platform options to our customers. More than 417,000 slot machines are connected to Bally Systems at more than 622 locations around the world.

Our Systems business is comprised of three key facets:

•

Hardware, which includes our iVIEW player-user-interface device and specialized system-based hardware products. Over the last two fiscal years, hardware sales have accounted for approximately 39 percent of Systems revenue;

•

Software and services, which includes licenses of our core systems and suite of player tracking, bonusing, and marketing applications and customized system solutions for customers. Over the last two fiscal years, sales of software and services accounted for approximately 31 percent of Systems revenue;

•

Maintenance, which provides access to future enhancements or upgrades to the system software for a fee based on a percent of the license fee. Over the last two fiscal years, ongoing maintenance fees accounted for approximately 30 percent of Systems revenue.

Slot, Casino, and Table Management Systems

Our solutions, which support GSA protocols, operate on common platforms such as Windows ®, AS/400 (iSeries®), Linux, and UNIX. By supporting these platforms, our customers can choose a technology solution that meets their existing or future infrastructure requirements.

Our slot-management systems are fully featured and designed to handle slot monitoring, slot accounting, slot operations, bonusing, sweepstakes, promotions, cashless transfer, ticketing, jackpots, promotional coupons, redemptions, and soft count.

Our casino-management systems are composed of various system-based hardware and software products that provide gaming operators player-loyalty solutions comparable to frequent guest programs offered in other leisure and retail industries; database marketing and table-game accounting solutions including the calculation of all revenue and expense-related items; and cage and credit accountability for all extensions of credit and cage cash balancing functions. These systems are designed and deployed in both domestic and international markets and adaptable to foreign languages and currencies.

Our TableView™ table-rating and player-tracking solution brings automated management of table-game activities directly to the casino pit with a high-tech touch screen.

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iVIEW Player-Communication Network

Our server-based iVIEW network serves as a way to communicate with players at the point-of-play. The iVIEW leverages an LCD screen and accompanying hardware and software that reside in the gaming device, while the iVIEW DM player-user-interface, also operating on the iVIEW network, allows casinos to present messages in a split or full screen format on the main game display on any touch-screen- equipped gaming device without interrupting traditional game play using picture-in-picture-style technology.

Our iVIEW network is also designed to work with our Bally Command Center for server-based download of iVIEW content, our Elite Bonusing Suite of floorwide-bonusing applications, our Bally CoolSign Media Management, and other new technologies under development. iVIEW and iVIEW DM work on any manufacturers' gaming devices with a touch screen and are backwards and forwards compatible, thus protecting gaming operators' previously invested capital. iVIEW content is customizable and can be tailored for each individual player when combined with Bally Business Intelligence and the operator's player database.

The iVIEW DM solution, with its customizable and player-configurable interface, is an especially compelling solution for marketing to players at the point-of-play. This picture-in-picture style technology enables enhanced communication and customer-service functions such as beverage service, floor mapping, and real-time perishable promotions without interrupting game play. iVIEW DM can also be used to create excitement on the casino floor with floor-wide bonusing events; game-in-games; second-chance-to-win games; floor-wide slot tournaments; interactive touch-screen events, time-based promotions; and targeted player messaging all without interrupting game play.

iVIEW DM can be implemented across the entire gaming floor, in smaller sections of the floor, or bank-by-bank based on casino operator preference.

Elite Bonusing Suite

The Elite Bonusing Suite allows customers to reward their players right at the point-of-play via the iVIEW network. Bonusing applications on the Elite Bonusing Suite server allow customers to tailor and automate promotions utilizing server-based applications such as Virtual Racing™, DM Tournaments™, U-Spin Bonusing™, Power Winners™, Dynamic Random Bonusing™, Video Poker Bonusing™, iVIEW Messaging™, Flex Rewards™, and Lucky Match Bonusing™.

Bally CoolSign

Bally CoolSign is the gaming industry's leading gaming centric media management tool that allows gaming promotions and/or gaming information, triggered through any of our products, to be displayed onto any digital display. In addition to regular resort advertising, CoolSign can also be used to promote casino marketing messages directly onto hotel room in-room TV's when used in conjunction with Bally TV.

Bally Business Intelligence

The Bally Business Intelligence applications, which span across all our products, bring state-of-the-art data analytics to a gaming operators' key executive and marketing-management teams. The executive dashboards, slot floor data, and transaction visualization, empower gaming operators to analyze customer activity and make quick decisions about products, floor layouts, and marketing programs that can significantly enhance revenue and profits.

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Bally Command Center

Our server-based command center enables gaming operators to download marketing content on iVIEW and iVIEW DM displays, configure gaming device paytables and game play options, and deliver new game content and game libraries from a central server. Bally Command Center also enables customers to perform updates of game firmware such as ticket printers and bill acceptors in a matter of minutes via a central server, rather than having to implement the update on each gaming device.

Bally Enterprise Progressive System

The Bally Enterprise Progressive System is a single-wire enterprise progressive solution that supports all progressive types. This centrally managed application allows casino operators to manage and audit all progressives from one location and integrates with ACSC and SDS progressive slot accounting, reporting systems, and the Bally CoolSign digital media management system.

High-Speed Network Solutions

Over the past several years, as we have seen gaming content and systems applications merge into a single gaming-floor network architecture, the functionality of these systems has evolved from basic automation of manual activities to highly integrated applications. Our systems typically provide gaming operators with useful features such as active, real-time monitoring tools for gaming devices, tools to collect and manage customer data, security to protect against theft and data loss, the ability to track and reward players, and marketing programs to enhance the gaming experience.

As the gaming industry continues to evolve, some gaming operators have embraced new server-based and high-speed network technology. Many new gaming operations have opened with high-speed Ethernet connections on their floors, and many others are upgrading to high-speed networks. We partner with our customers to help them add network and server-based solutions to their existing systems offerings, whether on a floor-wide basis or in smaller sections of the floor or on selected banks of games. Once installed, these network and server-based solutions provide gaming operators with improved operating efficiencies and labor savings, and even more importantly, they give operators new and more efficient ways to market and communicate with their players. By marketing at the point-of-play and delivering floor-wide tournaments, bonusing events, and second-way-to-win games, customers are able to add even more excitement to game play across the gaming floor.

In-game marketing and communications solutions, such as Bally's iVIEW and iVIEW DM, when combined with the Bally Elite Bonusing Suite and Bally Command Center for centralized control, are very powerful ways to use network and server-based solutions for the benefit of the player and the operator.

The rate at which customers are implementing network and server-based solutions has been impacted by the global economic crisis and reduced capital to spend on upgrading gaming floors to high-speed network environments—a requirement for floor-wide, network and server-based solutions.

Research and Development

Our research and development ("R&D") activities are directed toward the development of world-class games and systems products, technologies, and the continued evolution and advancement of our current product line. We also focus R&D resources towards researching future technologies and products. The customer-centric nature of our Company also includes custom-development of applications and solutions for customers. These solutions often become part of our general product portfolio.

The scope of Bally's R&D is far-reaching, with major centers in Las Vegas and Reno, Nevada; Bangalore and Chennai, India; and smaller centers in Nice, France and throughout North America. Our R&D initiatives are performed by various business groups within the Company and across the

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globe, and this decentralized R&D presence enables us to more easily recruit and retain top talent and develop games and systems specific to each market. We centrally manage key cross-business group product initiatives to prioritize and align our R&D activities across these teams. In addition, we may augment our R&D initiatives through third-party development agreements with outside companies, or by entering into agreements with companies that have similar R&D areas of focus.

Our total expenditures for R&D were $88.1 million, $80.3 million, and $77.3 million during the years ended June 30, 2011, 2010 and 2009, respectively. The increase in R&D expenditures over this three-year period reflects our corporate focus on our technology assets, the expansion of technical resources, and the competitive landscape that requires continuous development of future generations of gaming products and systems.

Sales and Marketing

We have a direct sales force consisting of approximately 61 employees located in multiple offices, primarily in North America. We also, to a lesser extent, utilize an independent distributor network to distribute our products. The agreements we have with distributors generally specify minimum purchases and also provide that we may terminate the relationship if certain performance standards are not met.

The sale of gaming devices takes place throughout our fiscal year and can range from proposals for a small quantity of units to several thousand units. We conduct one-on-one meetings with our customers to demonstrate our products at their locations, host customers to private demonstrations in our offices or at offsite venues, and participate in a number of trade shows domestically and internationally each year. In certain cases, we participate in responding to competitive requests for proposals from private and public entities seeking to purchase gaming equipment.

For casino enterprise system sales, we offer our customers the option of signing separate hardware and software maintenance agreements at the time of sale. These agreements are typically for one-year terms and automatically renew unless otherwise canceled in writing by either party. After an initial warranty period, typically 90 days, the customer is invoiced monthly for hardware and software maintenance fees that provide for, among other things, repair or replacement of malfunctioning hardware and software, software version upgrades, and on-call support for software.

The sale of enterprise systems is often a long process, at times extending beyond one year. Typically, a potential systems customer will participate in a formal evaluation and selection of a system vendor. The level of sales available to us at any point in time can vary materially due to a number of factors, including the capital budgets of our customers, availability of new product modules, timing associated with regulatory approvals, and the success and features contained in the products sold by our competitors. The price paid for a full system can vary materially from customer to customer depending on a number of factors, including, but not limited to, the size of the gaming operation and the number of functions contained in the system specified.

Global Marketing

Our global marketing program is designed to support our sales team through branding, public relations, promotions, product marketing, and extensive market-research activities.

We promote brand awareness and generate demand through our own direct marketing as well as co-marketing programs with our casino customers. Our direct marketing activities include print and web-based advertising, as well as media relations, participation in industry trade shows, conferences, and events, and gaming industry and player/consumer communications. We market primarily to business audiences, and focus on building awareness and generating demand for our games and systems solutions.

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We currently have 23 team members dedicated to marketing, with a focus on casino-operator research, player research, and pre and post-product launch support. Over the past several years we have significantly increased our use of focus groups to support product development. These focus groups are an important tool for acquiring feedback on not-yet-released products, or new products, before they are broadly released to the market, and enable us to make changes to the product before we invest in a widespread product release.

Discontinued Operations

The Rainbow Casino, located in Vicksburg, Mississippi, began operations in July 1994. It is one of five casinos operating in the Vicksburg, Mississippi market with the fifth casino opening in late October 2008. The facility includes a 33,000 square-foot casino, a large buffet-style restaurant, and a 20,000 square-foot conference center. The casino also includes the 89-room Rainbow Hotel, which is owned and operated by a third party. Rainbow is marketed as a "locals" casino and draws mid-level gaming customers principally from within a 75-mile radius of Vicksburg. Its promotions are focused primarily on direct mail and special promotional events.

On April 5, 2010, we entered into a definitive purchase agreement to sell the Rainbow Casino. The sale closed on June 8, 2010. Under the terms of the agreement, we received approximately $80.0 million in an all-cash transaction. During fiscal year 2010, the Company recognized a gain on the sale of Rainbow of $22.1 million (net of approximately $12.2 million in income taxes). During fiscal year 2011, the Company recognized a loss on the sale of Rainbow of approximately $0.4 million, net of income taxes, for certain post-closing adjustments.

The assets and liabilities of the Rainbow Casino were classified as held for sale as of June 30, 2009 and the results of its operations for the years ended June 30, 2011, 2010 and 2009 were classified as discontinued operations because we do not receive significant cash flows from the Rainbow Casino after the sale.

We were the general partner of Rainbow Casino Vicksburg Partnership, L.P. ("RCVP"), the limited partnership that operated Rainbow. The limited partner of RCVP was entitled to receive 10% of the net available cash flows of RCVP after debt service and other items, as defined in the limited partnership agreement, which increased to 20% of the net available cash flows based on the incremental amount of revenues in excess of $35.0 million, payable quarterly through December 31, 2010. We previously consolidated RCVP and recorded an adjustment to reflect the portion of earnings of RCVP attributable to minority shareholders.

Product Markets

We believe that the total installed base of gaming devices in North America is approximately 987,000 units, with approximately 889,000 units in the United States alone. This total includes land-based, riverboat, Native American casinos and video lottery markets. New sales opportunities for gaming devices in the United States and Canada are primarily driven by replacement of existing units, new casino openings or expansions and the legalization of gaming in new markets. The gaming industry also continues to expand in international markets. Europe, Latin America, South America, Mexico and Asia-Pacific are currently our primary international markets. We regularly evaluate expanding our business into additional international markets, including the risks attendant to such foreign operations, including those described in Item 1A, Risk Factors.

We distribute our gaming devices through direct sales efforts and through a small number of distribution arrangements. Our international business is conducted primarily from offices in Amsterdam, Netherlands for customers in Europe; Puerto Rico for customers in the Caribbean/Latin America; Buenos Aires, Argentina for customers in South America; Mexico City for customers in

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Mexico; and Macau, China for customers in Asia-Pacific; and Sydney, Australia for customers in Australia and New Zealand.

The primary markets for casino enterprise systems are the United States and, to a lesser extent, Canada, South America, Europe, the Pacific Rim and the Caribbean/Latin America, though additional international markets are beginning to emerge. The market for our casino enterprise systems includes new casino openings, expansions, upgrades of existing facilities, and the competitive replacement of other systems. We also generate new system sales through the introduction of new hardware and software products. In many cases, domestic regulations require the implementation of a system as part of their operational requirements while international markets have only recently begun the full implementation of such systems. We believe, as international markets begin to mature and become more competitive, the use of systems will become more common.

Competition and Product Demand

The demand for gaming devices, content, and systems varies depending on the level of new construction and renovation of casinos as well as market conditions that might generate the need for new and replacement equipment and product innovation. For the year ended June 30, 2011, our 10 largest customers, including corporate customers with multiple casino properties, accounted for approximately 22% of gaming device sales.

The demand for casino enterprise systems is driven by regulatory requirements in each applicable jurisdiction and by gaming operators' competitive need to properly track device and player activity and to establish and compile individual device and player profitability and other demographic information. These features enable casinos to develop or enhance marketing strategies. As more and more gaming operators move to high-speed networked floors, we expect the demand for new systems technologies will increase as customers replace older systems with new network and server-based systems solutions that enable activities such as centralized management and floor-wide events and tournaments on each gaming device. Revenues for casino enterprise systems are derived from selling products to new or existing customers. For the year ended June 30, 2011, the 10 largest casino enterprise system customers, that include certain multi-site operators that have corporate agreements, accounted for approximately 44% of systems revenues, with the largest customer accounting for 10% of these revenues.

We compete with a number of domestic and international businesses in the various geographic markets where we sell our products. Our ability to compete effectively is based on a number of factors including, but not limited to, our product quality, product depth, pricing, financing terms, regulatory approvals, the successful development and protection of intellectual property, as well as the success of our distribution, sales and service levels.

International Game Technology ("IGT") is the market leader in the North American gaming device market. Some of our other competitors currently include Aristocrat Leisure Limited ("Aristocrat"), Atronic International, GTECH Holdings Corporation ("GTECH"), Konami Co. Ltd. ("Konami") and WMS Industries, Inc. ("WMS"). These competitors also compete in the international markets we serve, along with well established foreign companies such as Ainsworth Game Technology Ltd, Aruze Gaming America, Inc., Unidesa Gaming and Systems, Novomatic AG, and Recreativos Franco S.A.

The competition for casino enterprise systems is also significant. Product feature and functionality, accuracy, reliability, service level and pricing are all among the key factors in determining a provider's success in selling its system. Our principal competition in casino enterprise systems currently consists of, among others, IGT, Aristocrat, Konami and several smaller competitive providers in the international market. Competition is keen in this market due to the number of providers and the limited number of casinos and jurisdictions in which they operate.

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Global Headquarters, Technology Campuses, Manufacturing and Assembly Operations

Global Headquarters

Our global headquarters is located in Las Vegas, Nevada at 6601 South Bermuda Road. Our 150,000 square foot facility is used for corporate administrative functions as well as to accommodate the design, assembly and distribution of gaming equipment and casino management systems' hardware and to meet product design demands and varying levels of volume requirements.

Las Vegas and Reno Technology Campus

We lease an additional 36,000 of office space next door to our global headquarters facility in Las Vegas to create a Technology Campus for our game development, advanced development, and project management teams. In addition, we consolidated multiple facilities in Reno, Nevada, eliminated certain locations and leased additional space for a combined total of approximately 83,000 square feet to provide a more cohesive and larger campus-style environment to accommodate the growth of our game development, system development, product management, and administrative functions in northern Nevada.

Bally Innovation Lab

Our global Innovation Lab is located in Pleasanton, California, a major suburb of San Francisco. This allows us to draw from the significant high-tech talent that resides in the Silicon Valley. In our Innovation Lab, a team of employees focus on researching and developing new gaming technologies, products, and the rapidly growing area of server-based systems gaming. The Innovation Lab capitalizes on our R&D talent across the globe and is dedicated to developing, testing, and deploying the newest technology.

Manufacturing and Assembly

Our assembly operations have common hardware components that provide greater flexibility in our assembly operations where each product family can be produced by an expanded set of assembly lines with fewer internal product differences and more streamlined testing.

We generally buy raw material inventory to build our gaming devices when we receive firm orders from our customers. To the extent possible, we also forecast the demand for our products to develop more efficient supply chains with our vendors. We create specifications and design nearly all of the major assemblies that are incorporated into our gaming devices.

We believe our primary offices and related facilities in Las Vegas, as well as process improvement initiatives implemented during the last few fiscal years, will enable us to increase production without adding significant floor space.

Patent, Copyright and Trade Secret Protection

We have been a long-standing participant in the development of intellectual property in our industry. While we do not believe that any single patent or series of patents or other intellectual property is crucial to our business, we use a combination of patents, copyrights, trade secrets, trademarks and proprietary information to maintain and enhance our competitive position, protect our products, and defend against litigious competitors. We have been granted over 300 patents related to games and systems, most of which are unexpired, and have approximately 600 patent applications pending in the United States as well as in many foreign countries. The expiration dates of these patents vary and are based on their filing and issuances dates. We intend to continue to actively file for patent protection, where such filings are commercially reasonable, within and outside the United States. We also seek protection for a large number of our products by registering hundreds of trademarks and copyrights in

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the United States and various foreign countries. Under permission or license agreements with third parties, we also sell products covered by independently filed copyrights and trademarks. Typically, these contracts require us to pay royalties to the licensing party. Royalty expenses are included in cost of gaming and systems in our consolidated financial statements included in this report.

Employees and Labor Relations

As of June 30, 2011, we and our subsidiaries employed approximately 2,827 individuals worldwide. None of our employees are covered by collective bargaining agreements. We believe we have satisfactory relationships with our employees.

Financial Information

The other financial information that is required to be included in this Item 1, Business is set forth in Item 6, Selected Financial Data with respect to our revenues, profits and losses, and assets, and in Note 16 to the consolidated financial statements, Segment and Geographical Information with respect to domestic and foreign revenues and assets.

Gaming Regulations and Licensing

The manufacture and distribution of gaming devices and systems are subject to extensive federal, state, local, and foreign regulation. Although the laws vary from jurisdiction to jurisdiction, the regulatory structure and the requirements of the State of Nevada, as described below, are typical of the types of statutory and regulatory schemes to which the Company is subject. Such laws, rules, and regulations generally concern the responsibility, financial stability and character of the Company and our officers, directors, major stockholders and key personnel. Many jurisdictions require gaming devices, systems and other products we manufacture to be tested and approved before being distributed. We have obtained all licenses necessary to manufacture, distribute and, where permitted, operate gaming devices in the jurisdictions in which we do business. We manufacture our products in the state of Nevada.

Nevada

Our business is subject to the Nevada Gaming Control Act and the regulations promulgated thereunder (the "Nevada Act") and various local ordinances and regulations. We are subject to the licensing and regulatory control of the Nevada State Gaming Control Board (the "Nevada Board"), the Nevada Gaming Commission (the "Nevada Commission"), and various county and city regulatory agencies, all of which are collectively referred to as the "Nevada Gaming Authorities."

Nevada gaming law is based on policies concerning (i) the prevention of unsavory and unsuitable persons from having any involvement with gaming; (ii) the establishment and maintenance of responsible accounting practices; (iii) the maintenance of effective control over the financial practices of licensees, including the establishment of minimum procedures for internal fiscal affairs and the safeguarding of assets and revenues, providing reliable record-keeping and requiring the filing of periodic reports with the Nevada Gaming Authorities; (iv) the prevention of cheating and fraudulent practices; and (v) providing a source of state and local revenues through taxation and licensing fees. A change in, or non-compliance with, such laws, regulations, and procedures could have an adverse effect on our business.

Each of our subsidiaries that manufactures, distributes, or operates gaming devices in Nevada, or the entities that own such subsidiaries (collectively, the "licensed subsidiaries"), are licensed or found suitable (which is comparable to licensing) by the Nevada Gaming Authorities. The licenses require periodic renewals and payments of fees and taxes and are not transferable. We are registered with the Nevada Commission as a publicly traded corporation and have been found suitable to own the licensed subsidiaries.

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Only licensed manufacturers and distributors may manufacture or distribute gaming devices and cashless wagering systems in Nevada. All gaming devices manufactured for use or play in Nevada or for distribution out of Nevada must be approved by the Nevada Commission before they are distributed or exposed for play. Before associated equipment (as defined in the Nevada Act) can be distributed in Nevada, it must be administratively approved by Nevada Board chairman.

The Nevada Gaming Authorities may require any individual who has a material relationship or involvement with us or our licensed subsidiaries, including officers, directors, and key employees, to be found suitable or licensed. The Nevada Gaming Authorities may deny an application for licensing or finding of suitability for any cause they deem reasonable.

The Nevada Gaming Authorities may require us to sever all relationships with anyone who is found unsuitable or who refuses to file appropriate applications.

We and our licensed subsidiaries are required to submit detailed financial and operating reports to the Nevada Commission. Substantially all material loans, leases, sales of securities, and similar financing transactions must be reported to and in some cases approved by the Nevada Commission.

If the Nevada Commission determined that we had violated the Nevada Act, our licenses could be limited, conditioned, suspended, or revoked. In addition, we could be subject to substantial fines for each separate violation. Any such disciplinary action could, and revocation of any gaming license would, materially adversely affect our operations.

The Nevada Gaming Authorities may require the holder of any of our equity or debt securities to file applications, be investigated, and be found suitable by the Nevada Commission. The applicant must pay all costs of investigation.

The Nevada Act requires any person who acquires more than 5 percent of any class of our voting securities to report the acquisition to the Nevada Commission. The Nevada Act requires that beneficial owners of more than 10 percent of any class of our voting securities apply to the Nevada Commission for a finding of suitability within thirty days after the chairman of the Nevada Board mails written notice requiring such filing, in which case the applicant must pay all costs of investigation. Under certain circumstances, an "institutional investor," as defined in the Nevada Act, that acquires more than 10 percent but not more than 25 percent of a class of our voting securities may apply to the Nevada Commission for a waiver of finding of suitability if the institutional investor holds the securities for investment purposes only, as defined in the Nevada Act. Any person who fails to apply for a finding of suitability or a license within thirty days after being ordered to do so by the Nevada Commission or the chairman of the Nevada Board may be found unsuitable. The same result would occur to a record owner if the record owner, after request, fails to identify the beneficial owner. Any stockholder found unsuitable and who holds, directly or indirectly, any beneficial ownership of our voting securities beyond such period of time as may be prescribed by the Nevada Commission may be guilty of a criminal offense. We are subject to disciplinary action if, after we receive notice that a person is unsuitable to be a stockholder or to have any other relationship with us or our subsidiaries, we (i) pay that person any dividend or interest; (ii) allow the exercise of any voting right; (iii) pay remuneration to that person; or (iv) fail to pursue all lawful efforts to require such unsuitable person to relinquish the voting securities, including, if necessary, the immediate purchase of the securities for cash at fair market value.

In January 2009, the Nevada Commission granted us prior approval to make public offerings of our securities for a period of two years, subject to certain conditions ("Shelf Approval"). The Shelf Approval is not a finding, recommendation, or approval by the Nevada Commission as to the accuracy or inaccuracy of the prospectus or the investment merits of the securities offered. Any contrary representation is unlawful.

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Changes in control of us through merger, consolidation, stock or asset acquisitions, management or consulting agreements, or any act or conduct whereby a person or entity acquires control, may not occur without prior Nevada Commission approval. The Nevada Commission has regulations to ameliorate the potentially adverse affects of corporate acquisitions opposed by management, repurchases of voting securities, and corporate defense tactics affecting Nevada gaming licensees. Approvals are required from the Nevada Commission before a registered corporation can make exceptional repurchases of voting securities and before a corporate acquisition opposed by management can be consummated. The Nevada Act also requires prior approval of a plan of recapitalization proposed by our board of directors in response to a tender offer made directly to our stockholders for the purpose of acquiring control of us.

License fees and taxes are payable to the State of Nevada and to the counties and municipalities in which the licensees operate.

We are required to deposit with the Nevada Board and thereafter maintain a revolving fund to pay the expenses of investigation by the Nevada Board of our participation in certain gaming activities outside Nevada. We are also required to comply with certain reporting requirements and are subject to disciplinary action if we violate any gaming laws of the foreign jurisdiction pertaining to the foreign gaming operation, fail to conduct the foreign gaming operations to the standards required of Nevada gaming operations, engage in activities that are harmful to Nevada or its ability to collect gaming taxes and fees, or employ a person in the foreign operations who has been denied a license or finding of suitability in Nevada.

Native America

Gaming operations on Native American lands are governed by tribal and federal law and tribal-state compacts. The Federal Indian Gaming Regulatory Act of 1988 (the "Act") created a framework for the various responsibilities of the tribal, state, and federal authorities over tribal gaming operations. The Act is subject to interpretation and enforcement by the National Indian Gaming Commission, which has the authority to issue regulations and to otherwise regulate tribal gaming activities. Most tribes, in the exercise of their sovereignty, have also established tribal gaming commissions or agencies that regulate gaming operations on their tribal lands. Compacts between tribes and states also may impose conditions and requirements on tribal gaming operations. We are required to comply with all such sources of law, which may impose different requirements with respect to licensing, product approvals, and operations.

ITEM 1A.    RISK FACTORS

Our business and investing in our common stock involves risk. Prospective investors should carefully consider the following risks and uncertainties and other information contained in this Annual Report on Form 10-K, including our financial statements and the notes to those statements, before making an investment decision. We have identified the following important risks and uncertainties that could cause actual results to differ materially from those projected in any forward looking statements we may make from time to time.

Our success in the gaming industry depends in large part on our ability to manage and frequently introduce innovative products on a timely basis. If we fail to keep pace with rapid innovations in new technologies or product design and deployment, our business could be adversely affected.

Our success is dependent on our ability to develop and sell new products that are attractive to casino operators and other gaming enterprises and their customers. Furthermore, if our gaming devices deployed in gaming operations do not meet or sustain revenue and profitability expectations, they may be replaced by our competitors' products or removed altogether or we may experience a reduction in

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fees generated from our participation arrangements. Therefore, our success depends upon our ability to continue to design, manage and frequently market and update technologically sophisticated products that meet our customers' needs regarding ease of use and adaptability, and that are unique and entertaining such that they achieve high levels of player appeal and sustainability. If our competitors develop new game content and technologically innovative products and we fail to keep pace, our business could be adversely affected. Further, our products could suffer a loss of floor space to table games or other more technologically advanced games. There is no assurance that our investments in research and development will lead to successful new technologies or timely new products.

The demands of our customers and the preferences of the end players are continually changing. There is constant pressure to develop and market new game content and technologically innovative products. Our revenues are dependent on the earning power and life span of our games. We therefore face increased pressure to design and deploy new and successful game themes to maintain our revenue and remain competitive. The success of newly introduced technology and products, such as our Pro Series cabinets and ALPHA 2 platform and our iView Display Manager, is dependent on customer and end player acceptance as well as the reliability and performance of our products. Our customers will generally only accept a new product if we can show that it is likely to produce more revenue and net wins than our existing products and our competitors' products. While we feel we have been successful at developing new and innovative products, our ability to do so could be adversely affected by:

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a decline in the popularity of our gaming products with end players;

•

a decision by our customers to reduce the number of gaming devices on their gaming floor;

•

a decision by our customers or the gaming industry in general to cut back on purchases of new gaming devices or to cancel or return previous orders, content, or systems in anticipation of newer technologies;

•

an inability to roll out new games, services or systems on schedule due to delays in regulatory product approval in the applicable jurisdictions; and

•

an increase in the popularity of our competitors' games.

If a new product does not gain market acceptance, our business could be adversely affected. Most directly, if a product is unsuccessful we could incur losses and also be required to increase our inventory obsolescence charges. Further, our newer products are generally technologically more sophisticated than those we have produced in the past and we must continually refine our production capabilities to meet the needs of our product innovation. If we cannot adapt our manufacturing infrastructure to meet the needs of our product innovations, if we are unable to make upgrades to our production capacity in a timely manner, or if we commit significant resources to upgrades for products that are ultimately unsuccessful, our business could be adversely affected. In addition, because of the sophistication of our newer products, they are generally more expensive to produce. If the increase in the average selling price of these new products is not proportionate to the increase in production cost, in each case as compared to our prior products or, if the average cost of production does not go down over time, whether by reason of long-term customer acceptance, our ability to find greater efficiencies in the manufacturing process as we refine our production capabilities or a general decrease in the cost of the technology, our margins will suffer.

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Consumer spending on leisure activities is affected by changes in the economy and consumer tastes, as well as other factors that are difficult to predict and beyond our control. Decreases in consumer spending adversely affecting the gaming industry could harm our business, and unfavorable economic conditions have impacted and could continue to negatively impact the play levels of our participation games and purchases of our sale games.

The demand for entertainment and leisure activities tends to be highly sensitive to consumers' disposable incomes, and thus can be affected by changes in the economy and consumer tastes, both of which are difficult to predict and beyond our control. Unfavorable changes in general economic conditions, including recession, economic slowdown, sustained high levels of unemployment, and higher fuel or other transportation costs, may reduce disposable income of casino patrons or result in fewer patrons visiting casinos. As a result, we cannot ensure that demand for our products or services will remain constant. Continued adverse developments affecting economies throughout the world, including a general tightening of the availability of credit, decreased liquidity in many financial markets, increasing interest rates, increasing energy costs, acts of war or terrorism, transportation disruptions, natural disasters, declining consumer confidence, sustained high levels of unemployment or significant declines in stock markets, as well as concerns regarding epidemics and the spread of contagious diseases, could lead to a further reduction in discretionary spending on leisure activities such as gambling. Any significant or prolonged decrease in consumer spending on leisure activities could greatly affect the gaming industry, causing some or all of our customers to decrease spending or ultimately declare bankruptcy, each of which would adversely affect our business. If we experience a significant unexpected decrease in demand for our products, we could incur losses and also be required to increase our inventory obsolescence charges.

Our failure to collect outstanding accounts receivable or the deterioration of the financial condition of our customers could negatively impact our business. Development financing loans could adversely impact liquidity or cause us to incur loan losses. We have, and may continue, to incur additional provision for bad debt related to credit concerns on certain receivables.

We have offered extended payment terms to certain customers, including those in foreign jurisdictions. As a result, the collection of accounts receivable has become a matter of greater significance. While we believe the increased level of credit offered to customers has allowed us to grow our business, both domestically and internationally, it has also required direct, additional focus of and involvement by management. A decline in the relative health of the gaming industry, whether as a result of a general economic downturn or otherwise, and the difficulty or inability of our customers to obtain capital to finance their ongoing operations and purchase our products and services could adversely affect our revenues and collection of our outstanding receivables. Further, and especially due to the current downturn in the economy, some of our customers may not pay accounts receivable when due, whether as a result of financial difficulties, bankruptcy or otherwise, or because of assertion of sovereign immunity, or other defenses, resulting in increased write-offs for us. In addition, extended payment term arrangements are more prevalent with our customers in foreign jurisdictions which can implicate additional variables not present in our domestic transactions, and there is greater risk that those amounts will not be collected.

We have also provided financing for expansion or construction of gaming locations and other business purposes, including amongst other things, to assist customers with upfront payments to obtain gaming licenses abroad. These financing activities subject us to increased credit risk in certain regions, which could be exacerbated by unfavorable economic conditions or other political or economic instability in those regions. In addition, the repayment of these loans by the customer are contingent upon their operating performance which may be affected by delays in regulatory approval, as well as delays in the construction and opening of the individual gaming locations. Without the operation of gaming activities our customers may not be able to repay these loans. For example, we loaned a significant amount to an

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undercapitalized customer in Italy with limited operations to allow it to make advance payments necessary to obtain gaming licenses. If the customer does not otherwise commence gaming activities it will not be able to repay the loan. We have in the past and may in the future incur losses on these types of investments and loans. We monitor our investments and financing activities to assess impairment on a quarterly basis. Our results of operations, liquidity, or financial position may be negatively impacted if we are unable to collect on loans or profit from our investments.

The gaming industry is intensely competitive. We face competition from a number of companies, some of whom have greater resources, and if we are unable to compete effectively or expand into new markets, our business could be negatively impacted.

Competition among gaming machine manufacturers is intense and is primarily based on the amount of profit our products generate for our customers in relation to our competitors' products. Additionally, we compete on the basis of price and financing terms made available to customers, the appeal of game content and features to the end player, and the features and functionality of our hardware and software products. There are a number of established, well-financed companies producing gaming devices, game content and systems that compete with our products. Some competitors may have access to greater capital resources than we do and as a result may be better positioned to compete in the marketplace.

Competition in the gaming industry is intense due to the limited number of providers, as well as the limited number of casino operators and other gaming enterprises and jurisdictions in which they operate. Price, accuracy, reliability, and product features and functions are among the factors affecting a provider's success in selling its products. Obtaining space and favorable placement on casino gaming floors is also a competitive factor in our industry. Consolidation among the casino operators and cutbacks in spending by some operators due to the downturn in the economy has increased the level of competition among providers significantly as the amount of capital spend from casino patrons has decreased.

Because of the level of competition we face, our success and profitability is dependent in part on our ability to successfully enter new markets. However, because the rate of growth of gaming in North America has diminished and machine replacement is at historically low levels, the competition has only intensified. Any protracted slowdown in the establishment of new gaming jurisdictions or delays in the opening of new or expanded casinos and continued declines in, or low levels of demand for, machine replacements could further heighten the competition we face and adversely affect the demand for our products and our future profits.

Changes in ownership of any of our customers or consolidation within the gaming industry could affect our business.

We are heavily dependent on the gaming industry. A decline in demand for our products in the gaming industry could adversely affect our business. Demand for our products is driven primarily by the replacement of existing products as well as the expansion of existing casinos and the opening of new properties in existing and new jurisdictions. Because a significant portion of our sales come from repeat customers, our business could be affected if one of our customers is sold to or merges with another entity that utilizes the products and services of one of our competitors or that reduces spending on our products or causes downward pricing pressures. Such consolidations could lead to order cancellations, slow the replacement cycle or negatively impact pricing and purchasing decisions. Also, any fragmentation within the industry creating a number of smaller, independent operators with fewer resources could also adversely affect our business as these operators might cause a further slowdown in the replacement cycle for our products or otherwise adjust the number and frequency of orders they place with us to save money.

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Unfavorable political developments, weak foreign economies and other foreign risks may hurt our financial condition and results of operations.

Our business is dependent on international markets for a portion of our revenues. As of June 30, 2011, we had approximately $111.7 million of net accounts and notes receivable (current and long-term), or approximately 40 percent of our total net accounts and notes receivable, from customers in foreign countries. We expect that receivables with respect to foreign sales will continue to account for a significant portion of our total revenues. Our business in these markets is subject to a variety of risks, including:

•

recessions in foreign economies;

•

expropriation, nationalization and limitation or restriction on repatriation of earnings;

•

currency exchange fluctuations;

•

reduced protection of intellectual property rights in some countries;

•

longer receivables collection periods and greater difficulty in collecting accounts receivable;

•

difficulties in managing foreign operations;

•

social, political and economic instability;

•

unexpected changes in regulatory requirements;

•

ability to finance foreign operations;

•

changes in consumer tastes and trends;

•

tariffs and other trade barriers;

•

additional costs of compliance with international laws;

•

acts of war or terrorism; and

•

U.S. government requirements for export.

We may not be able to attract and retain the management or employees necessary to remain competitive in our industry.

The competition for qualified personnel in the gaming industry is intense. Our ability to continue to develop new technologies and create innovative products depends on our ability to recruit and retain talented employees. Our future success depends on the retention and continued contributions of our key management, finance, marketing, development and staff personnel, many of whom would be difficult or impossible to replace. Our success is also tied to our ability to recruit additional key personnel in the future. We may not be able to retain our current personnel or recruit any additional key personnel required. The loss of services of any of our personnel or our inability to recruit additional necessary key personnel could have a material adverse effect on our business, financial condition, results of operations and prospects.

The gaming industry is heavily regulated, and regulatory changes may adversely impact our ability to operate or expand.

The manufacture and distribution of gaming devices, development of systems and the conduct of gaming operations are subject to extensive federal, state, local and foreign regulation by various gaming authorities. Each of our games and systems hardware and software must be approved in each jurisdiction in which it is placed. Our ability to continue to operate in certain jurisdictions or our ability

21

to expand into new jurisdictions or our ability to launch new product offerings could be adversely affected by:

•

delays in the adoption of or, changes to legislation to permit or expand gaming in new and existing jurisdictions;

•

unfavorable public referendums, such as referendums to increase taxes on gaming revenues;

•

unfavorable legislation affecting or directed at manufacturers or gaming operators;

•

adverse changes to and new interpretations of existing gaming regulations and findings of non-compliance with applicable gaming regulations;

•

delays in approvals from regulatory agencies;

•

a limitation, conditioning, suspension or revocation of any of our gaming licenses or approvals of our games or system hardware or software;

•

unfavorable determinations or challenges of suitability by gaming regulatory authorities with respect to our officers, directors, major stockholders or key personnel; and

•

the adoption of new laws and regulations, or the repeal or amendment of existing laws and regulations, including, but not limited to, internet gaming.

The enactment of unfavorable legislation or government efforts affecting or directed at manufacturers or gaming operators, such as referendums to increase gaming taxes or requirements to use local distributors, would likely have a negative impact on our operations.

Public opinion can also exert a significant influence over the regulation of the gaming industry. A negative shift in the public's perception of gaming could affect future legislation in individual jurisdictions. Among other things, such a shift could cause jurisdictions to abandon proposals to legalize gaming, thereby limiting the number of new jurisdictions into which we could expand. Negative public perception could also lead to new restrictions on or the prohibition of gaming in jurisdictions in which we currently operate.

Although the jurisdictions in which we operate vary in their specific requirements, virtually all jurisdictions, including those into which we may expand in the future, require licenses, permits, qualification documentation, including evidence of integrity and financial stability, and other forms of approval to engage in gaming operations or the manufacture and distribution of gaming devices. Our officers, directors, major stockholders, and key personnel are also subject to significant regulatory scrutiny. If regulatory authorities determine that any person is unsuitable to work in the gaming industry, we could be required to terminate our relationship with that person. To our knowledge, we and our key personnel have obtained, or applied for, all government licenses and approvals necessary to conduct our activities in the jurisdictions that we operate. However, there can be no assurance those licenses or approvals will be renewed in the future, or that new forms of approval necessary to operate will be granted.

Compliance with environmental, health and safety laws and regulations, including new regulations requiring higher standards, may increase our costs, limit our ability to utilize our current supply chain, and force design changes to our products. These changes could reduce the net realizable value of our inventory, which would result in an immediate charge to our consolidated income statements. Non-compliance could negatively impact our operations and financial position as a result of fines, penalties, and the cost of mandated remediation or delays to our manufacturing.

22

Our intellectual property protections may be insufficient to properly safeguard our technology.

The gaming industry is constantly employing new technologies in both new and existing markets. We rely on a combination of patent and other technical security measures to protect our products, and continue to apply for patents protecting such technologies. Notwithstanding these safeguards, our competitors may still be able to obtain our technology or imitate our products. Furthermore, others may independently develop products similar or superior to ours.

We also rely on trade secrets and proprietary know-how. We enter into confidentiality agreements with our employees and independent contractors regarding our trade secrets and proprietary information, but we cannot assure you that the obligation to maintain the confidentiality of our trade secrets or proprietary information will be honored. Despite various confidentiality agreements and other trade secret protections, our trade secrets and proprietary know-how could become known to, or independently developed by, competitors.

We may be subject to claims of intellectual property infringement or invalidity. Expenses incurred with respect to monitoring, protecting, and defending our intellectual property rights could adversely affect our business.

Competitors and others may infringe on our intellectual property rights, or may allege that we have infringed on theirs. Monitoring infringement and misappropriation of intellectual property can be difficult and expensive, and we may not be able to detect infringement or misappropriation of our proprietary rights. We may also incur significant litigation expenses protecting our intellectual property or defending our use of intellectual property, reducing our ability to fund product initiatives. These expenses could have an adverse effect on our future cash flows and results of operations. We have in the past and are currently subject to litigation regarding patent infringement which, if resolved adversely to us, could have a material impact on our business. If we are found to infringe on the rights of others we could be required to discontinue offering certain products or systems, to pay damages, or purchase a license to use the intellectual property in question from its owner. Litigation can also distract management from the day-to-day operations of the business. There can be no assurances that certain of our products, including those with currently pending patent applications, will not be determined to have infringed upon an existing third party patent.

The intellectual property rights of others may prevent us from developing new products or entering new markets.

The gaming industry is characterized by the rapid development of new technologies, which requires us to continuously introduce new products and expand into new markets that may be created. Therefore, our success depends in part on our ability to continually adapt our products and systems to incorporate new technologies and to expand into markets that may be created by new technologies. If technologies are protected by the intellectual property rights of others, including our competitors, we may be prevented from introducing products based on these technologies or expanding into markets created by these technologies. If the intellectual property rights of others prevent us from taking advantage of innovative technologies, our financial condition, operating results or prospects may be harmed.

Our gaming operations, particularly our wide area progressive networks and centrally determined systems, may experience losses due to technical difficulties or fraudulent activities.

Our success depends on our ability to avoid, detect, replicate and correct software and hardware errors and fraudulent manipulation of our products. All of our games are designed with security features to prevent fraudulent activity. However, we cannot guarantee that these features will effectively stop all fraudulent or subversive activities. If our security features do not prevent these types of activities, we could adversely be affected. To the extent any of our products experience errors or fraudulent

23

manipulation, our customers may replace our products with those of our competitors. In addition, the occurrence of errors in, or fraudulent manipulation of, our products may give rise to claims for lost revenues and related litigation by our customers and may subject us to investigation or other action by gaming regulatory authorities, including shutting down our gaming machines, suspension or revocation of our gaming licenses or disciplinary action. Additionally, in the event of such issues with our products, substantial engineering and marketing resources may be diverted from other areas to rectify the problem.

Our credit agreement imposes significant restrictions. Failure to comply with these restrictions could result in the acceleration of a substantial portion of our debt, which we may not be able to repay or refinance.

Our credit agreement contains covenants that restrict our ability and certain of our subsidiaries to (among other things):

•

dispose of assets;

•

incur additional indebtedness and issue preferred stock;

•

pay dividends or make other distributions;

•

enter into certain acquisitions;

•

repurchase equity interests or subordinated indebtedness;

•

issue or sell equity interests of our subsidiaries; and

•

engage in mergers or consolidations or certain other transactions with subsidiaries and affiliates.

In addition, our credit agreement requires us to maintain compliance with certain financial ratios. Our ability to comply with such financial ratios, meet our debt service obligations, or reduce our total debt is dependent upon our future performance, which may be affected by events beyond our control. There can be no assurance that we will be able to comply with such restrictions and limitations, or that they will not adversely affect our ability to finance our future operations or capital needs or engage in other business activities that would otherwise be in our interest.

A breach of any of our covenants or our inability to comply with the required financial ratios under the credit agreement or under any replacement credit agreement could result in a default under such credit agreement. In the event of a default, the lenders could elect to declare all borrowings outstanding under such credit agreement, together with any accrued interest and other fees, to be due and payable, as well as require us to apply all available cash to repay the amounts. If we were unable to repay the indebtedness upon its acceleration, the lenders could proceed against the underlying collateral. There can be no assurance that our assets would be sufficient to repay the amount in full, that we would be able to borrow sufficient funds to refinance the indebtedness or that we would be able to obtain a waiver to cure the default.

Current borrowings, as well as potential future financings, may substantially increase our current indebtedness.

No assurance can be given that we will be able to generate the cash flows necessary to permit us to meet our fixed charges and payment obligations with respect to our debt. We could be required to incur additional indebtedness to meet these fixed charges and payment obligations. Incurring additional debt could:

•

adversely affect our ability to expand our business, market our products and make investments and capital expenditures;

24

•

adversely affect the cost and availability of funds from commercial lenders, debt financing transactions and other sources; and

•

create competitive disadvantages compared to other companies with lower debt levels.

Any inability to service our fixed charges and payment obligations, or the incurrence of additional debt, would have an adverse effect on our cash flows, results of operations and business generally.

An inability to maintain sufficient liquidity could negatively affect expected levels of operations and new product development.

Future revenue may not be sufficient to meet operating, product development and other cash flow requirements. Sufficient funds to service our debt and maintain new product development efforts, and expected levels of operations may not be available. Additional capital, if and when needed by us, may not be available on terms acceptable to us. If we cannot obtain sufficient capital on acceptable terms when needed, we may not be able to carry out our planned product development efforts and level of operations.

Our reported results can be affected adversely by the implementation of new, or changes in the interpretation of existing, accounting principles or financial reporting requirements.

Our financial reporting complies with accounting principles generally accepted in the United States of America ("U.S. GAAP"), and U.S. GAAP is subject to change over time. If new rules, or interpretations of existing rules, require us to change our financial reporting (including the proposed lease accounting changes and the adoption of international financial reporting standards ("IFRS") in the United States), our reported results of operations and financial condition could be affected substantially, including requirements to restate historical financial reporting. As an example, the adoption of IFRS could affect many of our financial ratios and covenant compliance calculations under our credit agreement. We may or may not be successful in changing the original financial ratios based on U.S. GAAP with our lenders, and if successful, we may incur additional costs in updating our credit agreement for these new ratios.

As we introduce new products and transactions become increasingly complex, additional analysis and judgment is required to account for and recognize revenues in accordance with U.S. GAAP. Transactions may include multiple element arrangements and/or software components and applicable accounting principles could further change the timing of revenue recognition and could adversely affect our financial results for any given period. Fluctuations may occur in our deferred revenues and reflect our continued shift toward more multiple element contracts that include systems and software.

Our financial results vary from quarter to quarter, which could negatively impact our business.

Various factors affect our quarterly operating results, some of which are not within our control. These factors include, among others:

•

the financial strength of the gaming industry;

•

consumers' willingness to spend money on leisure activities;

•

the timing and introduction of new products;

•

the mix of products sold;

•

the timing of significant orders from and shipments to or installations by customers;

•

product pricing and discounts;

•

the timing of acquisitions of other companies and businesses or dispositions; and

25

•

general economic conditions.

In certain sales of new gaming machines and the placement of participation gaming machines, we have offered free gaming machines and free conversions, while at the same time we continue to charge our customers for gaming machines and conversions upgrade kits. We cannot be sure that competitive pressure will not cause us to increase the number of free gaming machines and conversions we are expected to offer to our customers, which would decrease the revenue we expect to receive and reduce our gross profit.

Our gross margins are impacted in a given period by a number of different factors. For example, our gross margins would be adversely affected by both decreases to the average selling prices of our units or our average daily revenue from gaming operations. The introduction of new products can also impact gross margins. Increases to our costs of products sold, whether from higher material costs due to the fluctuating commodities markets, higher labor costs, increased freight charges reflecting escalating energy prices or the use of higher-priced technology in newer products, can also have a negative impact on gross margins. These and other factors are likely to cause our financial results to fluctuate from quarter to quarter. We believe that quarter-to-quarter comparisons of our results of operations may not be meaningful. In addition, such fluctuations could cause us to be unable to comply with the financial ratios in our credit agreement.

Business combinations and investments in intellectual properties or affiliates may not achieve the financial and strategic goals that were contemplated at the time of the transaction, which could materially affect our financial results.

We have invested in strategic business combinations and acquisitions of important technologies and intellectual property that we believe will expand our geographic reach, product lines, and/or customer base. Those combinations and acquisitions and any future such transactions may present difficulties in the assimilation of acquired operations, technologies and products, or may prove to be less valuable than the price we paid because of, among other things, a failure to realize anticipated benefits such as cost savings and revenue enhancements or because of the assumption of liabilities in an acquisition, including unforeseen or contingent liabilities in excess of the amounts estimated. In addition, acquisitions can divert management's attention from day-to-day operations and may include substantial transaction costs. We also may encounter difficulties applying our internal controls to an acquired business. Any of these events or circumstances may have an adverse effect on our business by requiring us to, among other things, record substantial impairment charges on goodwill and other intangible assets, resulting in a negative impact on our operating results.

Moreover, as we continue to evaluate our business and assess our long-term strategic goals, we will also evaluate past and potential investments to determine how they will fit into our organizational structure. If an event or change occurs in affiliate relationships or agreements associated with business combinations, we may be required to reassess cash flows, recoverability, useful lives, and fair value measurements, which may result in material impairment charges.

Provisions of our articles of incorporation and bylaws, Nevada law, and the regulatory burdens attendant to ownership, could discourage or prevent a potential takeover of our Company that might otherwise result in our stockholders receiving a premium over the market price for our common stock.

Our articles of incorporation permit our Board of Directors to issue special shares from time to time, with such rights and preferences as they consider appropriate. Our Board of Directors could authorize the issuance of special shares with terms and conditions and under circumstances that could have an effect of discouraging a takeover or other transaction.

As a Nevada corporation, we are also subject to certain provisions of the Nevada General Corporation Law that have anti-takeover effects and may inhibit a non-negotiated merger or other business

26

combination. These provisions are intended to encourage any person interested in acquiring us to negotiate with, and to obtain the approval of, our Board of Directors. Some of these provisions may discourage a future acquisition of Bally, including an acquisition in which the stockholders might otherwise receive a premium for their shares. As a result, stockholders who might desire to participate in such a transaction may not have the opportunity to do so.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.

ITEM 2.    PROPERTIES

The following sets forth information regarding our leased and owned properties. We believe our facilities are suitable for our needs and we have no future expansion plans that would make these properties inadequate. See Note 10 to the consolidated financial statements, Leases, for information as to our lease commitments with respect to the leased properties.

Bally Gaming Equipment and Systems

Global Headquarters and Manufacturing and Assembly Facility

We maintain our global headquarters and our primary manufacturing and assembly facilities in Las Vegas, Nevada in a facility with approximately 150,000 square feet that we own. The facility is used for corporate administrative functions as well as to accommodate the design, assembly and distribution of gaming equipment and casino management systems' hardware and to meet product design demands and varying levels of volume requirements. We also lease an additional 129,000 square feet of office and warehouse space in the general area of our main facility.

Las Vegas and Reno Technology Campus

In addition to the Las Vegas facilities described above, in fiscal year 2009 we began leasing an additional 36,000 square feet of office space next to our global headquarters to create a Las Vegas Technology Campus for our Games Development, Advanced Development and Project Management teams. We have also consolidated multiple facilities, eliminated certain locations and leased additional space in Reno, Nevada for a combined total of approximately 83,000 square feet to provide a more cohesive and larger campus-style environment to accommodate the growth of our Games Development, Systems Development, Sales, Product Management, and Administrative functions in northern Nevada.

Innovation Lab

Bally's Global Innovation Lab is located in Pleasanton, California, a major suburb of San Francisco. We lease a facility with approximately 6,250 square feet that allows the Company to draw from the significant high-tech talent that resides in the Silicon Valley.

Other Leased Facilities

India—We lease approximately 105,000 square feet of office and R&D space in Bangalore and Chennai.

Netherlands—We lease approximately 16,000 square feet of sales, service and warehouse space in Amsterdam and Diemen.

China—We lease approximately 24,000 square feet of sales, marketing and warehouse space in Macau.

27

South America—We lease approximately 25,000 square feet of office and warehouse space in Buenos Aires, Argentina, Lima, Peru and Montevideo, Uruguay.

In addition to the facilities described above, we maintain leased space in major gaming jurisdictions worldwide including approximately 103,000 square feet of office, sales and service, R&D and warehouse space throughout the United States, and approximately 27,000 square feet of office, sales and service, R&D and warehouse space in Europe, Asia, South Africa, Australia and Mexico. These facilities are located in the cities listed below. Each property is fully utilized unless otherwise noted with an asterisk (*).

United States	Europe, Asia, South Africa, Australia and Mexico
Scottsdale, Arizona	Nice, France
Huntington Beach, California	Chestergates, United Kingdom
Murrietta, California	Rome, Italy
San Diego, California	Singapore, Singapore
Golden, Colorado	Kyalami, Midrand, South Africa
Dover, Delaware	Sydney, Australia
Davie, Florida	Mexico City, Mexico
Kennesaw, Georgia
Naperville, Illinois
Tinley Park, Illinois
Biloxi, Mississippi
Egg Harbor Township, New Jersey
Chester, New York
Oklahoma City, Oklahoma
Fife, Washington
Kirkland, Washington*
San Juan, Puerto Rico

ITEM 3.    LEGAL PROCEEDINGS

Bally has been named in and has brought lawsuits in the normal course of business. We do not expect the outcome of these suits to have a material effect on our financial position or results of operations. A description of certain of these matters is contained in Note 15 to the consolidated financial statements, Commitments and Contingencies, and is incorporated herein by reference.

ITEM 4.    (REMOVED AND RESERVED)

28

PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is listed on the New York Stock Exchange (the "NYSE") under the symbol "BYI". The following table sets forth the high and low closing bid price of our common stock as reported by the NYSE for the periods indicated.

		Price Range of Common Stock
		High		Low
Fiscal Year Ended June 30, 2011
	1st Quarter	$	35.37	$	30.75
	2nd Quarter		43.59		34.03
	3rd Quarter		43.41		34.58
	4th Quarter		41.01		35.75
Fiscal Year Ended June 30, 2010
	1st Quarter	$	42.06	$	27.79
	2nd Quarter		44.61		35.45
	3rd Quarter		46.56		37.64
	4th Quarter		46.85		32.39

As of August 22, 2011, we had approximately 4,800 holders of record of our common stock and the closing price on the NYSE was $28.92.

Dividend Policy

We have never declared or paid cash dividends on our common stock. Our credit agreement materially limits our ability to pay dividends on our common stock, as discussed in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 9 to the consolidated financial statements, Long-Term Debt. We intend to follow a policy of retaining earnings to finance the growth of our business and do not anticipate paying any cash dividends in the foreseeable future. The declaration and payment of future dividends on our common stock will be at the sole discretion of our Board of Directors and will depend on our profitability, the terms of our credit agreement and our financial condition, capital requirements, statutory and contractual restrictions, future prospects and other factors the Board of Directors deem relevant.

Share Repurchases

On April 4, 2010, the Company's Board of Directors approved a new share repurchase plan under which, subject to price and market conditions, purchases of shares of common stock can be made from time to time in the open market or in private negotiated transactions using available cash, in an aggregate amount of up to $150 million. On April 6, 2011, the Company's Board of Directors increased the share-repurchase program to an amount equal to $550 million minus the amount repurchased in the tender offer described below.

On April 8, 2011, the Company launched a modified Dutch auction tender offer to purchase up to $400 million in value of its common stock. As of May 12, 2011, the shareholders tendered 9,912,993 shares of the Company's common stock at $40.18 per share for an aggregate cost of approximately $398.3 million.

29

Our quarterly share repurchases under these plans, excluding treasury shares acquired in non-cash transactions related to forfeited stock awards and shares exchanged for options exercised, were as follows:

Period		Total Number of Shares (or Units) Purchased		Average Price Paid Per Share (Per Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Be Purchased Under the Plans or Programs
April 1 - April 30, 2011			—		—		—	$	550,000,000
May 1 - May 31, 2011			9,912,993	$	40.18		9,912,993	$	151,658,558
June 1 - June 30, 2011			—		—		—	$	151,658,558
	Total		9,912,993	$	40.18		9,912,993

30

Stock Performance Graph

The following graph compares the cumulative 5-year total return to shareholders on Bally Technologies Inc.'s common stock relative to the cumulative total returns of (i) the S&P 500 index, (ii) the Russell 2000 index and (iii) a customized peer group of five companies that includes: Aristocrat, IGT, Scientific Games Corp., Shuffle Master Inc and WMS ("Peer Group"). An investment of $100 (with reinvestment of all dividends) is assumed to have been made in the company's common stock, in each index and in the peer group on June 30, 2006 and its relative performance is tracked through June 30, 2011.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Among Bally Technologies Inc., the S&P 500 Index,
the Russell 2000 Index and a Peer Group

*Comparison of 60 Month Cumulative Return:

	6/06		6/07		6/08		6/09		6/10		6/11
Bally Technologies Inc.		100.00		160.41		205.22		181.66		196.66		246.99
S&P 500		100.00		120.59		104.77		77.30		88.46		115.61
Russell 2000		100.00		116.43		97.58		73.17		88.89		122.15
Peer Group		100.00		106.06		67.55		45.61		44.69		43.29

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

31

ITEM 6.    SELECTED FINANCIAL DATA

The following selected statement of operations data for fiscal years 2011, 2010 and 2009, and selected balance sheet data for fiscal years 2011 and 2010 has been derived from the consolidated financial statements, which appear elsewhere in this Annual Report on Form 10-K. The Selected Financial Data should be read in conjunction with:

•

Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations; and

•

Item 8, Financial Statements and Supplementary Data.

			Year Ended June 30,
			2011			2010			2009			2008			2007
			(in 000s, except per share amounts)
Statement of Operations Data:
Revenues			$	758,155		$	778,191		$	843,760		$	852,392		$	634,643
Operating income (loss)(1)				151,535			184,110			203,018			181,719			49,078
Income from continuing operations before income taxes				143,393			170,818			184,960			160,985			20,063
Income tax expense				(45,182	)		(60,721	)		(64,781	)		(61,282	)		(5,352	)
Income from continuing operations				98,211			110,097			120,179			99,703			14,711
Income from discontinued operations(2), net of tax				—			7,181			8,057			12,120			12,420
Gain (loss) on sale of discontinued operations(2), net of tax				(403	)		22,079			—			—			—
	Net income(1)			97,808			139,357			128,236			111,823			27,131
	Less: net income attributable to noncontrolling interests			(455	)		1,880			1,927			4,616			4,803
	Net income attributable to Bally Technologies, Inc.		$	98,263		$	137,477		$	126,309		$	107,207		$	22,328
Basic earnings per share attributable to Bally Technologies, Inc.:
	Income from continuing operations		$	1.90		$	2.00		$	2.19		$	1.78		$	0.22
	Income from discontinued operations			—			0.11			0.13			0.19			0.20
	Gain (loss) on sale of discontinued operations			(0.01	)		0.41			—			—			—
		Total	$	1.89		$	2.52		$	2.32		$	1.97		$	0.42
Diluted earnings per share attributable to Bally Technologies, Inc.:
	Income from continuing operations		$	1.82		$	1.89		$	2.10		$	1.67		$	0.21
	Income from discontinued operations			—			0.11			0.12			0.18			0.19
	Gain (loss) on sale of discontinued operations			(0.01	)		0.38			—			—			—
		Total	$	1.81		$	2.38		$	2.22		$	1.85		$	0.40

32

		Year Ended June 30,
		2011			2010			2009			2008			2007
		(in 000s, except per share amounts)
Statement of Cash Flows Data:
Continuing operations:
	Operating activities	$	56,756		$	129,125		$	153,308		$	56,275		$	16,847
	Investing activities		(29,220	)		(32,324	)		(28,966	)		(23,231	)		(24,741	)
	Financing activities		(106,466	)		(83,921	)		(131,250	)		(19,009	)		23,199
Effect of exchange rate changes on cash			669			(396	)		(71	)		1,159			176
Discontinued operations:
	Operating activities		(403	)		(9,483	)		8,868			15,645			12,182
	Investing activities		—			78,757			(6,756	)		(3,211	)		(3,963	)
	Financing activities		—			(1,267	)		(1,371	)		(1,930	)		(1,899	)
	Decrease in cash and cash equivalents of discontinued operations		—			8,712			2,133			15			1,308
Increase (decrease) in cash and cash equivalents		$	(78,664	)	$	89,203		$	(4,105	)	$	25,713		$	23,109

		As of June 30,
		2011		2010		2009		2008		2007
		(in 000s)
Balance Sheet Data:
Cash and cash equivalents		$	66,425	$	145,089	$	55,886	$	59,991	$	34,278
Total current assets			473,677		476,409		465,607		587,584		461,708
Total current liabilities			160,616		174,553		178,050		294,398		256,938
	Net working capital		313,061		301,856		287,557		293,186		204,770
Total assets			927,394		913,176		880,882		995,124		824,895
Total long term debt and capital leases, including current maturities(3)			515,403		173,793		209,087		304,504		333,854
Total stockholders' equity(3)			214,592		544,192		438,749		325,107		200,402

(1)

We have recorded the following significant items affecting comparability of operating income and/or net income:

•

Net income in fiscal year 2011 and 2009 was affected by debt issuance costs write-offs of $4.1 million and $0.7 million, respectively.

•

Operating income and net income in fiscal year 2010 were impacted by impairment charges of $11.4 million.

•

Operating income and net income were affected by inventory write-downs of $3.6 million, $2.0 million, $4.5 million, $9.2 million and $10.5 million in fiscal years 2011, 2010, 2009, 2008 and 2007, respectively.

(2)

Discontinued operations consist of:

•

We previously owned and operated the Rainbow Casino, a dockside riverboat casino in Vicksburg, Mississippi. The sale was completed on June 8, 2010 and was an all-cash transaction for approximately $80.0 million which resulted in a gain in fiscal year 2010 of $22.1 million, net of tax. In fiscal year 2011, we reduced the gain on sale by approximately $0.4 million, net of tax, for certain post-closing adjustments.

(3)

During fiscal year 2011 we purchased $477.2 million of our common stock and entered into an amended and restated credit agreement that provided for a $700 million senior secured credit facility comprised of a $300 million, five-year term loan and a $400 million, five-year revolving credit facility.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business Overview

We are a diversified, worldwide gaming company that innovates, designs, manufactures, operates and distributes advanced technology-based gaming devices, systems and server-based solutions. As a global gaming-systems provider, we offer technology solutions which provide gaming operators with a wide range of marketing, data management and analysis, accounting, player tracking, security and other software applications and tools to more effectively manage their operations. Our primary hardware technologies include spinning-reel and video gaming devices, specialty gaming devices and wide-area progressive systems for traditional land-based, riverboat and Native American casinos, video lottery and central determination markets and specialized system-based hardware products.

We previously owned and operated the Rainbow Casino, a dockside riverboat casino in Vicksburg, Mississippi. On April 5, 2010, we entered into a definitive purchase agreement to sell the Rainbow Casino. The sale closed on June 8, 2010. As a result of the sale, our Casino Operations were classified as discontinued operations in the accompanying financial statements. See Note 3 to the consolidated financial statements, Discontinued Operations.

We derive our revenues from the following:

•       Gaming Equipment	—	Sale of gaming devices and related equipment, parts and conversion kits;
•       Gaming Operations	—	Operation of linked progressive systems, video lottery and centrally determined systems and the rental of gaming devices and content; and
•       Systems	—	Sale and support of specialized systems-based software and hardware products and related recurring hardware and software maintenance revenue.

We review certain financial measures in assessing our financial condition and operating performance not only in connection with creating our forecasts and in making comparisons to financial results from prior periods, but also in making comparisons to our competitors' financial results and our internal financial plans. We focus on fluctuations in revenue, cost and gross margin and also pay close attention to changes in our consolidated operating income, net income, diluted earnings per share, Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, including asset charges and share-based compensation), cash flows from operations and free cash flow (cash flows from operating activities less capital expenditures) as they are key indicators of our success. We also measure changes in selling, general and administrative ("SG&A") expenses as a percent of revenue, which indicate management's ability to control costs, as well as changes in research and development ("R&D") costs as a percent of revenue, which demonstrate our investment in technology and product development. The measures listed above are not a comprehensive list of all factors considered by us in assessing our financial condition and operating performance, and we may consider other individual measures as required by trends and discrete events arising in a specific period, but they are the key indicators.

We are currently operating in a challenging economic environment. The combination of economic uncertainty, lower demand for replacement products and reduced opportunities from new or expanded markets has negatively impacted the gaming sector and our consolidated results. The gaming sector was and continues to be negatively impacted by lower consumer spending. As a result of the challenging economic environment, we have provided select customers a greater amount of payment terms for periods up to one year, and in some cases for periods up to three years. We expect to continue to extended credit for these longer periods for the foreseeable future.

Our operating results for fiscal year 2011and fiscal year 2010 reflect the continued tough economic conditions currently facing the gaming industry, which has resulted in a slow domestic replacement

34

cycle and a lower number of casino openings and expansions, combined with lower system revenues in fiscal year 2011 resulting from the timing of implementations and longer than expected customer decision making cycles.

Game equipment revenues were $246.6 million, $273.7 million and $357.0 million for the years ended June 30, 2011, 2010 and 2009, respectively. The decrease in revenue reflects the lower number of new casino openings and expansions in fiscal year 2011 combined with a slow domestic replacement cycle. During the years ended June 30, 2011, 2010 and 2009, we sold 9,552, 10,813 and 16,848 new gaming devices in the United States and Canada, respectively, of which 8,455, 8,911 and 13,032, were replacement units, respectively. In calendar year 2010, we released our new Pro Series cabinets with ALPHA 2 technology which are state of the art for the industry with regards to ergonomics, processing power, display technology, input device, operating system, sound and serviceability. This new platform allows us to develop new, more compelling games and also facilitates our game download solution for customers. The majority of our Pro Series cabinets feature our latest innovation, iDeck, an LCD (liquid crystal display) touch screen that replaces the traditional button panel and OLED's (Organic light-emitting diodes). iDeck is the first of its kind multi-touch fully programmable and downloadable button panel which offers opportunity to add more interaction to the game-play experience with mystery bonus events, virtual shooting galleries and skill-based bonus games.

Systems revenues were $193.0 million, $217.5 million and $211.8 million for the years ended June 30, 2011, 2010 and 2009, respectively. Systems revenues were negatively impacted by the timing of certain customer decisions regarding system purchases and upgrades which impacted implementation timelines during fiscal year 2011. Maintenance revenue increased 12% in the year ended June 30, 2011, when compared to the same period last year, as a result of an increased install base of customers utilizing our systems. Even though systems sales were negatively impacted by customers delaying purchases due to the prolonged, challenging economic environment, the new SDS Version 11, which runs on both Unix and Windows using the same code base, our iVIEW DM and our Elite Bonusing Suite are generating positive interest. We recently announced an enterprise-wide agreement with one of the world's largest casino entertainment companies to implement iView DM player-user-interfaces across their casino operations. Despite the challenging economic conditions, we have continued to invest in the basics of enterprise software development, delivery, customer support and services discipline, on improving core products, providing quality upgrade options for our customers, and increasing customer satisfaction levels through better service and support which are all serving us well in these difficult economic times.

Despite the prolonged, challenging economic conditions and the absence of revenue from the charitable bingo market in Alabama, (see Note 4 to the consolidated financial statements, Impairment Charges), gaming operations revenues continued to increase at $318.6 million, $287.0 million and $275.0 million during the years ended June 30, 2011, 2010 and 2009, respectively. Revenues were stronger year over year due primarily to the continued performance of existing and new premium game titles which increased rental and participation revenue, and increases in our centrally determined business. We experienced significant growth in the installed base of our rental and daily-fee games which increased by approximately 1,121 units over June 30, 2010. Fiscal year 2011 results benefitted from our growing product offerings and innovations, such as U-Spin, our first in a series of play mechanics utilizing gesture control, and the continued success of our Cash Spin game, Digital Tower Series platforms and Hot Shot family of games. We also introduced the first dual wheel game with Vegas Hits in addition to the release of Cash Wizard, our first Alpha 2 premium game with a spinning wheel bonus. In the fourth quarter of fiscal year 2011, we released our first Hammer Head products to our wide-area progressive game lineup and also introduced a follow-up to Cash Spin called Hot Spin, where the player can choose the symbol and thereby the frequency of the bonus wheel feature. Additionally, we introduced Betty Boop Love Meter, a wide-area progressive game. We continue to focus our

35

development efforts on the introduction of new and innovative games and cabinets both for our spinning-reel and video platforms.

International revenues were $138.9 million, $157.0 million and $141.9 million for the years ended June 30, 2011, 2010 and 2009, respectively. International revenues decreased in fiscal year 2011, when compared to the same period last year, due primarily to a decrease in sales in Mexico, and Asia, which was slightly offset by increases in sales in South America during the same period. We continue to focus on international expansion opportunities and began selling our games in Australia in the fourth quarter of fiscal year 2011. In addition, we are testing with the Italian regulatory authorities and expect we will be approved to place gaming machines in the market in the first half of fiscal year 2012.

There are several new and potential gaming market developments that we believe will benefit us in the long term. In North America, we are focused on approved new jurisdictional opportunities and expansions in Canada, Illinois, Ohio, New York, Kansas, Maryland, New Jersey, Louisiana, Mississippi and California, and the potential for new market opportunities in Massachusetts, Minnesota, Michigan, Maine and Texas. The breadth and timing of such opportunities remain uncertain due to the legislative process in these jurisdictions, as well as the difficult credit environment facing certain of our customers and the risk of the gaming industry impact of continued economic uncertainty. We are also engaged in expanding our position in South Africa, Australia, New Zealand, and Mexico, as it continues to move towards Class III gaming, and, in the future, we also expect to generate revenue from the new Italian VLT market and from potential new markets in Eastern Europe, Africa, Greece, Taiwan, Korea, and Brazil. Further, as we continue to grow and gain market share in Asia, opportunities are anticipated to arise in that region which would enable us to further expand internationally.

Net cash provided by operating activities from continuing operations was $56.8 million, $129.1 million and $153.3 million for the years ended June 30, 2011, 2010 and 2009, respectively. Cash flows provided by operating activities from continuing operations in the current period were negatively impacted by our investment in inventories to significantly expand our installed base of leased gaming equipment and to build games for the new market opportunity in Italy and, to a lesser extent, a reduction in income from continuing operations. In addition, during fiscal year 2010, we recorded impairment charges of $11.4 million related to our exit from the charitable bingo gaming market in Alabama.

On April 8, 2011, we launched a modified Dutch auction tender offer to purchase up to $400 million of our common stock. On May 12, 2011, we purchased 9.9 million shares of our common stock under the tender offer at $40.18 per share for $398.3 million. On April 15, 2011, we entered into an amended and restated credit agreement that provided for a $700 million senior secured credit facility comprised of a $300 million, five-year term loan and a $400 million, five-year revolving credit facility. We utilized proceeds from the amendment and restatements of the credit facility to fund the shares repurchased under the tender offer. During fiscal year 2011, in addition to the 9.9 million shares purchased under the tender offer, we purchased 2.0 million shares of our common stock for approximately $75.7 million.

Management continuously monitors and reviews its SG&A expenses in comparison to revenues. SG&A expenses from continuing operations increased to $225.0 million from $203.2 million during the years ended June 30, 2011 and 2010, respectively. SG&A expenses from continuing operations increased as a percentage of revenue to 30% during the year ended June 30, 2011, compared to 26% and 25% during the years ended June 30, 2010 and 2009, respectively. The increase in SG&A expenses as a percentage of revenue during the year ended June 30, 2011 was due primarily to the decrease in revenue during the current period coupled with increases in payroll and related expenses, legal fees, travel and entertainment and bad debt expense, which were offset by decreases in outside services and temporary labor during the same periods. The increase in SG&A expenditures for legal fees and travel and entertainment reflect our investment in potential new markets.

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Results of Operations

The summary financial results and operating statistics are as follows:

		Year Ended June 30,
		2011		% Rev			2010		% Rev			2009		% Rev
		(dollars in millions)
Revenues
	Gaming Equipment	$	246.6		33	%	$	273.7		35	%	$	357.0		42	%
	Gaming Operations		318.6		42	%		287.0		37	%		275.0		33	%
	Systems		193.0		25	%		217.5		28	%		211.8		25	%
Total revenues		$	758.2		100	%	$	778.2		100	%	$	843.8		100	%
Gross Margin
	Gaming Equipment(1)	$	112.1		45	%	$	138.0		50	%	$	166.8		47	%
	Gaming Operations		229.8		72	%		203.9		71	%		194.9		71	%
	Systems(1)		142.6		74	%		156.5		72	%		150.2		71	%
Total gross margin		$	484.5		64	%	$	498.4		64	%	$	511.9		61	%
Selling, general and administrative			225.0		30	%		203.2		26	%		212.7		25	%
Research and development costs			88.1		12	%		80.3		10	%		77.3		9	%
Impairment charges			—		—			11.4		1	%		—		—
Depreciation and amortization			19.9		3	%		19.4		3	%		18.9		2	%
Operating income		$	151.5		20	%	$	184.1		24	%	$	203.0		24	%
Income from continuing operations		$	98.2		13	%	$	110.1		14	%	$	120.2		14	%

(1)

Gross Margin from Gaming Equipment and Systems excludes amortization related to certain intangibles, including core technology and license rights, which are included in depreciation and amortization.

		Year Ended June 30,
		2011		2010		2009
Operating Statistics:
New gaming devices			13,537		17,334		22,108
New unit Average Selling Price ("ASP")		$	15,832	$	14,398	$	14,259
End of period installed base:
	Gaming monitoring units installed base		407,000		386,000		362,000
	Linked progressive systems		1,059		1,030		1,010
	Rental and daily-fee games		14, 315		13,194		11,592
	Video lottery systems		8,350		7,739		8,152
	Centrally determined systems		50,754		50,029		48,924

Fiscal Year 2011 vs. Fiscal Year 2010

Total revenues decreased $20.0 million, or 3%, in fiscal year 2011, when compared to fiscal year 2010, as a result of the following:

Gaming Equipment Revenue.    Gaming Equipment revenue decreased by $27.1 million, or 10%, to approximately $246.6 million primarily as a result of a 22% decrease in new gaming device sales to 13,537 units in fiscal year 2011. New gaming device sales decreased due to a challenging economy, lower international sales and a continued sluggish North America replacement market and fewer new

37

casino openings and expansions during this period as compared to the same period last year. ASP of new gaming devices increased by 10% to $15,832 in fiscal year 2011 compared to $14,398 in the same period last year. The increase in ASP was primarily as a result of the mix of products sold including sales of the new Pro Series cabinets with Alpha 2 technology in the current fiscal year which made up approximately 47% of shipments.

Gaming Equipment Gross Margin.    Gaming Equipment gross margin decreased to 45% in fiscal year 2011 from 50%, in the same period last year, due primarily to the write-down of older technology platforms, an increase in royalty-based fees associated with third-party themes due to an increase in the number of related unit and game conversion kit sales, and the increased cost of our new Pro Series cabinets during the current period.

Gaming Operations Revenue.    Gaming Operations revenue increased $31.6 million, or 11%, to approximately $318.6 million in fiscal year 2011, when compared to the same period last year, primarily as a result of an increase in participation and rental revenue and the placements of higher yield premium products, including Cash Spin and Vegas Hits, the performance of our lottery systems installed base, as well as the continued success of our Digital Tower Series and Hot Shot family of games. The improvement in participation and rental revenue was primarily due to increases in our end of period installed base of games, that included an 8% increase in the installed games base of rental and daily fee games from 13,194 games as of June 30, 2010 to 14,315 games as of June 30, 2011.

Gaming Operations Gross Margin.    Gross margin increased to 72% in fiscal year 2011 from 71% in fiscal year 2010. The improvement in gross margin was primarily due to increases in participation revenue which had little associated variable costs.

Systems Revenue.    Systems revenue decreased $24.5 million, or 11%, to approximately $193.0 million in fiscal year 2011, when compared to the same period last year, due primarily to the timing of certain customer decisions regarding system purchases and upgrades which impacted the closing of deals and implementation timelines. Maintenance revenue increased 12% in fiscal year 2011, when compared to the same period last year, as a result of the increased installed base of customers on our systems. During fiscal year 2011, increases in maintenance revenue were offset by a 30% decrease in software and services revenue and a 10% decrease in hardware revenue, when compared to the same period last year.

Systems Gross Margin.    Systems gross margin increased to 74% in fiscal year 2011 from 72%, in the same period last year, primarily as a result of a change in the mix of products sold in the comparative periods coupled with an increase in maintenance revenue which involves minimal variable costs during the same period. Specifically, Systems revenues for fiscal year 2011 were comprised of 39% hardware, 34% maintenance and 27% software and service revenue, as compared to 38% hardware, 27% maintenance and 35% software and services revenue in the same period last year.

Selling, General and Administrative Expenses.    SG&A expenses increased $21.8 million, or 11%, in fiscal year 2011, when compared to the same period last year, due primarily to increases in payroll and related expenses, legal fees, travel and entertainment expense and bad debt expense. Payroll and related expenses increased due primarily to an 8% increase in headcount in the comparative periods as a result of our expansion into international markets. Legal fees increased due primarily to costs associated with recent litigation and fees related to our entrance into new international markets. The increase in travel and entertainment expense was due primarily for travel associated with new business and the addition of new international locations. Bad debt expense increased due primarily to increases in accounts receivable during the comparable periods and the increased exposure to international markets. Bad debt as a percentage of revenue continues to remain at approximately 1%.

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Research and Development Costs.    R&D costs increased $7.8 million, or 10%, in fiscal year 2011, when compared to the same period last year, due primarily to an increase in employees and an increase in hardware development costs. The increased costs are attributable to our continued focus on our technology assets due to the increased focus on content development on the ALPHA 2 platform and the new Pro Series cabinets as well as development of iVIEW DM.

Impairment Charges.    Impairment charges of $11.4 million were recorded during fiscal year 2010 due to the circumstances in Alabama where the legality of charitable bingo gaming was under challenge by the state's governor and there were several lawsuits pending before the State's Supreme Court that negatively affected charitable gaming in the state. See Note 4 to the consolidated financial statements, Impairment Charges.

Depreciation and Amortization Expense.    Depreciation and amortization expense increased $0.5 million, or 3%, in fiscal year 2011, when compared to same period last year, primarily as a result of additions of leased gaming equipment year over year.

Fiscal Year 2010 vs. Fiscal Year 2009

Total revenues decreased $65.6 million, or 8%, in fiscal year 2010, when compared to fiscal year 2009, as a result of the following:

Gaming Equipment Revenue.    Gaming Equipment revenue decreased by $83.3 million, or 23%, to approximately $273.7 million primarily as a result of a 22% decrease in new gaming device sales to 17,334 units in fiscal year 2010. New gaming device sales decreased due to a sluggish North America replacement market and fewer new casino openings and expansions during this period as compared to the same period in the prior fiscal year. Further, during fiscal year 2010, trade-in allowances and customer discounts increased $8.2 million and parts revenues decreased $7.8 million, when compared to the same period in fiscal year 2009. ASP increased slightly by 1% to $14,398 in fiscal year 2010 compared to $14,259 in the same period in fiscal year 2009. The increase in ASP was primarily as a result of the mix of newer and higher priced platforms sold during the fiscal year 2010, when compared to the same period in the prior fiscal year. Used games revenue increased $3.9 million during fiscal year 2010 due primarily to the greater number of older, used premium platforms sold at a higher ASP, when compared to the same period in fiscal year 2009.

Gaming Equipment Gross Margin.    Gaming Equipment gross margin increased to 50% in fiscal year 2010 from 47%, in the same period in the prior fiscal year, primarily as a result of product mix and improved purchasing and manufacturing efficiencies. In addition, royalty expense decreased $7.9 million in fiscal year 2010 when compared to the same period in fiscal year 2009, due to a reduction in fees associated with unit sales and game conversion kits with third party titles. There was also a $1.8 million decrease in inventory write-downs during the same period as a result of improved material planning efforts and a concentrated effort to convert or rework slower moving inventory, when compared to the same period in the prior fiscal year.

Gaming Operations Revenue.    Gaming Operations revenue increased $12.0 million, or 4%, to approximately $287.0 million in fiscal year 2010, when compared to the same period in fiscal year 2009, primarily as a result of an increase in participation, rental and license revenue. The improvement in participation revenue was primarily due to higher lottery revenue due to an increase in rates and net win per unit during the period, as well as an increase in premium revenue units. The improvement in rental revenue was due the 14% increase in the installed games base from 11,592 games as of June 30, 2009 to 13,194 games as of June 30, 2010.

Gaming Operations Gross Margin.    Gross margin was consistent at 71% in both fiscal years 2010 and 2009.

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Systems Revenue.    Systems revenue increased $5.7 million, or 3%, to approximately $217.5 million in fiscal year 2010, when compared to the same period in fiscal year 2009, primarily as a result of an increase in maintenance revenue during the period. Maintenance revenue increased 14% in fiscal year 2010, when compared to the same period in the prior fiscal year, as a result of the increased installed base of customers on our systems. In addition, during fiscal year 2010, there was a 12% increase in software and services revenue, which was offset by a decrease of 10% in hardware revenue, when compared to the same period in fiscal year 2009.

Systems Gross Margin.    Systems gross margin increased to 72% in fiscal year 2010 from 71%, in the same period in fiscal year 2009, primarily as a result of a change in the mix of products sold in the comparative periods and a reduction in hardware revenue year over year.

Selling, General and Administrative Expenses.    SG&A expenses decreased $9.5 million, or 4%, in fiscal year 2010, when compared to the same period in fiscal year 2009, due primarily to decreases in accounting, legal and consulting fees and partially offset by increases in advertising and promotional expenditures and bad debt expense during the same period. Advertising and promotional expenditures increased due primarily to Systems promotional events during the fiscal year. Bad debt expense increased due primarily to increase in accounts receivable and the write-off of certain notes receivable during the same period. Bad debt as a percentage of revenue was under 1%. Accounting fees and legal fees decreased due to a reduction in services provided during the same period as a result of improved internal controls and fewer litigation related expenses. The decrease in consulting expense was due to a company-wide initiative to reduce external consulting and convert individuals to full time positions only where necessary. SG&A expenses in fiscal year 2009 benefited from a $3.0 million insurance reimbursement from claims for the 2005 U.S. Gulf Coast hurricanes which destroyed or temporarily shut down our gaming operations in the region when our rental and daily fee games were destroyed in third party locations.

Research and Development Costs.    R&D costs increased $3.0 million, or 4%, in fiscal year 2010, when compared to the same period in the prior fiscal year, due primarily to an increase in employees and an increase in the development of our ALPHA 2 operating systems and system products. The increased costs were attributable to our continued focus on our technology assets due to the competitive landscape that required a continual investment in future generations of gaming products and systems.

Impairment Charges.    Impairment charges of $11.4 million were recorded during fiscal year 2010 due to the evolving circumstances in Alabama where the legality of charitable bingo gaming was under challenge by the state's governor and there were also several lawsuits pending before the State's Supreme Court which could have negatively affected charitable gaming in the state. See Note 4 to the consolidated financial statements, Impairment Charges.

Depreciation and Amortization Expense.    Depreciation and amortization expense increased $0.5 million, or 3%, in fiscal year 2010, when compared to same period in the prior fiscal year, primarily as a result of additions of property and equipment year over year.

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Other Income (Expense), Income Tax Expense and Net Loss (Income) Attributable to Noncontrolling Interests

Other income (expense) and income tax expense from continuing operations and net loss (income) attributable to noncontrolling interests was as follows:

		Year Ended June 30,
		2011			2010			2009
		(in 000s)
Other income (expense)
Interest income		$	5.0		$	3.3		$	3.4
Interest expense			(12.0	)		(12.6	)		(19.1	)
Loss on extinguishment of debt			(4.1	)		—			(0.8	)
Other, net			3.0			(4.0	)		(1.5	)
Total other expense			(8.1	)		(13.3	)		(18.0	)
	Income tax expense		(45.2	)		(60.7	)		(64.8	)
	Net income (loss) attributable to noncontrolling interests		(0.5	)		1.9			1.9

Fiscal Year 2011 vs. Fiscal Year 2010

Other Income (Expense).    Other expense decreased $5.2 million, or 39%, in fiscal year 2011, when compared to the same period last year, due primarily to an increase in gains on foreign currency translations of $6.8 million as a result of the weakening of the U.S. dollar during the same period. Interest expense decreased $0.6 million in fiscal year 2011, when compared to the same period last year, while interest income increased $1.7 million during the same period.

As a result of amending and restating the credit facility, we incurred a loss on extinguishment of debt of $4.1 million for the write-off of certain debt issue costs. The interest rate on the term loan was 3.82% at June 30, 2011. In December 2008, we entered into a floating-to-fixed interest rate swap to fix the interest rate at 1.89% until September 2012. Effective June 2011, we entered into a second floating-to-fixed interest rate swap to fix the interest rate at 2.09% until the term loan's maturity in May 2016.

Income Tax Expense.    Income tax expense decreased $15.5 million during fiscal year 2011, when compared to the same period last year, due primarily to a reduction in net income, certain changes in our uncertain tax positions primarily resulting from settlement of the Internal Revenue Service ("IRS") examination of our 2003 to 2005 income tax returns, the reinstatement of the R&D tax credit and deferred tax expense on the repatriation of earnings from our India subsidiary. See Note 14 to the consolidated financial statements, Income Taxes. The effective income tax rate for continuing operations for fiscal year 2011 and 2010 was 31.5% and 35.5%, respectively.

Net loss (income) attributable to noncontrolling interests.    Net income attributable to noncontrolling interests decreased $2.4 million in fiscal year 2011, when compared to the same period last year. In fiscal year 2010, net income attributable to noncontrolling interests was due to earnings from unconsolidated subsidiaries, including the Rainbow Casino. See Note 3 to the consolidated financial statements, Discontinued Operations.

Fiscal Year 2010 vs. Fiscal Year 2009

Other Income (Expense).    Other expense decreased $4.7 million, or 26%, in fiscal year 2010, when compared to the same period in the prior fiscal year, due primarily to a decrease in interest expense during the same period. Interest expense decreased $6.5 million due primarily to a reduction in the principal balance on the term loan over the year. The interest rate on the term loan was 4.14% at

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June 30, 2010. Other expense decreases were offset by increases in losses incurred on foreign currency translations as a result of the strengthening U.S. dollar.

Income Tax Expense.    The effective income tax rate for continuing operations for fiscal years 2010 and 2009 was 35.5% and 35.0%, respectively. The effective income tax rate for fiscal year 2010 only reflected a half year benefit from the R&D tax credit while the effective income tax rate for fiscal year 2009 reflected the retroactive reinstatement of the R&D tax credit of approximately $3.1 million. The IRS commenced examination of our United States federal income tax returns for 2003 through 2005 in the fourth quarter of 2006. In January 2009, the IRS completed its field examination of the open tax years and issued a Revenue Agent's Report and we paid $3.4 million in tax and $1.2 million in interest to the IRS to settle certain agreed adjustments. We subsequently appealed certain unagreed issues to the IRS Appeals Division. On June 30, 2010 we agreed to settle all remaining issues with the IRS and we received a refund of $1.7 million in tax and $0.6 million in interest in December 2010.

Net income attributable to noncontrolling interests.    Net income attributable to noncontrolling interests was consistent in both fiscal years 2010 and 2009.

Discontinued Operations

On April 5, 2010, we entered into a definitive purchase agreement to sell the Rainbow Casino. Under the terms of the agreement, we received approximately $80.0 million in an all-cash transaction. The sale closed on June 8, 2010. We recognized a gain on the sale of Rainbow of approximately $22.1 million (net of approximately $12.2 million in income taxes) in the fourth quarter of fiscal year 2010. Per the terms of the sale agreement, we incurred certain post-closing adjustments during fiscal year 2011 which reduced our gain on the sale by approximately $0.4 million (net of approximately $0.2 million income taxes).

The results of operations for fiscal years 2011, 2010 and 2009 were classified as discontinued operations because we did not continue to receive significant cash flows from the Rainbow Casino after the sale. Rainbow's revenues, reported in discontinued operations for fiscal years 2010 and 2009 were $34.3 million and $39.6 million, respectively. We recorded income from discontinued operations, net of income taxes, for fiscal years 2010 and 2009 of $7.2 million and $8.1 million, respectively. See Note 3 to the consolidated financial statements, Discontinued Operations.

Financial Condition and Liquidity

Working Capital

						Increase (decrease)
		June 30, 2011		June 30, 2010
						Amount			%
		(in 000s)
Cash and cash equivalents		$	66,425	$	145,089	$	(78,664	)		(54	)%
Total long-term debt, including current maturities		$	515,403	$	173,793		341,610			197	%
Total current assets		$	473,677	$	476,409	$	(2,732	)		(1	)%
Total current liabilities			160,616		174,553		(13,937	)		(8	)%
	Net working capital	$	313,061	$	301,856	$	11,205			4	%

As of June 30, 2011 and 2010, we had $66.4 million and $145.1 million, respectively, in consolidated cash and cash equivalents from continuing operations.

Pursuant to various state gaming regulations, certain cash accounts are maintained to ensure availability of funds to pay wide-area progressive jackpot awards in installments, rather than in one lump-sum. At

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June 30, 2011 and 2010, these accounts had an aggregate value of approximately $8.4 million and $8.3 million, respectively, which are classified as restricted cash in our consolidated balance sheets. In addition, we purchase U.S. Treasury Strip Securities for the benefit of jackpot winners who elect to receive winnings in annual or weekly installment payments. These securities are included in restricted long-term investments in the accompanying consolidated balance sheets, and totaled $12.5 million and $13.1 million as of June 30, 2011 and 2010, respectively.

On June 30, 2011, the amount of cash and investments held by foreign subsidiaries was $18.2 million. If these funds are needed for our operations in the U.S., we would be required to accrue and pay U.S. taxes to repatriate these funds.

Our net working capital increased $11.2 million in the fiscal year months ended June 30, 2011, when compared to the same period last year, and was primarily affected by the $78.7 million decrease in cash and cash equivalents during the same period and by net working capital increases for the following components:

•

An increase of $27.9 million in current accounts and notes receivable due primarily to certain new systems contracts and international sales during the period;

•

An increase of $25.8 million in inventories due primarily to the purchase of raw materials which increased in part due to acquisition of raw materials related to the new Pro Series cabinets and the build-up of inventory in our European location in preparation for the roll-out of products in Italy; and

•

A decrease of $27.4 million in current maturities of long-term debt due primarily to the new amended and restated credit facility and a reduction in quarterly principal payments from $11.25 million to $3.75 million for the next twelve-month period.

Current and long-term accounts and notes receivable increased $27.9 million and $16.5 million, respectively, during the fiscal year ended June 30, 2011, when compared to the same period last year. Long-term accounts and notes receivable increased due primarily to an increase in loans to finance gaming opportunities to a customer in Italy during the current period. In addition, our DSO's increased to 116 days from 99 days at June 30, 2010 due primarily to an increase in certain new systems contracts and international sales over the last twelve months coupled with a decrease in revenue during the same period.

On May 12, 2011, we concluded a modified Dutch auction tender offer to purchase up to $400 million of our common stock, purchasing 9.9 million shares at $40.18 per share for $398.3 million. During fiscal year 2011 we purchased a total of 12.0 million shares of our common stock for approximately $477.2 million.

On April 15, 2011, we entered into an amended and restated credit agreement, that provides for a $700 million senior secured credit facility comprised of a $300 million, five-year term loan and a $400 million, five-year revolving credit facility, including a $50 million sublimit for the issuance of standby letters of credit, a $10 million sublimit for swingline loans and a $150 million sublimit for multicurrency borrowings approved under the credit facility.

The interest rate on the credit facility is subject to a leverage-based pricing grid. If the leverage ratio, as defined under the credit facility, is greater than 2.5, the interest rate will be LIBOR plus a margin of 2.00%; if the leverage ratio is between 2.0 and 2.5, the interest rate will be LIBOR plus a margin of 1.75%; if the leverage ratio is between 1.5 and 2.0, the interest rate will be LIBOR plus a margin of 1.50%; if the leverage ratio is between 1.0 and 1.5, the interest rate will be LIBOR plus a margin of 1.25%; and if the leverage ratio is below 1.0, the interest rate will be LIBOR plus a margin of 1.00%. As of June 30, 2011 and 2010, our leverage ratio was below 2.5 and 1.0, respectively.

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Effective December 2008, we entered into a floating-to-fixed interest rate swap agreement with an original notional value of $218.8 million and a maturity date of September 26, 2012 to fix floating LIBOR based debt to fixed rate debt at an interest rate of 1.89%. Effective June 2011, we entered into a second floating-to-fixed rate swap agreement with an original notional value of $165.0 million and a maturity date of May 13, 2016 to fix a portion of the floating LIBOR based debt under the new term loan to fixed rate debt at an interest rate of 2.09%. At June 30, 2011, the combined swap agreements had a notional value of$296.3 million.

Under the credit facility, the term loan requires quarterly principal reductions in an amount equal to 1.25% of the effective date term loan amount, or $3,750,000, through March 2013; an amount equal to 1.875% of the effective date term loan amount, or $5,625,000, through March 2014; an amount equal to 2.50% of the effective date term loan amount, or $7,500,000, from June 2014 until the term loan's maturity in May 2016 upon when the remaining outstanding principal balance of $187,500,000 is due.

The credit facility is collateralized by substantially all of our domestic property and is guaranteed by each of our domestic subsidiaries, excluding any noncontrolling interests, and is secured by a pledge agreement.

The fair value of long-term debt is estimated by discounting expected cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings and remaining maturities. As of June 30, 2011 and 2010, the fair value of long-term debt approximated the carrying value.

The credit facility contains a number of covenants that, among other things, restrict our ability and certain of our subsidiaries to dispose of assets, incur additional indebtedness or issue preferred stock, pay dividends or make other distributions, enter into certain acquisitions, repurchase equity interests or subordinated indebtedness, issue or sell equity interests of our subsidiaries, engage in mergers or acquisitions or certain transactions with subsidiaries and affiliates, and that otherwise restrict corporate activities.

The financial covenants under the credit facility consist of a leverage ratio and an interest coverage ratio. The leverage ratio is computed as total debt outstanding at the end of the quarter divided by the trailing twelve months Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), excluding certain cash and non-cash charges. The interest coverage ratio is computed as EBITDA for the trailing twelve months divided by the trailing twelve months of interest charges.

A breach of any of the covenants or the inability to comply with the required financial ratios could result in a default under the credit facility. In the event of any such default, the lenders could elect to declare all borrowings outstanding under the credit facility, together with any accrued interest and other fees, to be due and payable. If we were unable to repay the indebtedness upon its acceleration, the lenders could proceed against the underlying collateral. We were in compliance with all of the credit facility covenants as of June 30, 2011.

As of June 30, 2011, there was approximately $181.0 million of undrawn availability under the revolving credit facility. Availability under the revolving credit facility is reduced to the extent of outstanding letters of credit.

Management believes that cash flows from current operating activities will provide us with sufficient capital resources and liquidity to operate our business for at least the next 12 months.

At June 30, 2011, we had no material commitments for capital expenditures.

Cash Flow Summary

Our primary sources of liquidity include existing cash and cash equivalents, cash flows from all operating activities and the availability of funds under our revolving credit facility.

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Cash flows from continuing operating activities are derived from Bally Gaming Equipment and Systems. Cash flows from discontinued operating activities, or Casino Operations, were derived from the operation of the Rainbow Casino. We utilize our cash to acquire materials for the manufacture of goods for resale, to pay payroll, interest, taxes and SG&A expenses and to fund R&D activities.

Cash flows provided by continuing operating activities were $56.8 million in fiscal year 2011 as compared to $129.1 million in the same period last year, a $72.3 million decrease. Cash flows from operating activities of continuing operations for fiscal year 2011 were negatively impacted by our investment in inventories to significantly expand our installed base of leased gaming equipment and to build games for the new market opportunity in Italy, and to a lesser extent, a reduction in income from continuing operations. Cash flows used by discontinued operations were $0.4 million in fiscal year 2011, when compared to $9.5 million in fiscal year 2010.

Cash utilized for investing activities from continuing operations is primarily for capital expenditures related to furniture, fixtures, office and gaming equipment and improvements in leaseholds, financing arrangements with customers and investments in technology and other long-term assets. During fiscal years 2011 and 2010, we provided $9.9 million and $15.8 million, respectively, in loans to finance gaming opportunities for certain customers, and made capital expenditures of $13.2 million and $11.6 million, respectively, during the same period. Cash provided by investing activities from discontinued operations was $78.8 million during fiscal year 2010 and was primarily for proceeds from the sale of Rainbow of approximately $80.0 million offset by additions to property, plant and equipment during the same period.

Cash utilized for financing activities from continuing operations is primarily for the payment of principal on our debt and the purchase of shares of our common stock. During fiscal year 2011 we purchased 12.0 million shares of our common stock for approximately $477.2 million. With proceeds of $300 million from the term loan and $229 million in borrowings under our revolving credit facility, each after the amendment and restatement of the credit facility, we purchased $398.3 million worth of shares from the tender, paid off our prior credit facility of $142.5 million and paid debt issuance costs for the amendment and restatement of the credit facility of $7.1 million. During fiscal year 2011, we also made additional payments of $66.9 million on our notes payable and our revolving credit facility. During fiscal year 2010, we made payments of $35.3 million on our notes payable and purchased 2.3 million shares of our common stock for $91.2 million under our share repurchase plan.

Cash provided by financing activities is primarily from proceeds from the exercise of stock options and purchases of stock under our Employee Stock Purchase Plan ("ESPP"), borrowings under our revolving credit facility, and excess tax benefits of stock option exercises. During fiscal year 2011, we also borrowed $21.9 million under our revolving credit facility, and employees exercised options for 1.6 million shares of common stock for $26.3 million and purchased 67,730 shares of common stock for $2.1 million under our ESPP. During fiscal year 2010, employees exercised options for 2.1 million shares of common stock for $30.1 million and purchased 53,716 shares of common stock for $1.9 million under our ESPP.

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Contractual Commitments

We are committed to make future payments pursuant to various contracts and agreements. A summary of those contractual obligations existing as of June 30, 2011, grouped according to the periods in which such payments are due, is as follows:

		Payments Due By Period
		Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
		(in 000s)
Debt:
Revolving credit facility		$	—	$	—	$	219,000	$	—	$	219,000
Term loan facility(1)			15,000		41,250		240,000		—		296,250
Other, generally unsecured debt			153		—		—		—		153
		$	15,153	$	41,250	$	459,000	$	—	$	515,403
Estimated interest payments(2)			15,965		30,475		25,319		—		71,759
		$	31,118	$	71,725	$	484,319	$	—	$	587,162
Other commitments:
Operating leases(3)			8,584		10,891		4,831		1,490		25,796
Purchase commitments(4)			—		—		—		—		—
Jackpot liabilities(5)			11,894		601		645		4,581		17,721
Employment agreements(6)			998		1,497		—		—		2,495
	Total commitments	$	52,594	$	84,714	$	489,795	$	6,071	$	633,174

(1)

Our term loan requires quarterly principal reductions in an amount equal to 1.25% of the effective date term loan amount, or $3,750,000, through March 2013; an amount equal to 1.875% of the effective date term loan amount, or $5,625,000, through March 2014; an amount equal to 2.50% of the effective date term loan amount, or $7,500,000, from June 2014 until the term loan's maturity date in May 2016 upon when the remaining outstanding principal balance of $187,500,000 is due.

(2)

Loans under the credit facility bear interest at a variable rate equal to either the applicable base rate or LIBOR, plus in each case an interest margin determined by our leverage ratio. If the leverage ratio, as defined under the credit facility, is greater than 2.5, the interest rate will be LIBOR plus a margin of 2.00%; if the leverage ratio is between 2.0 and 2.5, the interest rate will be LIBOR plus a margin of 1.75%; if the leverage ratio is between 1.5 and 2.0, the interest rate will be LIBOR plus a margin of 1.50%; if the leverage ratio is between 1.0 and 1.5, the interest rate will be LIBOR plus a margin of 1.25%; and if the leverage ratio is below 1.0, the interest rate will be LIBOR plus a margin of 1.00%. As of June 30, 2011, our leverage ratio was below 2.5.

Effective December 2008, we entered into a floating-to-fixed interest rate swap agreement with an original notional value of $218.8 million and a maturity date of September 26, 2012 to fix floating LIBOR based debt to fixed rate debt at an interest rate of 1.89%. Effective June 2011, we entered into a second floating-to-fixed rate swap agreement with an original notional value of $165.0 million and a maturity date of May 13, 2016 to fix a portion of the floating LIBOR based debt under the new term loan to fixed rate debt at an interest rate of 2.09%. At June 30, 2011, the combined swap agreements had a notional value of $296.3 million.

We computed estimated future interest payments for our term loan and revolving credit facilities using interest rates as of June 30, 2011 of approximately 3.82% and 2.29%, respectively. The term loan facility interest rate includes both floating-to-fixed rate swap agreements for their respective remaining terms assuming our leverage ratio will continue to be below 2.5.

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(3)

Consists of operating leases for our facilities, autos and office equipment, less sublease income, that expire at various times through fiscal year 2019.

(4)

Consisted of a commitment to purchase components related to the production of gaming devices which was fulfilled in April 2011 of which approximately $17.2 million and $468,000 of components were purchased in fiscal years 2011 and 2010, respectively.

(5)

Represents amounts payable to future jackpot winners on our wide-area progressive systems.

(6)

We have employment agreements with most of our employees with positions of Vice President or above. These agreements generally provide for an initial rate of pay and other general employment terms. Some include post-employment non-compete provisions and the terms of the severance benefits generally range from three to twelve months salary continuation with similar non-compete periods. Almost all such agreements contain language that the employee is still an "at will" employee, and as such can be terminated at anytime subject to the individual termination provisions. The only multi-year employment arrangement is with Richard Haddrill, our CEO.

As of June 30, 2011, we had a liability for unrecognized tax benefits of $9.3 million, including accrued interest and penalties. It is difficult to estimate the period of cash settlement for the liability for unrecognized tax benefits; however we believe it is reasonably possible that the amount of unrecognized tax benefits may decrease in fiscal year 2012 by up to $0.3 million. See Note 14 to the consolidated financial statements, Income Taxes, for a further discussion on our income tax positions.

Off Balance Sheet Arrangements

We are party to financial instruments with off-balance sheet risk, such as performance bonds and other guarantees not reflected in our balance sheet that arise in the normal course of business. However, such off balance sheet arrangements are not reasonably likely to have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or resources.

Critical Accounting Policies

We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Our accounting policies are more fully described in Note 1 to the consolidated financial statements, Description of Business and Summary of Significant Accounting Principles. Some of our accounting policies require us to make difficult, complex and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain.

We considered the following critical accounting policies to be the most important to understanding and evaluating our financial results and require the most subjective and complex judgments made by management. We have discussed the development, selection and disclosure of our critical accounting policies and estimates with the Audit Committee of our Board of Directors. There can be no assurance that actual results will not differ from our estimates.

Revenue recognition

Our revenue recognition policy is to record revenue when all of the following criteria have been satisfied:

•

Persuasive evidence of an arrangement exists;

•

The price or fee to the customer is fixed or determinable;

•

Collectability is reasonably assured;

•

Delivery has occurred; and

•

No significant contractual obligations remain.

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Revenues are reported net of incentive rebates, discounts, sales taxes, and other taxes of a similar nature. For products sold under arrangements with extended payment terms the probability of collection is evaluated based on a review of the customer's credit worthiness and a review of historic collection experience on contracts with extended payment terms. As a result of such review, we recognize revenue on extended payment term arrangements when we have determined that collectability is reasonably assured and the fees are fixed and determinable.

Games placed with customers on a trial basis are not recognized as revenue until the trial period ends, the customer accepts the games and all other relevant criteria have been met. Amounts billed to customers prior to completing the earnings process are deferred until the revenue recognition criteria are met.

Effective July 1, 2009, we adopted new accounting guidance related to revenue recognition for multiple deliverable arrangements and certain revenue arrangements that include software elements. We elected to adopt this guidance prior to the required effective date using the prospective method. Accordingly, this guidance was applied to all new or materially modified revenue arrangements entered into since the start of our fiscal year of adoption, which was July 1, 2009.

Prior to the adoption of the new revenue recognition guidance gaming equipment and systems revenue was recognized in accordance with software revenue recognition guidance. The new guidance amended the scope of software revenue recognition to exclude all tangible products containing both software and nonsoftware components that function together to deliver the product's essential functionality. As a result of applying the new guidance, certain products that were previously accounted for under the scope of software revenue recognition guidance are no longer accounted for as software.

Considerable judgment is necessary to determine whether certain of our products are within the scope of software revenue recognition and whether the software and nonsoftware elements of these products function together to deliver the essential functionality. This determination dictates whether general revenue recognition guidance or software revenue recognition guidance applies and could impact the timing of revenue recognition.

Considerable judgment is also required to determine whether an arrangement consists of multiple deliverables, whether the delivered item has value to the customer on a stand-alone basis and determining the relative selling price used to allocate the arrangement fee to each deliverable. Such determination affects the amount and timing of revenue recognition. Management evaluates the primary use and functionality of each deliverable in determining whether a delivered item has stand-alone value and qualifies as a separate unit of accounting. Judgments for revenue recognition also involve an assessment as to whether collectability is reasonably assured and whether fees under an arrangement are fixed or determinable.

Gaming Operations Revenue.    Gaming operations revenue consists of the operation of linked progressive systems and the rental of gaming devices, game content and the related systems placed with customers. Fees under these arrangements are earned and recognized based on a share of money wagered, a share of the net winnings, or on a fixed daily rate. The daily fee entitles the customer to full use of the gaming device and includes maintenance, licensing of the game content software and connection to a linked progressive system, where applicable. In certain markets, we also charge a daily system connection fee for the customer to connect to a central determination system and/or back-office system. We do not consider these arrangements to have multiple revenue-generating activities as the services offered are a comprehensive solution in exchange for a daily fee and all of the products and services are delivered contemporaneously. Gaming operations revenue is recognized under general revenue recognition guidance as the deliverables provide the customer with rights to use tangible gaming devices and software that is essential to the functionality of the gaming device.

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Gaming Equipment Revenue.    Gaming Equipment revenue is generated from the sale of gaming devices and licensing rights to game content software that is installed in the gaming device, parts, and other ancillary equipment. Arrangements may also include sales of game content conversion kits which enable customers to replace game content without purchasing a new gaming device. Gaming equipment arrangements do not include maintenance and product support fees beyond a standard warranty period. The recognition of revenue from the sale of gaming devices occurs as title and risk of loss have passed to the customer and all other criteria have been satisfied.

As the combination of game content software and the tangible gaming device function together to deliver the product's essential functionality, revenue from the sale of gaming devices is recognized under general revenue recognition guidance. Prior to July 1, 2009, gaming devices were recognized under software revenue recognition guidance. Game content conversion kits are considered software deliverables and are recognized in accordance with software revenue recognition guidance.

Systems Revenue.    Systems revenue arrangements generally include a combination of systems software licenses, systems-based hardware products, maintenance and product support fees and professional services. The primary function of systems software licensed by us is to aid customers to more effectively run their business with marketing, data management and analysis, accounting, player tracking and security features.

Revenue for systems software and maintenance and product support fees is recognized under software revenue recognition guidance. Although the systems software and certain systems-based hardware function together, the primary functionality of the systems software is derived from the software and the systems software is not essential to the functionality of the systems-based hardware.

We license systems software on a perpetual basis or under time-based licenses. Revenue from perpetual license software is recognized at the inception of the license term if all revenue recognition criteria have been met. Revenue from maintenance and product support fees sold with perpetual licenses is recognized over the term of the support period. Our time-based licenses are generally for twelve month terms and are bundled with software maintenance and product support fees. All revenue from such arrangements is recognized over the term of the license.

Systems-based hardware includes embedded software that is essential to the functionality of the hardware. Accordingly, revenue related to all systems-based hardware sales and related maintenance and product support fees are recognized under general revenue recognition guidance. Prior to July 1, 2009, systems-based hardware was recognized under software revenue recognition guidance. Revenue from the sale of systems-based hardware is generally recognized upon delivery when title and risk of loss have passed to the customer and all other revenue recognition criteria are met. However, in the case of arrangements involving a systems installation, revenue on systems-based hardware is generally not recognized until the system has been installed and the customer has accepted the system. Hardware maintenance and product support fees are recognized during the term of the support period which is generally 12 months.

Software maintenance and product support provides customers with rights to unspecified software product upgrades, maintenance and patches released during the term of the support period. Our software maintenance and product support arrangements are generally for 12 month periods. Software maintenance and product support is recognized on a straight-line basis over the term of the support period.

Multiple Element Arrangements.    We enter into revenue arrangements that may consist of multiple deliverables of our products and services. Customers may enter into arrangements with us for the implementation of systems software and the sale of gaming devices. Arrangements for the implementation of systems software will generally include a combination of systems software licenses, systems-based hardware products, maintenance and product support fees, and professional services.

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Certain gaming equipment arrangements may also include the sale of gaming devices and game conversion kits.

Revenue arrangements with multiple deliverables are allocated to separate units of accounting if the deliverables meet both of the following criteria:

•

The delivered items have value to the customer on a standalone basis. The items have value on a standalone basis if they are sold separately by any vendor or the customer could resell the delivered items on a standalone basis; and

•

If the arrangement includes a general right of return relative to the delivered items, delivery or performance of the undelivered items is considered probable and substantially in the control of us.

At the inception of a multiple element arrangement, fees under the arrangement are allocated to the nonsoftware deliverables, and to the software deliverables as a group based on their relative selling price. Software deliverables are further subject to separation and allocation based on software revenue recognition guidance as described in the following paragraph. When applying the relative selling price method, a hierarchy is used for estimating the selling price based first on vendor-specific objective evidence ("VSOE"), then third-party evidence ("TPE") and finally management's estimate of the selling price ("ESP"). Revenue for each unit of accounting is recognized when the relevant recognition criteria for each respective element has been met.

In allocating arrangement fees under the relative selling price hierarchy, we use VSOE for all products which have been sold on a stand-alone basis. As TPE is generally not available, we use ESP for products that are not sold on a stand-alone basis and for recently introduced products that are sold on a stand-alone basis but for which a history of stand-alone sales has not yet been developed. Following these guidelines, we use either VSOE or ESP for gaming devices, system-based hardware products, maintenance and product support fees associated with perpetual licenses and professional services; and ESP for perpetual and time-based software licenses and maintenance and product support fees associated with time-based licenses.

We use the residual method to recognize revenue allocated to software deliverables. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is allocated to the delivered element and is recognized as revenue. In arrangements in which we do not have VSOE of fair value of all undelivered software elements, revenue is deferred until delivery occurs or VSOE of fair value has been established for any remaining undelivered software elements. In the event the only undelivered software element is maintenance and product support for which VSOE of fair value does not exist, the revenue is recognized ratably over the maintenance and product support period.

The establishment of VSOE requires judgment as to whether there is a sufficient quantity of items sold on a stand-alone basis and whether the prices demonstrate an appropriate level of concentration to conclude that VSOE exists. In determining ESP, management considers a variety of information including historic pricing and discounting practices, competitive market activity, internal costs, and the pricing and discounting practices of products sold in bundled arrangements.

Inventories

Inventories are stated at the lower of cost, determined on a first-in, first-out basis, or market value. Cost elements included in work-in-process and finished goods include raw materials, direct labor and manufacturing overhead. We regularly review inventory quantities and update estimates for the net realizable value of inventories due to the subjectivity involved in projecting sales volumes, used game sales values, refurbishment costs, and product demand. This process includes examining the carrying values of new and used gaming devices, parts and ancillary equipment in comparison to the current fair

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market values for such equipment (less costs to sell or dispose). Some of the factors involved in this analysis include the overall levels of our inventories, the current and projected sales levels for such products, the projected markets for such products, the costs required to sell the products, including refurbishment costs and importation costs for international shipments, and the overall projected demand for products once the next generation of products are scheduled for release.

As a result of our ongoing analysis of inventory, we recognized inventory write-downs totaling $3.6 million, $2.0 and $4.5 million during the years ended June 30, 2011, 2010 and 2009, respectively. Additional valuation charges could occur in the future as a result of changes in the factors listed above.

Leased gaming equipment

Leased gaming equipment is stated at cost and depreciated over estimated useful lives ranging from two to three and one-half years. The estimation of useful lives for our leased gaming equipment requires judgment and is based on the period of time over which we believe the assets will be of economic benefit. Given changes in technology, customer preferences and product demand, we review and evaluate the recoverability of our investment in such assets on a quarterly basis, as well as the estimated useful lives used to depreciate these assets.

There is the potential for acceleration of future depreciation, or asset impairments, if conditions were to change and certain factors were determined to have an adverse impact on our ability to realize our full investment in such assets.

Impairment of long-lived assets and goodwill

We review long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets are measured by a comparison of the carrying amount of the asset to future, net cash flows expected to be generated by the asset, undiscounted and without interest. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

We review goodwill for impairment annually at the beginning of our fourth fiscal quarter, or whenever events or circumstances indicate the carrying value may not be recoverable or warrant a revision to the estimated remaining useful life. We perform the impairment analysis of goodwill at a reporting unit level by comparing the fair value of a reporting unit with its carrying value, including goodwill. If the fair value is less than the carrying value, the impairment to be recognized is measured by the amount by which the carrying amount of the goodwill exceeds the fair value of the reporting unit goodwill.

We are required to make significant judgments and estimates regarding future cash flows, the determination of fair values and the identification of reporting units utilized in determining the fair value and recoverability of long-lived assets and goodwill. We believe our estimates are reasonable; however, if our estimates materially differ or factors utilized in developing our estimates change, different assumptions could materially affect our assessment of the fair value and recoverability of long-lived assets and goodwill.

During the year ended June 30, 2010, impairment charges of $5.9 million related to long-lived assets were recorded (see Note 4 to the consolidated financial statements, Impairment Charges). During the years ended June 30, 2011 and 2009, no impairment charges related to long-lived assets were recorded.

During the years ended June 30, 2011, 2010 and 2009, no impairment charges related to goodwill were recorded.

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Share-based compensation

We account for share-based compensation based on the calculated fair value of the award measured on the grant date which is recognized, net of estimated forfeitures, as expense over the employee's requisite service period which is generally the vesting period of the equity grant.

Determining the appropriate fair value model and calculating the fair value of share-based awards requires the input of highly subjective assumptions including the expected option term and the expected volatility of our common stock over the option's expected term. We believe that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of stock options granted; however, if actual results differ significantly from these estimates, share-based compensation expense could be materially impacted.

In addition, we are required to estimate the expected forfeiture rate, and only recognize expense for those shares expected to vest. If our actual forfeiture rate is materially different from our estimate, the share-based compensation expense could be significantly different from what we have recorded. As a result, if factors change and we use different assumptions, our share-based compensation expense could be materially different in the future.

Pre-tax share-based compensation expense from continuing operations was $12.9 million, $13.8 million and $16.3 million during the years ended June 30, 2011, 2010 and 2009, respectively. As of June 30, 2011, there was $11.2 million of total unrecognized compensation expense related to the unvested portion of stock options which will be recognized over the subsequent 1.89 years. In addition, as of June 30, 2011, there was $12.0 million of total unrecognized compensation expense related to the unvested portion of restricted stock and Restricted Stock Units ("RSUs") which will be recognized over the subsequent 1.76 years.

Income taxes

We conduct business globally and are subject to income taxes in U.S. federal, state, local, and foreign jurisdictions. Determination of the appropriate amount and classification of income taxes depends on several factors, including estimates of the timing and probability of realization of deferred income taxes, reserves for uncertain income tax positions and income tax payment timing.

We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Taxes on income of our foreign subsidiaries are provided at the tax rates applicable to the tax jurisdictions in which they are located.

The recoverability of certain deferred tax assets is based in part on estimates of future income and the timing of temporary differences, and the failure to fully realize such deferred tax assets could result in a higher tax provision in future periods. Our net deferred tax assets from continuing operations totaled $40.6 million and $65.0 million at June 30, 2011 and 2010, respectively. Our accrued income taxes payable totaled $3.0 million and $7.0 million and our accrued income taxes receivable totaled $47.3 million and $16.5 million at June 30, 2011 and 2010, respectively. We have classified $11.0 million of the accrued income taxes receivable at June 30, 2011 as long term as we do not expect collection of these amounts in the next twelve months.

We apply FASB Topic 740 "Accounting for Uncertainty in Income Taxes" to our uncertain tax positions. Under the guidance, we may recognize a tax benefit from an uncertain position only if it is more likely than not that the position will be sustained upon examination by taxing authorities based on the

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technical merits of the issue. The amount recognized in the financial statements is the largest benefit that we believe has greater than a 50% likelihood of being realized upon settlement.

We are required to make significant judgments when evaluating our uncertain tax positions and the related tax benefits. We believe our assumptions are reasonable; however, there is no guarantee that the final outcome of the related matters will not differ from the amounts reflected in our income tax provisions and accruals. We adjust our liability for uncertain tax positions based on changes in facts and circumstances such as the closing of a tax audit or changes in estimates. Our income tax provision may be impacted to the extent that the final outcome of these tax positions is different than the amounts recorded. As of June 30, 2011 and 2010, our liabilities for unrecognized tax benefits totaled $8.4 million and $11.6 million, respectively. Of this amount, $8.2 million and $10.2 million as of June 30, 2011 and 2010, respectively, if recognized, would impact the effective tax rate.

Recently adopted accounting pronouncements

For a description of recently adopted accounting pronouncements, see Note 1 to the consolidated financial statements, Summary of Significant Accounting Policies.

Recently issued accounting pronouncements not yet adopted

For a description of recently issued accounting pronouncements not yet adopted, see Note 1 to the consolidated financial statements, Summary of Significant Accounting Policies.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

As of June 30, 2011, we had total debt outstanding of approximately $515.4 million which consisted primarily of a $296.3 million term loan and $219.0 million of borrowing under our revolving credit facility. During the year, the interest rate for the credit facility and the prior credit facility was subject to a leveraged based pricing grid. We have minimized our exposure to market interest rate risk because the variable interest rate on the term loan was effectively converted to a fixed rate as a result of the floating-to-fixed interest rate swaps entered into in December 2008 and June 2011, respectively, and discussed in Note 9 to the consolidated financial statements, Long-Term Debt. As of June 30, 2011, the interest rate on the revolving credit facility was 2.29% and the interest rate on our term loan was approximately 3.82%, after giving effect to our interest rate swaps, given our leverage ratio was below 2.5 for the period.

Foreign Currency Exchange Rate Risk

Certain of our foreign subsidiaries use their local currency as their functional currency and are exposed to risks resulting from fluctuations in foreign currency exchange rates. During the year ended June 30, 2011, we recognized a foreign currency exchange rate gain of approximately $2.5 million, and during the years ended June 30, 2010 and 2009, we recognized foreign currency exchange rate losses of approximately $4.3 million and $1.6 million, respectively. We estimate that a hypothetical 10% strengthening (or weakening) of the U.S. dollar for fiscal year 2011 would not have a material impact on our business and financial condition.

In addition, the net assets of these subsidiaries are exposed to foreign currency translation gains and losses which are included as a component of accumulated other comprehensive income in stockholders' equity in our Consolidated Balance Sheet. Such translation resulted in an unrealized gain of $0.8 million for fiscal year 2011 and an unrealized loss of $0.3 million for fiscal year 2010.

We may enter into foreign currency forward contracts, generally with maturities of twelve months or less, to hedge recognized foreign currency assets and liabilities to reduce the reduce the risk that

53

earnings and cash flows will be adversely affected by changes in foreign currency exchange rates. See Note 1 to the consolidated financial statements, Summary of Significant Policies (Fair value of financial instruments).

During the fiscal year ended June 30, 2011, we borrowed and repaid €15.0 million (EURO converted into $21.9 million U.S. dollars) under our revolving credit facility.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our consolidated financial statements, including the notes thereto, and supplementary financial information are listed in Item 15, Exhibits and Financial Statement Schedules, and are included after the signature page hereto beginning at page F-1.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) promulgated under the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Exchange Act, as of the end of the period covered by this report.

Based on this evaluation our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2011.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected or that judgments in decision-making are not based on faulty input.

Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) promulgated under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of an issuer's financial statements for external purposes in accordance with U.S. GAAP. Internal control over financial reporting includes policies and procedures that:

•

pertain to the maintenance of records that in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

•

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and our directors; and

•

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

54

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, the application of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that compliance with the policies or procedures may deteriorate.

Management evaluated the effectiveness of our internal control over financial reporting based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework. Based on this assessment, management concluded that our internal control over financial reporting was effective as of June 30, 2011. The attestation report issued by Deloitte & Touche LLP, an independent registered public accounting firm, on the effectiveness of our internal control over financial reporting is included in their audit opinion included on page F-2 of this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting during the Quarter Ended June 30, 2011

There were no changes in our internal control over financial reporting that occurred in the three months ended June 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.    OTHER INFORMATION

None.

PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required under this Item is incorporated herein by reference to our definitive proxy statement to be filed with the SEC no later than 120 days after the close of our fiscal year ended June 30, 2011.

ITEM 11.    EXECUTIVE COMPENSATION

The information required under this Item is incorporated herein by reference to our definitive proxy statement to be filed with the SEC no later than 120 days after the close of our fiscal year ended June 30, 2011.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

All information, except the equity compensation plans table below, required under this Item is incorporated herein by reference to our definitive proxy statement to be filed with the SEC no later than 120 days after the close of our fiscal year ended June 30, 2011.

55

Equity Compensation Plans

The following table sets forth information as of June 30, 2011 with respect to our equity compensation plans under which our equity securities are authorized for issuance:

		Number of securities to be issued upon exercise of outstanding options and rights(1)		Weighted average exercise price of outstanding options and rights(1)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)
Plan Category
Equity compensation plans approved by security holders			4,182,419	$	21.12		3,229,519
Equity compensation plans not approved by security holders(2)			100,000		16.99		—
	Total		4,282,419	$	21.02		3,229,519

(1)

Rights include grants for Restricted Stock Units that can be exercised for no consideration; the total weighted average exercise price excluding these rights would be $24.45.

(2)

Options granted to an executive officer pursuant to an employment agreement as an inducement to accept employment with the Company.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required under this Item is incorporated herein by reference to our definitive proxy statement to be filed with the SEC no later than 120 days after the close of our fiscal year ended June 30, 2011.

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required under this item is incorporated herein by reference to our definitive proxy statement to be filed with the SEC no later than 120 days after the close of our fiscal year ended June 30, 2011.

56

PART IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Documents filed as part of this Annual Report on Form 10-K:

1.

Financial Statements:

•

Report of Independent Registered Public Accounting Firm

•

Consolidated Balance Sheets as of June 30, 2011 and 2010

•

Consolidated Statements of Operations for the Years Ended June 30, 2011, 2010 and 2009

•

Consolidated Statements of Stockholders' Equity for the Years Ended June 30, 2011, 2010 and 2009

•

Consolidated Statements of Cash Flows for the Years Ended June 30, 2011, 2010 and 2009

•

Notes to consolidated financial statements

2.

Financial Statement Schedules: Schedule II—Valuation and Qualifying Accounts for the years ended June 30, 2011, 2010 and 2009

3.

Exhibits:

Exhibit Number	Description
3.1	Restated Articles of Incorporation of Alliance Gaming Corporation, as amended, filed on May 7, 2004 as Exhibit 4.6 to the Registration Statement on Form S-8 (File No. 333-115271) of Alliance Gaming Corporation, and incorporated herein by reference.
3.2	Amendment to Amended and Restated Articles of Incorporation dated March 13, 2006, filed on March 15, 2007 as Exhibit 3.2 to the Annual Report on Form 10-K for the fiscal year ended June 30, 2006 of Bally Technologies, Inc., and incorporated herein by reference.
3.3	Certificate of Increase in Number of Authorized Shares of Common Stock of Alliance Gaming Corporation dated April 16, 2002, filed on December 21, 2007 as Exhibit 3.1 to the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2007 of Bally Technologies, Inc., and incorporated herein by reference.
3.4#	Bylaws of Alliance Gaming Corporation.
3.5	Amendment to Bylaws filed on April 8, 2010 as Exhibit 3.1 to the Current Report on Form 8-K of Bally Technologies, Inc., and incorporated herein by reference.
10.1	Amended and Restated Credit Agreement, dated as of April 15, 2011 among Bally Technologies, Inc., Bank of America, N.A. as Administrative Agent, Wells Fargo Bank, National Association and Union Bank, N.A., as Syndication Agents, JPMorgan Chase Bank, N.A., Key Bank National Association and U.S. Bank National Association, as Documentation Agents and Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC, and Union Bank, N.A. as Joint Lead Arrangers and Joint Book Managers and the other lenders party thereto, filed on April 18, 2011 as Exhibit 10.1 to the Current Report on Form 8-K of Bally Technologies, Inc., and incorporated herein by reference.
10.2*	Alliance Gaming Corporation 1996 Long Term Incentive Plan, filed on August 21, 1997 with the Registration Statement on Form S-8 (File No. 333-34077) of Alliance Gaming Corporation, and incorporated herein by reference.

57

Exhibit Number	Description
10.3*	Bally Technologies, Inc. 2010 Long Term Incentive Plan, filed on May 3, 2010 as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2010 of Bally Technologies,  Inc., and incorporated herein by reference.
10.4*	Bally Technologies, Inc. Employee Stock Purchase Plan, filed on March 11, 2008 as Exhibit 4.8 to the Registration Statement on Form S-8 (File No. 333-149637) of Bally Technologies, Inc., and incorporated herein by reference.
10.5*	Amendment to the Bally Technologies, Inc. 2010 Long Term Incentive Plan, filed on March 31, 2011 as Exhibit 4.7 to the Registration Statement on Form S-8 (File No. 333-173190) of Bally Technologies, Inc., and incorporated herein by reference.
10.6*#	Form of Stock Option Agreement under the 2001 Long Term Incentive Plan.
10.7*#	Form of Director Stock Option Agreement under the 2001 Long Term Incentive Plan.
10.8*#	Form of Director Stock Option Agreement under the 2001 Long Term Incentive Plan dated June 13, 2005.
10.9*	Form of Notice of Grant of Stock Options and Option Agreement under the 2010 Long Term Incentive Plan, filed on August 26, 2010 as Exhibit 10.10 to the Annual Report on Form 10-K for the fiscal year ended June 30, 2010 of Bally Technologies, Inc., and incorporated herein by reference.
10.10*	Form of Notice of Grant of Award of Restricted Stock and Award Agreement under the 2010 Long Term Incentive Plan, filed on August 26, 2010 as Exhibit 10.11 to the Annual Report on Form 10-K for the fiscal year ended June 30, 2010 of Bally Technologies, Inc., and incorporated herein by reference.
10.11*#	Restricted Stock Agreement by and between Alliance Gaming Corporation and Richard Haddrill, dated as of June 30, 2004.
10.12*#	Stock Option Agreement by and between Alliance Gaming Corporation and Richard Haddrill, dated as of June 30, 2004.
10.13*#	Stock Option Agreement by and between Alliance Gaming Corporation and Richard Haddrill, dated as of October 27, 2004.
10.14*#	Restricted Stock Agreement by and between Alliance Gaming Corporation and Richard Haddrill, dated as of December 22, 2004.
10.15*	Employment Agreement between Alliance Gaming Corporation and Richard Haddrill, dated as of June 30, 2004, filed on August 26, 2010 as Exhibit 10.16 to the Annual Report on Form 10-K for the fiscal year ended June 30, 2010 of Bally Technologies, Inc., and incorporated herein by reference.
10.16*	Amendment dated December 22, 2004, to the Employment Agreement by and between Alliance Gaming Corporation and Richard Haddrill, filed on August 26, 2010 as Exhibit 10.17 to the Annual Report on Form 10-K for the fiscal year ended June 30, 2010 of Bally Technologies, Inc., and incorporated herein by reference.
10.17*#	Second Amendment to Employment Agreement by and between Alliance Gaming Corporation and Richard Haddrill, effective as of June 13, 2005.
10.18*#	Form of Third Amendment to Haddrill Employment Agreement dated June 20, 2006, by and between Bally Technologies, Inc. and Richard Haddrill.

58

Exhibit Number	Description
10.19*	Form of Fourth Amendment to Haddrill Employment Agreement dated February 13, 2008, by and between Bally Technologies, Inc. and Richard Haddrill, filed on February 14, 2008 as Exhibit 10.1 to the Current Report on Form 8-K of Bally Technologies, Inc., and incorporated herein by reference.
10.20*	Fifth Amendment to Haddrill Employment Agreement dated October 22, 2008, by and between Bally Technologies, Inc. and Richard Haddrill, filed on October 28, 2008 as Exhibit 10.1 to the Current Report on Form 8-K of Bally Technologies, Inc., and incorporated herein by reference.
10.21*	Sixth Amendment to Haddrill Employment Agreement dated December 30, 2008, by and between Bally Technologies, Inc. and Richard Haddrill, filed on August 26, 2010 as Exhibit 10.22 to the Annual Report on Form 10-K for the fiscal year ended June 30, 2010 of Bally Technologies, Inc., and incorporated herein by reference.
10.22*	Seventh Amendment to Haddrill Employment Agreement dated August 10, 2009, by and between Bally Technologies, Inc. and Richard Haddrill, filed on August 26, 2010 as Exhibit 10.23 to the Annual Report on Form 10-K for the fiscal year ended June 30, 2010 of Bally Technologies, Inc., and incorporated herein by reference.
10.23*	Eighth Amendment to Haddrill Employment Agreement dated December 22, 2010, by and between Bally Technologies, Inc. and Richard Haddrill, filed on December 27, 2010 as Exhibit 10.1 to the Current Report on Form 8-K of Bally Technologies, Inc., and incorporated herein by reference.
10.24*	Executive Employment Agreement dated May 23, 2011 by and between Bally Technologies, Inc. and Ramesh Srinivasan, filed on May 27, 2011 as Exhibit 10.1 to the Current Report on Form 8-K of Bally Technologies, Inc., and incorporated herein by reference.
10.25*	Letter Agreement dated August 12, 2010 by and between Bally Technologies, Inc. and Neil Davidson, filed on August 17, 2010 as Exhibit 10.1 to the Current Report on Form 8-K of Bally Technologies, Inc., and incorporated herein by reference.
10.26*	Employment Agreement dated August 15, 2000 between Alliance Gaming Corporation and Mark Lerner, filed on August 20, 2009 as Exhibit 10.25 to the Annual Report on Form 10-K for the fiscal year ended June 30, 2009 of Bally Technologies, Inc., and incorporated herein by reference.
10.27*	Separation and Services Agreement dated August 12, 2010 by and between Bally Technologies, Inc. and Robert C. Caller, filed on August 17, 2010 as Exhibit 10.2 to the Current Report on Form 8-K of Bally Technologies, Inc., and incorporated herein by reference.
10.28*#	Letter Agreement dated June 19, 2006, by and between the Company and Michael Gavin Isaacs.
21#	Subsidiaries of the Registrant
23.1#	Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm
31.1#	Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a).
31.2#	Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a).
32.1#	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350.

59

Exhibit Number	Description
32.2#	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
101.INS	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema Document**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB	XBRL Taxonomy Extension Label Linkbase Document**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document**

*

Denotes management contract or compensatory plan or arrangement.

**

Pursuant to applicable securities laws and regulations, the Company is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as the Company has made a good faith attempt to comply with the submission requirements and promptly amends the interactive data files after becoming aware that the interactive data files fails to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability.

#

Filed herewith.

60

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BALLY TECHNOLOGIES, INC.    DATED: August 26, 2011
By	/s/ RICHARD M. HADDRILL Richard M. Haddrill Chief Executive Officer (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Name	Title	Date
/s/ RICHARD M. HADDRILL Richard M. Haddrill	Chief Executive Officer (Principal Executive Officer), and Director	August 26, 2011
/s/ NEIL P. DAVIDSON Neil P. Davidson	Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)	August 26, 2011
/s/ JACQUES ANDRÉ Jacques André	Director	August 26, 2011
/s/ ROBERT L. GUIDO Robert L. Guido	Director	August 26, 2011
/s/ DAVID ROBBINS David Robbins	Director	August 26, 2011
/s/ KEVIN VERNER Kevin Verner	Director and Chairman of the Board	August 26, 2011
/s/ JOSEPHINE LINDEN Josephine Linden	Director	August 26, 2011
/s/ W. ANDREW MCKENNA W. Andrew McKenna	Director	August 26, 2011

61

BALLY TECHNOLOGIES, INC.
INDEX TO FINANCIAL INFORMATION

	Page No.
Financial Statements and Financial Statement Schedule
Report of independent registered public accounting firm	F-2
Consolidated balance sheets at June 30, 2011 and June 30, 2010	F-4
Consolidated statements of operations for the years ended June 30, 2011, 2010 and 2009	F-5
Consolidated statements of stockholders' equity for the years ended June 30, 2011, 2010 and 2009	F-6
Consolidated statements of cash flows for the years ended June 30, 2011, 2010 and 2009	F-7
Notes to consolidated financial statements	F-9
Financial statement schedule II—Valuation and Qualifying Accounts for the years ended June 30, 2011, 2010 and 2009	F-45

All other schedules are omitted because the required information is not present in amounts sufficient to require submission of the applicable schedule or because the information required is included in the Consolidated Financial Statements and Notes thereto.

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Bally Technologies, Inc.
Las Vegas, Nevada

We have audited the accompanying consolidated balance sheets of Bally Technologies, Inc. and subsidiaries (the "Company") as of June 30, 2011 and 2010, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended June 30, 2011. Our audits also included the financial statement Schedule II—Valuation and Qualifying Accounts for each of the three years in the period ended June 30, 2011. We have also audited the Company's internal control over financial reporting as of June 30, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management's report on internal control over financial reporting. Our responsibility is to express an opinion on these financial statements and financial statement schedule and an opinion on the Company's internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

F-2

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Bally Technologies, Inc. and subsidiaries as of June 30, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2011, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2011, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

As discussed in Note 1, the Company adopted new accounting guidance related to revenue recognition for multiple deliverable arrangements and certain revenue arrangements that include software elements, on July 1, 2009.

/s/ DELOITTE & TOUCHE LLP

Las Vegas, Nevada
August 26, 2011

F-3

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2011 AND 2010

			June 30, 2011			June 30, 2010
			(in 000s, except share amounts)
ASSETS
Current assets:
	Cash and cash equivalents		$	66,425		$	145,089
	Restricted cash			8,419			8,303
	Accounts and notes receivable, net of allowances for doubtful accounts of $11,059 and $9,974			235,246			207,365
	Inventories			68,634			42,806
	Prepaid and refundable income tax			36,332			7,783
	Deferred income tax assets			29,318			35,973
	Deferred cost of revenue			13,795			14,568
	Prepaid assets			10,524			11,172
	Other current assets			4,984			3,350
		Total current assets		473,677			476,409
	Restricted long-term investments			12,485			13,075
	Long-term accounts and notes receivables, net of allowances for doubtful accounts of $507 and $5,169			46,659			30,163
	Property, plant and equipment, net			33,266			32,094
	Leased gaming equipment, net			96,691			82,357
	Goodwill			162,110			161,153
	Intangible assets, net			34,865			34,048
	Deferred income tax assets			12,120			29,980
	Income tax receivable			10,972			8,688
	Deferred cost of revenue			23,193			30,958
	Other assets, net			21,356			14,251
		Total assets	$	927,394		$	913,176
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable		$	38,411		$	23,775
	Accrued and other liabilities			58,295			45,662
	Customer deposits			4,930			10,185
	Jackpot liabilities			11,894			11,531
	Deferred revenue			28,900			33,875
	Income tax payable			3,033			6,982
	Current maturities of long-term debt			15,153			42,543
		Total current liabilities		160,616			174,553
	Long-term debt, net of current maturities			500,250			131,250
	Deferred revenue			34,788			40,236
	Other income tax liability			9,321			13,646
	Other liabilities			7,827			9,299
		Total liabilities		712,802			368,984
Commitments and contingencies (Note 15)
Stockholders' equity:
	Special stock, 10,000,000 shares authorized: Series E, $100 liquidation value; 115 shares issued and outstanding			12			12
	Common stock, $.10 par value; 100,000,000 shares authorized; 61,541,000 and 59,495,000 shares issued and 44,397,000 and 54,392,000 outstanding			6,149			5,943
	Treasury stock at cost, 17,144,000 and 5,103,000 shares			(634,268	)		(157,053	)
	Additional paid-in capital			442,713			392,853
	Accumulated other comprehensive loss			(3,064	)		(3,044	)
	Retained earnings			401,363			303,100
		Total Bally Technologies, Inc. stockholders' equity		212,905			541,811
	Noncontrolling interests			1,687			2,381
		Total stockholders' equity		214,592			544,192
		Total liabilities and stockholders' equity	$	927,394		$	913,176

See accompanying notes to consolidated financial statements.

F-4

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE YEARS ENDED JUNE 30, 2011

		2011			2010			2009
		(in 000s, except per share amounts)
Revenues:
	Gaming equipment and systems	$	439,534		$	491,241		$	568,795
	Gaming operations		318,621			286,950			274,965
			758,155			778,191			843,760
Costs and expenses:
	Cost of gaming equipment and systems(1)		184,836			196,699			251,710
	Cost of gaming operations		88,820			83,106			80,083
	Selling, general and administrative		225,033			203,195			212,735
	Research and development costs		88,086			80,301			77,277
	Impairment charges		—			11,379			—
	Depreciation and amortization		19,845			19,401			18,937
			606,620			594,081			640,742
Operating income			151,535			184,110			203,018
Other income (expense):
	Interest income		4,960			3,310			3,392
	Interest expense		(11,984	)		(12,581	)		(19,140	)
	Loss on extinguishment of debt		(4,119	)		—			(786	)
	Other, net		3,001			(4,021	)		(1,524	)
Income from continuing operations before income taxes			143,393			170,818			184,960
	Income tax expense		(45,182	)		(60,721	)		(64,781	)
Income from continuing operations			98,211			110,097			120,179
Discontinued operations:
	Income from discontinued operations, net of tax		—			7,181			8,057
	Gain (loss) on sale of discontinued operations, net of tax		(403	)		22,079			—
Income (loss) from discontinued operations, net of tax			(403	)		29,260			8,057
Net income			97,808			139,357			128,236
	Less net income (loss) attributable to noncontrolling interests		(455	)		1,880			1,927
Net income attributable to Bally Technologies, Inc.		$	98,263		$	137,477		$	126,309
Basic earnings per share attributable to Bally Technologies, Inc.:
	Income from continuing operations	$	1.90		$	2.00		$	2.19
	Income from discontinued operations		—			0.11			0.13
	Gain (loss) on sale of discontinued operations		(0.01	)		0.41			—
Basic earnings per share		$	1.89		$	2.52		$	2.32
Diluted earnings per share attributable to Bally Technologies, Inc.:
	Income from continuing operations	$	1.82		$	1.89		$	2.10
	Income from discontinued operations		—			0.11			0.12
	Gain (loss) on sale of discontinued operations		(0.01	)		0.38			—
Diluted earnings per share		$	1.81		$	2.38		$	2.22
Weighted average shares outstanding:
	Basic		51,960			54,576			54,449
	Diluted		54,420			57,675			57,058
Amounts attributable to Bally Technologies, Inc.:
	Income from continuing operations, net of tax	$	98,666		$	109,223		$	119,439
	Income from discontinued operations, net of tax		—			6,175			6,870
	Gain (loss) on sale of discontinued operations, net of tax		(403	)		22,079			—
	Net income	$	98,263		$	137,477		$	126,309

(1)

Cost of gaming equipment and systems exclude amortization related to certain intangibles, including core technology and license rights, which are included in depreciation and amortization.

See accompanying notes to consolidated financial statements.

F-5

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE THREE YEARS ENDED JUNE 30, 2011

													Accumulated Other Comprehensive Income (Loss) ("OCI")
	Common Stock
					Series E Special Stock		Treasury Stock			Additional Paid-In Capital						Retained Earnings			Noncontrolling Interests			Total Stockholders' Equity
	Shares		Dollars
	(in 000s)
Balances at June 30, 2008		56,318	$	5,626	$	12	$	(25,041	)	$	302,146		$	1,268		$	39,314		$	1,782		$	325,107
Income from continuing operations, net of tax		—		—		—		—			—			—			119,439			740			120,179
Income from discontinued operations, net of tax		—		—		—		—			—			—			6,870			1,187			8,057
Foreign currency translation adjustment		—		—		—		—			—			(2,293	)		—			—			(2,293	)
Unrealized gain on derivative financial instruments, net of tax		—		—		—		—			—			255			—			—			255
Total comprehensive income		—		—		—		—			—			—			—			—		$	126,198
Distributions to noncontrolling interests		—		—		—		—			—			—			—			(1,266	)		(1,266	)
Issuance and receipt of restricted stock, ESPP shares, stock options and related tax and tax benefit		773		77		—		(1,411	)		11,914			—			—			—			10,580
Purchase of common stock for treasury		—		—		—		(38,275	)		—			—			—			—			(38,275	)
Share-based compensation				—		—		—			16,405			—			—			—			16,405
Balances at June 30, 2009		57,091	$	5,703	$	12	$	(64,727	)	$	330,465		$	(770	)	$	165,623		$	2,443		$	438,749
Income from continuing operations, net of tax		—		—		—		—			—			—			109,223			874			110,097
Income from discontinued operations, net of tax		—		—		—		—			—			—			6,175			1,006			7,181
Gain (loss) on sale of discontinued operations, net of tax		—		—		—		—			—			—			22,079			—			22,079
Foreign currency translation adjustment		—		—		—		—			—			(266	)		—			—			(266	)
Unrealized loss on derivative financial instruments, net of tax		—		—		—		—			—			(2,008	)		—			—			(2,008	)
Total comprehensive income		—		—		—		—			—			—			—			—		$	137,083
Distributions to noncontrolling interests		—		—		—		—			—			—			—			(1,942	)		(1,942	)
Issuance and receipt of restricted stock, ESPP shares, stock options and related tax and tax benefit		2,364		236		—		(1,105	)		48,462			—			—			—			47,593
Purchase of common stock for treasury		—		—		—		(91,221	)		—			—			—			—			(91,221	)
Shares issued upon exercise of warrants		40		4		—		—			(4	)		—			—			—			—
Share-based compensation		—		—		—		—			13,930			—			—			—			13,930
Balances at June 30, 2010		59,495	$	5,943	$	12	$	(157,053	)	$	392,853		$	(3,044	)	$	303,100		$	2,381		$	544,192
Income from continuing operations, net of tax		—		—		—		—			—			—			98,666			(455	)		98,211
Gain (loss) on sale of discontinued operations, net of tax		—		—		—		—			—			—			(403	)		—			(403	)
Foreign currency translation adjustment		—		—		—		—			—			762			—			—			762
Unrealized gain on derivative financial instruments, net of tax		—		—		—		—			—			(782	)		—			—			(782	)
Total comprehensive income		—		—		—		—			—			—			—			—		$	97,788
Distributions to noncontrolling interests		—		—		—		—			—			—			—			(239	)		(239	)
Issuance and receipt of restricted stock, ESPP shares, stock options and related tax and tax benefit		2,046		206		—		(3,161	)		36,953			—			—			—			33,998
Purchase of common stock for treasury		—		—		—		(474,054	)		—			—			—			—			(474,054	)
Share-based compensation		—		—		—		—			12,907			—			—			—			12,907
Balances at June 30, 2011		61,541	$	6,149	$	12	$	(634,268	)	$	442,713		$	(3,064	)	$	401,363		$	1,687		$	214,592

See accompanying notes to consolidated financial statements.

F-6

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE YEARS ENDED JUNE 30, 2011

		2011			2010			2009
		(in 000s)
Cash flows from operating activities:
Net income		$	97,808		$	139,357		$	128,236
Adjustments to reconcile net income to net cash provided by operating activities:
	Income from discontinued operations, net of tax		—			(7,181	)		(8,057	)
	(Gain) loss on sale of discontinued operations, net of tax		403			(22,079	)		—
	Impairment charges		—			11,379			—
	Depreciation and amortization		74,980			73,900			68,772
	Share-based compensation		12,907			13,793			16,259
	Amortization of deferred debt issuance costs		3,404			2,984			2,108
	Income tax (benefit) expense		18,811			(19,927	)		28,602
	Provision for doubtful accounts		7,963			2,927			(42	)
	Loss on extinguishment of debt		4,119			—			786
	Inventory write-downs		3,623			2,025			4,536
	Excess tax benefit of stock option exercises		(8,214	)		(15,355	)		(270	)
	Other		(1,320	)		(1,089	)		1,945
Change in operating assets and liabilities:
	Accounts and notes receivable		(46,647	)		(49,816	)		41,180
	Inventories		(101,797	)		(36,553	)		5,638
	Prepaid and refundable income tax and income tax payable		(24,849	)		48,026			(31,098	)
	Other current assets		(557	)		3,890			5,628
	Accounts payable		14,615			3,763			(26,826	)
	Accrued liabilities, customer deposits and jackpot liabilities		3,393			(3,437	)		(38,748	)
	Deferred revenue and deferred cost of revenue		(1,886	)		(17,482	)		(45,341	)
Net cash provided by operating activities			56,756			129,125			153,308
Cash flows from investing activities:
	Capital expenditures		(13,202	)		(11,611	)		(27,555	)
	Restricted cash and investments		474			(205	)		4,110
	Development financing provided to customers		(9,940	)		(15,750	)		—
	Additions to other long-term assets		(6,552	)		(4,758	)		(5,521	)
Net cash used in investing activities			(29,220	)		(32,324	)		(28,966	)
Cash flows from financing activities:
	Proceeds from borrowing		300,000			—			—
	Proceeds from revolving credit facility		250,884			—			25,000
	Payments on revolving credit facility		(31,884	)		—			(75,000	)
	Capitalized debt issuance costs		(7,118	)		(2,906	)		(10,728	)
	Pay-off of debt from refinancing		(142,500	)		—			(14,553	)
	Reduction of long-term debt and capital leases		(35,049	)		(35,337	)		(27,961	)
	Distributions to noncontrolling interests		(239	)		(675	)		105
	Purchase of treasury stock		(477,215	)		(92,326	)		(39,686	)
	Excess tax benefit of stock option exercises		8,214			15,355			270
	Proceeds from exercise of stock options and employee stock purchases		28,441			31,968			11,303
Net cash used in financing activities			(106,466	)		(83,921	)		(131,250	)
Effect of exchange rate changes on cash			669			(396	)		(71	)
Net cash provided by (used in) operating activities of discontinued operations			(403	)		(9,483	)		8,868
Net cash provided by (used in) investing activities of discontinued operations			—			78,757			(6,756	)
Net cash used in financing activities of discontinued operations			—			(1,267	)		(1,371	)
Decrease in cash and cash equivalents of discontinued operations			—			8,712			2,133
			(403	)		76,719			2,874
Cash and cash equivalents:
	Increase (decrease) for year		(78,664	)		89,203			(4,105	)
	Balance, beginning of year		145,089			55,886			59,991
	Balance, end of year	$	66,425		$	145,089		$	55,886

See accompanying notes to consolidated financial statements.

F-7

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

FOR THE THREE YEARS ENDED JUNE 30, 2011

The following supplemental information is related to the consolidated statements of cash flows:

		Year Ended June 30,
		2011		2010		2009
		(in 000s)
Cash paid for interest		$	11,985	$	12,982	$	23,824
Cash paid for income taxes			46,132		42,306		64,957
Non-cash investing and financing transactions:
	Pay-off of debt from refinancing	$	—	$	—	$	275,000
	Transfer of inventory to leased gaming equipment(1)		87,307		51,952		43,938
	Reclassify property, plant and equipment to inventory(1)		15,519		8,931		12,869
	Acquisition of Bally trademark		—		7,500		—

(1)

As a result of the inability to separately identify the cash flows associated with the construction of leased gaming equipment, the Company has included all additions to leased gaming equipment as an increase in inventory under cash used in operating activities in the consolidated statement of cash flows. In addition, cash generated from the sale of used gaming equipment classified as leased gaming equipment is also included in cash provided by operating activities in the consolidated statement of cash flows. The Company has one process to procure raw materials for the assembly of both inventory and leased gaming equipment. The materials requisition planning process considers the number of devices the Company expects to build for sale and for use in its gaming operations division during a particular period, but it does not separately earmark purchases for leased gaming equipment. Without such an earmarking process, the Company is unable to determine whether the parts used to construct leased gaming equipment during a particular period came from inventory on hand at the beginning of the period or was constructed from inventory procured during the period of deployment, thus requiring the expenditure of cash.

F-8

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Bally Technologies, Inc. ("Bally" or the "Company"), a Nevada corporation, is a diversified, worldwide gaming company that innovates, designs, manufactures, operates and distributes advanced technology-based gaming devices, systems and server-based solutions. As a global gaming-systems provider, the Company offers technology solutions which provide gaming operators with a wide range of marketing, data management and analysis, accounting, player tracking, security and other software applications and tools to more effectively manage their operations. The Company's primary hardware technologies include spinning-reel and video gaming devices, specialty gaming devices and wide-area progressive systems for traditional land-based, riverboat and Native American casinos, video lottery and central determination markets and specialized system-based hardware products. In addition to selling its gaming devices, the Company also offers its customers a wide range of rental options.

Principles of presentation and consolidation

The accompanying consolidated financial statements include the accounts of Bally Technologies, Inc., and its wholly owned and partially owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"), include all adjustments necessary to fairly present the Company's consolidated financial position, results of operations and cash flows for each period presented. References to specific U.S. GAAP within this report cite topics within the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC").

All intercompany accounts and transactions have been eliminated in consolidation.

Discontinued Operations

The Company was the general partner of Rainbow Casino Vicksburg Partnership ("RCVP"), which operated the Rainbow Casino, a dockside riverboat casino in Vicksburg, Mississippi. On April 5, 2010, the Company entered into a definitive purchase agreement to sell the Rainbow Casino which closed on June 8, 2010. The Company's Casino Operations have been classified as discontinued operations in the accompanying financial statements. See Note 3 to consolidated financial statements, Discontinued Operations.

Use of estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair value of financial instruments

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amounts reflected in the accompanying consolidated balance sheets for cash equivalents, accounts and notes receivable, investment securities to fund jackpot liabilities, accounts payable, jackpot liabilities and long-term debt approximate their respective fair values.

F-9

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All financial assets and liabilities are recognized or disclosed at fair value using a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value:

•

Level 1:    quoted prices in active markets for identical assets or liabilities;

•

Level 2:    inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

•

Level 3:    unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company transacts business in various foreign currencies and has international sales and expenses denominated in foreign currencies, subjecting the Company to foreign currency risk. The Company may enter into foreign currency forward contracts, generally with maturities of twelve months or less, to hedge recognized foreign currency assets and liabilities to reduce the risk that earnings and cash flows will be adversely affected by changes in foreign currency exchange rates. The gains or losses resulting from changes in the fair value of these forward contracts, which are not designated as accounting hedges, are reported in other income (expense) in the consolidated statements of operations, and generally offset the gains and losses associated with the underlying foreign-currency-denominated balances, which are also reported in other income (expense). As of June 30, 2011, total outstanding contracts were $35.9 million, or the notional equivalent of €25 million Euro.

The Company may use interest rate derivatives to manage the interest expense generated by variable rate debt and foreign currency derivatives to manage foreign exchange risk. The Company's derivative financial instruments are measured at fair value on a recurring basis, and the balances as of June 30, 2011 and 2010 (which is included in other assets, net and accrued and other liabilities in the consolidated balance sheets) were as follows:

		Fair Value Measurements Using Input Type
		Level 1		Level 2		Level 3
		(in 000s)
As of June 30, 2011:
Asset:
	Foreign currency derivative financial instrument	$	—	$	452	$	—
	Interest rate derivative financial instruments	$	—	$	1,231	$	—
Liability:
	Foreign currency derivative financial instrument	$	—	$	586	$	—
	Interest rate derivative financial instruments	$	—	$	5,133	$	—
As of June 30, 2010:
Liability:
	Interest rate derivative financial instruments	$	—	$	2,698	$	—

F-10

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The valuation techniques used to measure the fair value of the derivative financial instruments above in which the counterparties have high credit ratings, were derived from pricing models, such as discounted cash flow techniques, with all significant inputs derived from or corroborated by observable market data. The Company's discounted cash flow techniques use observable market inputs, such as LIBOR-based yield curves and foreign currency forward rates. See Note 9 to consolidated financial statements, Long-Term Debt.

Accounting for Derivative Instruments and Hedging Activity

The Company assesses, both at the inception of each designated hedge and on an on-going basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of the hedged items. Such highly effective derivatives are granted hedge accounting treatment. The interest rate derivative instruments meet these requirements and are accounted for as a cash flow hedges.

The impact of the cash flow hedge and non-designated foreign currency derivatives on the consolidated financial statements is depicted below:

	Amount of Loss Recognized in OCI on Derivative (Effective Portion)							Amount of Loss Reclassified from Accumulated OCI into Income (Effective Portion)
Derivative in Cash Flow Hedging Relationship	Year Ended June 30, 2011			Year Ended June 30, 2010			Location of Loss Reclassified from Accumulated OCI into Income (Effective Portion)	Year Ended June 30, 2011			Year Ended June 30, 2010
	(in 000s)
Interest rate swap agreement	$	(3,661	)	$	(5,978	)	Interest expense	$	(2,458	)	$	(3,024	)

	Amount of Loss Recognized in Other Income (Expense)
Non-Designated Derivative	Year Ended June 30, 2011			Year Ended June 30, 2010		Year Ended June 30, 2009
Foreign Currency Forward Contract	$	(135	)	$	—	$	—

Cash and cash equivalents

Cash and cash equivalents consist of highly liquid debt instruments purchased with an original maturity of three months or less at the date of purchase and are carried at cost, which approximates fair value.

Restricted cash

The Company maintains jackpot funds totaling approximately $8.4 million and $8.3 million at June 30, 2011 and 2010, respectively, to ensure availability of funds to pay wide-area progressive jackpot awards.

Accounts and notes receivable, allowance for doubtful accounts and credit quality of financing receivables

Accounts and notes receivable are stated at face value less an allowance for doubtful accounts. The Company generally grants customers credit terms for periods of 30 to 120 days, but may also grant extended payment terms to some customers for periods up to three years, with interest at market rates.

F-11

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Trade receivables with contract terms greater than one year relate to the sale of gaming equipment and, to a lesser extent, systems transactions that include software as a major component of the sale, and are generally collateralized by the related equipment sold, although the value of such equipment, if repossessed, may be less than the receivable balance outstanding. Sales-type leasing arrangements relate to gaming equipment and include options to purchase the equipment at the end of the lease term at established prices. These customers typically have a long-standing credit history with the Company. Revenue from these lease arrangements is not considered significant as it is less than 2% of revenue for the Company.

The Company has also provided development financing to certain customers in the form of notes receivable with repayment terms of three to ten years. These notes may also include accelerated payment terms based upon a percentage of net-win from gaming devices sold or leased to these customers.

The Company has one portfolio segment, the casino industry customer, and four classes of receivables including its trade receivables with a contract term less than one year, trade receivables with a contract term greater than one year, sales-type leasing arrangements, or lease receivables, and notes receivable, which are primarily for developmental financing loans. As of June 30, 2011, the Company's accounts and notes receivable were as follows:

		Accounts and Notes Receivable as of June 30, 2011
		Ending Balance		Ending Balance Individually Evaluated for Impairment		Ending Balance Collectively Evaluated for Impairment
		(in 000s)
Contract term less than one year:
Trade and other receivables, current		$	162,202	$	2,064	$	160,138
Contract term greater than one year:
Trade receivables, current			72,237		3,973		68,264
Trade receivables, noncurrent			15,111		213		14,898
			87,348		4,186		83,162
Lease receivables, current			10,245		10,245		—
Lease receivables, noncurrent			13,490		13,490		—
			23,735		23,735		—
Notes receivable, current			1,621		1,621		—
Notes receivable, noncurrent			18,565		18,565		—
			20,186		20,186		—
	Total current		246,305		17,903		228,402
	Total noncurrent		47,166		32,268		14,898
	Total	$	293,471	$	50,171	$	243,300

F-12

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The activity related to the allowance for doubtful accounts since December 31, 2010, the date of adoption for new disclosure requirements related to the credit quality of financing receivables and the related allowance for credit losses, to June 30, 2011, is summarized below:

		Allowance for Doubtful Accounts
		Beginning Balance as of December 31, 2010			Charge- offs		Recoveries		Provision			Ending Balance as of June 30, 2011			Ending Balance Individually Evaluated for Impairment			Ending Balance Collectively Evaluated for Impairment
		(in 000s)
Contract term less than one year:
Trade and other receivables, current		$	(5,857	)	$	2,324	$	191	$	(2,533	)	$	(5,875	)	$	(2,064	)	$	(3,811	)
Contract term greater than one year:
Trade receivables, current			(3,329	)		1,615		53		(3,523	)		(5,184	)		(3,973	)		(1,211	)
Trade receivables, noncurrent			(498	)		204		—		(213	)		(507	)		(213	)		(294	)
			(3,827	)		1,819		53		(3,736	)		(5,691	)		(4,186	)		(1,505	)
Lease receivables, current			—			—		—		—			—			—			—
Lease receivables, noncurrent			—			—		—		—			—			—			—
			—			—		—		—			—			—			—
Notes receivable, current			—			—		—		—			—			—			—
Notes receivable, noncurrent			(5,169	)		5,169		—		—			—			—			—
			(5,169	)		5,169		—		—			—			—			—
	Total current		(9,186	)		3,939		244		(6,056	)		(11,059	)		(6,037	)		(5,022	)
	Total noncurrent		(5,667	)		5,373		—		(213	)		(507	)		(213	)		(294	)
	Total	$	(14,853	)	$	9,312	$	244	$	(6,269	)	$	(11,566	)	$	(6,250	)	$	(5,316	)

The Company accrues interest, if applicable, on its receivables per the terms of the agreement. Interest is not accrued on delinquent accounts that the Company has determined and specifically identified as not collectible. The Company's recorded investment in receivables on nonaccrual status as of June 30, 2011, excluding trade accounts receivable with a contract term less than one year, is as follows:

		Total
		(in 000s)
Trade receivables		$	4,186
Lease receivables			—
Notes receivables			—
	Total	$	4,186

The Company evaluates the credit quality of its accounts and notes receivable and establishes an allowance for doubtful accounts based on a combination of factors including, but not limited to,

F-13

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

customer collection experience, economic conditions, and the customer's financial condition. In addition to specific account identification, the Company utilizes historic collection experience for the most recent twelve month period, where applicable, to establish an allowance for doubtful accounts receivable. Receivables are written off only after the Company has exhausted all collection efforts.

Gaming is a highly regulated industry requiring customers to obtain a gaming operator's license and verify with the applicable regulatory agency that they have the financial resources to operate a gaming establishment. Many of the Company's customers, including new casinos that have opened in recent years, are owned by existing multi-property customers that have established a favorable payment history with the Company. Customer accounts typically include a mix of trade receivables balances with terms for periods of 30 to 120 days and financing receivables resulting from extended payment terms.

The Company monitors the credit quality of its accounts and notes receivable by reviewing an aging of customer invoices. Invoices are considered past due if a scheduled payment is not received within contractually agreed upon terms. The Company also reviews a variety of other relevant qualitative information such as collection experience, economic conditions and specific customer financial conditions to evaluate credit risk in recording the allowance for doubtful accounts.

The following summarizes the aging of past due receivables, excluding trade accounts receivable with a contract term less than one year, as of June 30, 2011:

		1 to 90 Days Past Due		91 to 180 Days Past Due		181 + Days Past Due		Total Past Due		Current		Total Receivable		Recorded Investment 90 Days and Accruing
		(in 000s)
Trade receivables		$	7,655	$	4,790	$	6,205	$	18,650	$	68,698	$	87,348	$	—
Lease receivables			—		—		—		—		23,735		23,735		—
Notes receivable			—		—		—		—		20,186		20,186		—
	Total	$	7,655	$	4,790	$	6,205	$	18,650	$	112,619	$	131,269	$	—

The aging of customer invoices is based on their contractually agreed upon payment terms, which in certain rare circumstances have been modified from the original financing terms. The modifications of original financing terms have not been material to our total trade, lease and note receivable balances.

The Company's notes receivable are reviewed quarterly, at a minimum, for impairment. The customer's solvency, collection experience, legal and regulatory environment and other financial information may indicate that the loan is impaired. As of June 30, 2011, the Company had no impaired loans remaining in its accounts and notes receivable balances. As of June 30, 2010, the Company had one impaired loan to a customer in Alabama and the recorded investment and related allowance of $5.2 million were written off during fiscal year 2011. In fiscal year 2010, the legality of the charitable bingo market in Alabama was questioned and several operators in the region closed and the Company recognized an impairment charge on the notes receivable. No further interest is accrued once a loan is impaired.

The fair value of accounts and notes receivable, net, is estimated by discounting expected future cash flows using current interest rates at which similar loans would be made to borrowers, with similar credit ratings and remaining maturities. As of June 30, 2011 and 2010, respectively, the fair value of the accounts and notes receivable, net, approximate the carrying value.

F-14

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Inventories

Inventories are stated at the lower of cost, determined on a first in, first out basis, or market. Cost elements included in work-in-process and finished goods include raw materials, direct labor and manufacturing overhead. Inventories consist of the following:

		June 30,
		2011		2010
		(in 000s)
Raw materials		$	53,926	$	34,221
Work-in-process			1,630		1,101
Finished goods			13,078		7,484
	Total	$	68,634	$	42,806

The Company regularly reviews inventory quantities and updates estimates for the net realizable value of inventories. This process includes examining the carrying values of new and used gaming devices, parts and ancillary equipment in comparison to the current fair market values for such equipment (less costs to sell or dispose). Some of the factors involved in this analysis include the overall levels of inventories, current and projected sales levels and markets for such products, the costs required to sell the products, including refurbishment costs and importation costs for international shipments, and the overall projected demand for products once the next generation of products are scheduled for release.

The Company recorded inventory write-downs totaling approximately $3.6 million, $2.0 million and $4.5 million during the years ended June 30, 2011, 2010 and 2009, respectively. These charges are included in the cost of gaming equipment and systems in the consolidated statements of operations.

Hurricane damage insurance recoveries

During fiscal year 2009, the Company negotiated an insurance settlement related to the 2005 U.S. Gulf Coast hurricane damages which destroyed or temporarily shut down certain gaming operations in the Gulf Coast region. The Company received a final payment of $3.0 million for business interruption, which was included in selling, general and administrative expenses.

Deferred revenue and deferred cost of revenue

Deferred revenue arises from the timing differences between the shipment or installation of gaming equipment and systems products and the satisfaction of all revenue recognition criteria consistent with the Company's revenue recognition policy. Deferred cost of revenue consists of the direct costs associated with the manufacture of gaming equipment and systems products for which revenue has been deferred. Deferred revenue and deferred cost of revenue that are expected to be realized within one year are classified as current liabilities and current assets, respectively.

Restricted long-term investments

The Company purchases U.S. Treasury Strip Securities for the benefit of jackpot winners who elect to receive annual or weekly installment payments. These securities are held to maturity and recorded at cost plus interest accretion to date. Such securities are included in restricted long-term investments in the consolidated balance sheets, and totaled $12.5 million and $13.1 million as of June 30, 2011 and 2010, respectively.

F-15

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Property, plant and equipment and leased gaming equipment

Property, plant and equipment is stated at cost and depreciated over the estimated useful lives or lease term, if less, using the straight line method as follows: buildings and improvements, ten to forty years; furniture, fixtures and equipment, three to seven years; and leasehold improvements, the shorter of lease term or ten years. Leased gaming equipment is stated at cost and depreciated over the estimated useful lives ranging from two to three and one-half years. Depreciation and asset charges related to leased gaming equipment are recorded to cost of gaming operations in the consolidated statements of operations.

Significant replacements and improvements are capitalized while other maintenance and repairs are expensed. The cost and accumulated depreciation of assets retired or otherwise disposed of are eliminated from the accounts and any resulting gain or loss is credited or charged to income.

Depreciation and amortization expense

For the years ended June 30, 2011, 2010 and 2009, depreciation and amortization expense from continuing operations totaled $75.0 million, $73.9 million and $68.8 million, respectively. Of these amounts, $55.1 million, $54.5 million and $49.8 million of depreciation and amortization expense were included in cost of gaming operations in the consolidated statements of operations. Depreciation expense from leased gaming equipment under capital leases totaled $2.1 million for the year ended June 30, 2009.

For the years ended June 30, 2010 and 2009, depreciation and amortization expense from discontinued operations totaled $2.9 million and $3.3 million, respectively.

Impairment of long-lived assets and goodwill

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets are measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset, undiscounted and without interest. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

The Company reviews goodwill for impairment annually at the beginning of its fourth fiscal quarter, or whenever events or circumstances indicate the carrying value may not be recoverable or warrant a revision to the estimated remaining useful life. The Company performs the impairment analysis of goodwill at a reporting unit level by comparing the fair value of a reporting unit with its carrying value, including goodwill. If the fair value is less than the carrying value, the impairment to be recognized is measured as the amount by which the carrying amount of the goodwill exceeds the fair value of the reporting unit goodwill.

During the year ended June 30, 2010, impairment charges of $5.9 million related to long-lived assets were recorded (see Note 4 to the consolidated financial statements, Impairment Charges). During the years ended June 30, 2011 and 2009, no impairment charges related to long-lived assets were recorded.

During the years ended June 30, 2011, 2010 and 2009, no impairment charges related to goodwill were recorded.

F-16

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Jackpot liabilities

The Company recognizes jackpot expense, included in cost of gaming operations in the consolidated statements of operations, and a liability for jackpots incurred but not yet won in each jurisdiction based on the discounted net present value of the progressive meter liability. Jackpots are payable either in weekly or annual installments, or immediately in the case of instant win progressive jackpots. Winners may elect to receive a single payment for the present value of a jackpot discounted at applicable interest rates in lieu of annual installments. Interest rates used in the single payment calculation vary by jurisdiction and are impacted by market forces and other economic conditions.

Revenue recognition

The Company's revenue recognition policy is to record revenue when all of the following criteria have been satisfied:

•

Persuasive evidence of an arrangement exists;

•

The price or fee to the customer is fixed or determinable;

•

Collectability is reasonably assured;

•

Delivery has occurred; and

•

No significant contractual obligations remain.

Revenues are reported net of incentive rebates, discounts, sales taxes, and other taxes of a similar nature. For products sold under arrangements with extended payment terms the probability of collection is evaluated based on a review of the customer's credit worthiness and a review of historic collection experience on contracts with extended payment terms. As a result of such review, the Company recognizes revenue on extended payment term arrangements as the Company has determined that collectability is reasonably assured and the fees are fixed and determinable.

Games placed with customers on a trial basis are not recognized as revenue until the trial period ends, the customer accepts the games and all other relevant criteria have been met. Amounts billed to customers prior to completing the earnings process are deferred until the revenue recognition criteria are met.

Effective July 1, 2009, the Company adopted new accounting guidance related to revenue recognition for multiple deliverable arrangements and certain revenue arrangements that include software elements. The Company elected to adopt this guidance prior to the required effective date using the prospective method. Accordingly, this guidance was applied to all new or materially modified revenue arrangements entered into since the start of the Company's fiscal year of adoption, which was July 1, 2009.

Prior to the adoption of the new revenue recognition guidance, gaming equipment and systems revenue was recognized in accordance with software revenue recognition guidance. The new guidance amended the scope of software revenue recognition to exclude all tangible products containing both software and nonsoftware components that function together to deliver the product's essential functionality. As a result of applying the new guidance, certain products that were previously accounted for under the scope of software revenue recognition guidance are no longer accounted for as software.

Gaming Operations Revenue.    Gaming operations revenue consists of the operation of linked progressive systems and the rental of gaming devices, game content and the related systems placed with customers. Fees under these arrangements are earned and recognized based on a share of money

F-17

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

wagered, a share of the net winnings, or on a fixed daily rate. The daily fee entitles the customer to full use of the gaming device and includes maintenance, licensing of the game content software and connection to a linked progressive system, where applicable. In certain markets, the Company also charges a daily system connection fee for the customer to connect to a central determination system and/or back-office system. The Company does not consider these arrangements to have multiple revenue-generating activities as the services offered are a comprehensive solution in exchange for a daily fee and all of the products and services are delivered contemporaneously. Gaming operations revenue is recognized under general revenue recognition guidance as the deliverables provide the customer with rights to use tangible gaming devices and software that is essential to the functionality of the gaming device.

Gaming Equipment Revenue.    Gaming Equipment revenue is generated from the sale of gaming devices and licensing rights to game content software that is installed in the gaming device, parts, and other ancillary equipment. Arrangements may also include sales of game content conversion kits which enable customers to replace game content without purchasing a new gaming device. Gaming equipment arrangements do not include maintenance and product support fees beyond a standard warranty period. The recognition of revenue from the sale of gaming devices occurs as title and risk of loss have passed to the customer and all other criteria have been satisfied.

As the combination of game content software and the tangible gaming device function together to deliver the product's essential functionality, revenue from the sale of gaming devices is recognized under general revenue recognition guidance. Prior to July 1, 2009, gaming devices were recognized under software revenue recognition guidance. Game content conversion kits are considered software deliverables and are recognized in accordance with software revenue recognition guidance.

Systems Revenue.    Systems revenue arrangements generally include a combination of systems software licenses, systems-based hardware products, maintenance and product support fees and professional services. The primary function of systems software licensed by the Company is to aid customers to more effectively run their business with marketing, data management and analysis, accounting, player tracking and security features.

Revenue for systems software and maintenance and product support fees is recognized under software revenue recognition guidance. Although the systems software and certain systems-based hardware function together, the primary functionality of the systems software is derived from the software and the systems software is not essential to the functionality of the systems-based hardware.

The Company licenses systems software on a perpetual basis or under time-based licenses. Revenue from perpetual license software is recognized at the inception of the license term if all revenue recognition criteria have been met. Revenue from maintenance and product support fees sold with perpetual licenses is recognized over the term of the support period. The Company's time-based licenses are generally for twelve month terms and are bundled with software maintenance and product support fees. All revenue from such arrangements is recognized over the term of the license.

Systems-based hardware includes embedded software that is essential to the functionality of the hardware. Accordingly, revenue related to all systems-based hardware sales and related maintenance and product support fees are recognized under general revenue recognition guidance. Prior to July 1, 2009, systems-based hardware was recognized under software revenue recognition guidance. Revenue from the sale of systems-based hardware is generally recognized upon delivery when title and risk of loss have passed to the customer and all other revenue recognition criteria are met. However, in the case of arrangements involving a systems installation, revenue on the systems-based hardware is

F-18

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

generally not recognized until the system has been installed and the customer has accepted the system. Hardware maintenance and product support fees are recognized during the term of the support period which is generally 12 months.

Software maintenance and product support provides customers with rights to unspecified software product upgrades, maintenance and patches released during the term of the support period. The Company's software maintenance and product support arrangements are generally for 12 month periods. Software maintenance and product support is recognized on a straight-line basis over the term of the support period.

Multiple Element Arrangements.    The Company enters into revenue arrangements that may consist of multiple deliverables of its products and services. Customers may enter into arrangements with the Company for the implementation of systems software and the sale of gaming devices. Arrangements for the implementation of systems software will generally include a combination of systems software licenses, systems-based hardware products, maintenance and product support fees, and professional services. Certain gaming equipment arrangements may also include the sale of gaming devices and game conversion kits. Revenue arrangements with multiple deliverables are allocated to separate units of accounting if the deliverables meet both of the following criteria:

•

The delivered items have value to the customer on a stand-alone basis. The items have value on a standalone basis if they are sold separately by any vendor or the customer could resell the delivered items on a standalone basis; and

•

If the arrangement includes a general right of return relative to the delivered items, delivery or performance of the undelivered items is considered probable and substantially in the control of the Company.

At the inception of a multiple element arrangement, fees under the arrangement are allocated to the nonsoftware deliverables, and to the software deliverables as a group based on their relative selling price. Software deliverables are further subject to separation and allocation based on software revenue recognition guidance as described in the following paragraph. When applying the relative selling price method, a hierarchy is used for estimating the selling price based first on vendor-specific objective evidence ("VSOE"), then third-party evidence ("TPE") and finally management's estimate of the selling price ("ESP"). Revenue for each unit of accounting is recognized when the relevant recognition criteria for each respective element has been met.

In allocating arrangement fees under the relative selling price hierarchy, the Company uses VSOE for all products which have been sold on a stand-alone basis. As TPE is generally not available, the Company uses ESP for products that are not sold on a stand-alone basis and for recently introduced products that are sold on a stand-alone basis but for which a history of stand-alone sales has not yet been developed. Following these guidelines, the Company uses either VSOE or ESP for gaming devices, system-based hardware products, maintenance and product support fees associated with perpetual licenses and professional services; and ESP for perpetual and time-based software licenses and maintenance and product support fees associated with time-based licenses.

The Company uses the residual method to recognize revenue allocated to software deliverables. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is allocated to the delivered element and is recognized as revenue. In arrangements in which the Company does not have VSOE of fair value of all undelivered software elements, revenue is deferred until delivery occurs or VSOE of fair value has been established for any remaining undelivered software elements. In the event the only undelivered software element is

F-19

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

maintenance and product support for which VSOE of fair value does not exist, the revenue is recognized ratably over the maintenance and product support period.

The establishment of VSOE requires judgment as to whether there is a sufficient quantity of items sold on a stand-alone basis and whether the prices demonstrate an appropriate level of concentration to conclude that VSOE exists. In determining ESP, management considers a variety of information including historic pricing and discounting practices, competitive market activity, internal costs, and the pricing and discounting practices of products sold in bundled arrangements.

Advertising costs

The Company expenses advertising costs as incurred, which totaled $9.6 million, $9.1 million and $6.8 million from continuing operations for the years ended June 30, 2011, 2010 and 2009, respectively.

Warranty expense

Gaming devices are typically sold with a 90-day parts and labor warranty. Warranty expense is calculated using historical experience, and totaled $2.5 million, $2.3 million and $3.3 million for the years ended June 30, 2011, 2010 and 2009, respectively.

Research and development

Research and development expenses related to product development are expensed until technological feasibility has been established. The Company has determined that technological feasibility is not established for its products until completion of the regulatory approval process. As this process is completed shortly before the products are made available to customers, any development costs incurred after the establishment of technological feasibility are typically not significant and expensed as incurred.

Income taxes

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Taxes on income of the Company's foreign subsidiaries are provided at the tax rates applicable to the tax jurisdictions in which they are located.

The Company recognizes tax benefits from an uncertain position only if it is more likely than not that the position will be sustained upon examination by taxing authorities based on the technical merits of the issue. The amount recognized is the largest benefit that the Company believes has greater than a 50% likelihood of being realized upon settlement. The Company recognizes interest and penalties related to uncertain tax positions as tax expense.

Share-based compensation

The Company accounts for share-based compensation based on the calculated fair value of the award measured on the grant date, which is recognized, net of estimated forfeitures, as an expense over the employee's requisite service period. The Company classifies share-based compensation expense in the same financial statement line as cash compensation, including cost of gaming equipment and systems

F-20

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

and casino operations, research and development costs, and selling, general and administrative expenses.

The excess tax benefit from stock option exercises and tax deductions in excess of compensation cost recognized are classified as a financing activity in the statement of cash flows.

Foreign currency translation

The functional currency of the Company's foreign subsidiaries is typically their local currency. Assets and liabilities of foreign operations are translated into U.S. dollars at the rate of exchange at the end of the period, and the income and expense accounts are translated at the average rate of exchange for the period. Translation adjustments are reflected as accumulated other comprehensive income within stockholders' equity. Gains and losses on foreign currency transactions are included in the consolidated statements of operations.

Recently adopted accounting pronouncements

On July 1, 2009, the Company adopted the new FASB ASC which establishes two levels of U.S. GAAP: authoritative and nonauthoritative. The ASC is now the single source of authoritative nongovernmental U.S. GAAP. All other literature is considered non-authoritative. The Company's adoption of this statement had no impact on the consolidated results of operations, financial position and cash flows, but rather changes the reference used to cite specific FASB accounting literature.

Effective July 1, 2009, the Company adopted new accounting guidance related to revenue recognition for multiple deliverable arrangements and certain revenue arrangements that include software elements. The Company elected to adopt this guidance prior to the required effective date using the prospective method. Accordingly, this guidance was applied to all new or materially modified revenue arrangements entered into after the start of the Company's fiscal year of adoption.

On July 1, 2009, the Company adopted new accounting guidance related to business combinations which clarifies the accounting for certain separately identifiable intangible assets which an acquirer does not intend to actively use. This guidance requires an acquirer in a business combination to account for a defensive intangible asset as a separate unit of accounting which should be amortized to expense over the period the asset diminishes in value. Future effects will be dependent upon acquisitions of defensive intangible assets, if any, at that time. In addition, there is new guidance for determining the useful life of a recognized intangible asset. This guidance is applied prospectively to intangible assets acquired after the effective date. However, the disclosure requirements are applied prospectively to all intangible assets recognized in financial statements. In addition, the new guidance requires that an acquiring entity recognize all of the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions, requires the expense of acquisition costs, and also includes a substantial number of new disclosure requirements. The Company's adoption of this guidance did not have a significant impact on the disclosures or the consolidated results of operations, financial position and cash flows for the year ended June 30, 2010.

On July 1, 2009, the Company adopted new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this guidance requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent's equity. The amount of net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. This guidance also clarifies that changes in a parent's ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial

F-21

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

interest and requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of the noncontrolling equity investment on the deconsolidation date. The guidance also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest. The adoption of this statement did not have a material impact on the consolidated results of operations, financial position and cash flows, but did affect presentation and disclosure. As a result of the adoption, the Company reclassified noncontrolling interests in the amount of $2.4 million from minority interest to equity in the June 30, 2009 Consolidated Balance Sheets and Statements of Stockholders' Equity. Certain reclassifications to the Consolidated Statements of Operations and Consolidated Statements of Cash Flows have been made to prior period amounts to conform to the presentation of the current period. Recorded amounts for prior periods previously presented as Net income which are now presented as Net income attributable to Bally Technologies, Inc., have not changed as a result of the adoption of this guidance.

On July 1, 2009, the Company adopted new accounting guidance requiring additional disclosures about fair value of financial instruments in interim and annual financial statements. The Company's adoption of this guidance resulted in the disclosure of information about the fair value of financial instruments consistent with the disclosures in the Company's most recent annual financial statements.

On December 31, 2010, the Company adopted new accounting guidance and disclosures to address concerns about the credit quality of financing receivables and the related allowance for credit losses. The guidance is intended to provide additional information to assist financial statement users in assessing an entity's credit risk exposures and evaluating the adequacy of its allowance for credit losses. The new disclosures included information at disaggregated levels, including the nature of the credit risk and how it is analyzed in arriving at the allowance for credit losses, a roll-forward schedule of and reasons for changes in the allowance, credit quality indicators, aging of past due accounts, the nature and extent of modifications, and significant purchases or sales, if applicable.

Recently issued accounting pronouncements not yet adopted

In April 2010, the FASB issued new accounting guidance related to accruals for casino jackpot liabilities. Specifically, the guidance clarifies that an entity should not accrue jackpot liabilities, or portions thereof, before a jackpot is won if the entity can avoid paying the jackpot. Jackpots should be accrued and charged to revenue when an entity has the obligation to pay the jackpot. The guidance applies to both base and progressive jackpots. The new guidance is effective for fiscal years beginning on or after December 15, 2010. The new guidance will be applied by recording a cumulative-effect adjustment to opening retained earnings in the period of adoption. The Company will adopt the guidance in fiscal year 2012 and there will not be a significant impact on its consolidated results of operations, financial position and cash flows. The effect of adoption will be recorded as a cumulative-effect adjustment to the retained earnings balance as of July 1, 2011.

In April 2011, the FASB issued new accounting guidance related to troubled debt restructuring. The guidance clarifies which loan modifications constitute troubled debt restructurings to assist creditors in determining whether a modification of the terms of a receivable meets the criteria to be considered a troubled debt restructuring, both for purposes of recording an impairment loss and for disclosures of troubled debt restructurings. The new guidance is effective for interim and annual periods beginning on or after June 15, 2011. The Company will adopt the guidance in fiscal year 2012 and there will not be a significant impact on its consolidated results of operations, financial position and cash flows. Its future impact would only be in its disclosures of troubled debt restructurings, if applicable.

F-22

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In December 2010, the FASB issued new accounting guidance related to goodwill impairment testing. The new guidance amends the criteria for performing Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts and requires performing Step 2 if qualitative factors indicate that it is more likely than not that a goodwill impairment exists. The new guidance is effective for annual periods beginning after December 31, 2011. The Company expects to adopt the guidance in fiscal year 2013 and does not believe it will have a significant impact on its consolidated results of operations, financial position and cash flows.

In May 2011, the FASB issued new accounting guidance related to fair value measurements. The new guidance changes the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements to ensure consistency between U.S. GAAP and IFRS. The guidance also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. The new guidance is to be applied prospectively and is effective for interim and annual periods beginning on or after December 15, 2011. The Company expects to adopt the guidance in the second quarter of fiscal year 2012 and does not believe it will have a significant impact on its consolidated financial statement footnote disclosures.

In June 2011, the FASB issued new accounting guidance to make the presentation of items within other comprehensive income ("OCI") more prominent. The new standard will require companies to present items of net income, items of OCI and total comprehensive income in one continuous statement or two separate consecutive statements, and companies will no longer be allowed to present items of OCI in the statement of stockholders' equity. Reclassification adjustments between OCI and net income will be presented separately on the face of the financial statements. The new guidance is to be applied retrospectively and is effective for interim or annual periods beginning after December 15, 2011. The Company expects to adopt the guidance in the second quarter of fiscal year 2012. The adoption of this standard will significantly change the presentation of the Company's consolidated financial statements.

The Company believes there is no additional new accounting guidance adopted but not yet effective that is relevant to the readers of our financial statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on its financial reporting.

2.     EARNINGS PER SHARE

Basic earnings per share are computed by dividing earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share reflect the additional dilution from all potentially dilutive securities.

F-23

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following computation of basic and diluted earnings per share applicable to the Company's common stock is as follows:

			Year Ended June 30,
			2011			2010		2009
			(in 000s, except per share amounts)
Amounts attributable to Bally Technologies, Inc.:
Income from continuing operations, net of tax			$	98,666		$	109,223	$	119,439
Income from discontinued operations, net of tax				—			6,175		6,870
Gain (loss) on sale of discontinued operations, net of tax				(403	)		22,079		—
Net income attributable to Bally Technologies, Inc.			$	98,263		$	137,477	$	126,309
	After tax interest expense on convertible debt			—			14		160
Diluted earnings attributable to Bally Technologies, Inc.			$	98,263		$	137,491	$	126,469
Weighted average common shares outstanding				51,960			54,576		54,449
	Dilutive effect of:
		Stock options, Restricted Stock Units ("RSU") and restricted stock		2,459			3,063		2,423
		Warrants		1			14		7
		Convertible debt(1)		—			22		179
	Weighted average diluted shares outstanding			54,420			57,675		57,058
Basic earnings per share attributable to Bally Technologies, Inc.:
Income from continuing operations			$	1.90		$	2.00	$	2.19
Income from discontinued operations				—			0.11		0.13
Gain (loss) on sale of discontinued operations				(0.01	)		0.41		—
Basic earnings per share			$	1.89		$	2.52	$	2.32
Diluted earnings per share attributable to Bally Technologies, Inc.:
Income from continuing operations			$	1.82		$	1.89	$	2.10
Income from discontinued operations				—			0.11		0.12
Gain (loss) on sale of discontinued operations				(0.01	)		0.38		—
Diluted earnings per share			$	1.81		$	2.38	$	2.22

(1)

The Company had certain related party debt outstanding which was convertible into common stock at the Company's discretion. The related party debt was paid in full in December 2009.

Certain securities were excluded from the diluted per share calculation because their inclusion would be anti-dilutive. Such securities consist of the following:

	Year Ended June 30,
	2011		2010		2009
	(in 000s)
Stock options, RSU and restricted stock		688		308		1,975

F-24

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3.     DISCONTINUED OPERATIONS

The Company owned and operated the Rainbow Casino, a dockside riverboat casino in Vicksburg, Mississippi, which was sold on June 8, 2010. Under the terms of the agreement, the Company was paid approximately $80.0 million in an all-cash transaction. The following table summarizes the gain on sale of discontinued operations:

		Year Ended June 30,
		2010
		(in 000s)
Sale proceeds		$	80,000
Distributions to noncontrolling interest			(688	)
Assets held for sale			(45,733	)
Liabilities related to assets held for sale			1,161
Adjustments to proceeds for fees and expenses			(471	)
Gain on sale of discontinued operations before income taxes			34,269
	Income tax expense		(12,190	)
Gain on sale of discontinued operations		$	22,079

Per the terms of the sale agreement, the Company had certain post-closing adjustments during fiscal year 2011, which reduced its gain on the sale of the Rainbow Casino in fiscal year 2010 by approximately $0.4 million, net of income taxes.

The following table summarizes income from discontinued operations:

		Year Ended June 30,
		2010			2009
		(in 000s)
Revenues:
	Casino operations	$	34,336		$	39,669
Costs and expenses:
	Direct cost of casino operations		14,081			16,750
	Selling, general and administrative		6,821			7,864
	Depreciation and amortization		2,873			3,337
			23,775			27,951
Operating income			10,561			11,718
Other income (expense):
	Interest income		7			26
	Other, net		(25	)		13
Income from discontinued operations before income taxes			10,543			11,757
	Income tax expense		(3,362	)		(3,700	)
Income from discontinued operations			7,181			8,057
	Less income attributable to noncontrolling interests		1,006			1,187
Income from discontinued operations attributable to Bally Technologies, Inc.		$	6,175		$	6,870

F-25

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4.     IMPAIRMENT CHARGES

As a result of actions concerning the legality of the charitable bingo market in Alabama, the Company recorded a charge of $11.4 million during fiscal year 2010, which included full allowances for notes and accounts receivable of $5.5 million and an impairment of $5.9 million in long-lived assets.

Recoverability of the long-lived assets and notes and accounts receivable were measured by a comparison of the carrying amount of the related asset to future net cash flows expected to be generated by the related asset. The impairment charges were measured by the amount by which the carrying amount of the assets exceeded the estimated fair value of the assets.

5.     PROPERTY, PLANT AND EQUIPMENT AND LEASED GAMING EQUIPMENT

Property, plant and equipment and leased gaming equipment consist of the following:

		June 30,
		2011			2010
		(in 000s)
Land and land improvements		$	1,975		$	1,975
Buildings and leasehold improvements			25,125			23,483
Gaming equipment			25,734			26,508
Furniture, fixtures and equipment			32,002			27,842
Less accumulated depreciation			(51,570	)		(47,714	)
	Property, plant and equipment, net	$	33,266		$	32,094
Leased gaming equipment		$	272,828		$	236,137
Less accumulated depreciation			(176,137	)		(153,780	)
	Leased gaming equipment, net	$	96,691		$	82,357

6.     GOODWILL AND INTANGIBLE ASSETS

Intangible assets consist of the following:

		June 30, 2011							June 30, 2010
	Useful Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(dollars in 000s)
Computer software	3 - 9	$	36,725		(31,841	)	$	4,884	$	35,652	$	(28,395	)	$	7,257
License rights	3 - 13		4,344		(2,751	)		1,593		3,624		(2,048	)		1,576
Trademarks	5 - 9		2,203		(2,203	)		—		2,203		(2,023	)		180
Core technology	5 - 14		22,763		(14,107	)		8,656		22,763		(10,346	)		12,417
Contracts	10		15,303		(7,372	)		7,931		10,836		(6,421	)		4,415
Other intangibles	3 - 5		5,337		(1,036	)		4,301		1,702		(999	)		703
Total finite-lived intangible assets		$	86,675	$	(59,310	)	$	27,365	$	76,780	$	(50,232	)	$	26,548
Trademark	indefinite		7,500		—			7,500		7,500		—			7,500
Total		$	94,175	$	(59,310	)	$	34,865	$	84,280	$	(50,232	)	$	34,048

F-26

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In September 2009, the Company recorded an intangible asset of approximately $7.5 million related to one-time consideration given for a perpetual, world-wide license for the use of the Bally trademark in connection with the Company's business. Consideration for this intangible asset included approximately $5.0 million related to the delivery of gaming devices and $2.5 million in forgiveness of certain customer receivable balances. Previously, a royalty fee was paid and expensed based upon the number of units produced and sold using the trademark.

Total amortization expense related to finite-lived intangible assets totaled $9.3 million, $10.3 million and $9.8 million for the years ended June 30, 2011, 2010 and 2009, respectively, which included computer software amortization expense of $3.3 million, $4.4 million and $4.1 million, respectively.

Future amortization of finite-lived intangible assets is scheduled as follows:

Year Ended June 30,	(in 000s)
2012	$	10,326
2013		8,681
2014		4,180
2015		1,464
2016		1,297
Thereafter		1,417
Total	$	27,365

All goodwill is associated with continuing operations. The changes in the carrying amount of goodwill for the years ended June 30, 2011 and 2010 are as follows:

	(in 000s)
Balance as of June 30, 2009	$	161,960
Foreign currency translation adjustment		(807	)
Balance as of June 30, 2010		161,153
Foreign currency translation adjustment		957
Balance as of June 30, 2011	$	162,110

No impairment charges for goodwill and intangible assets were necessary for the years ended June 30, 2011, 2010 and 2009.

7.     OTHER CURRENT ASSETS

Other current assets consist of the following:

		June 30,
		2011		2010
		(in 000s)
Games on trial		$	3,609	$	2,744
Refundable deposits			1,224		413
Other			151		193
	Total other current assets	$	4,984	$	3,350

F-27

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8.     ACCRUED AND OTHER LIABILITIES

Accrued liabilities consist of the following:

		June 30,
		2011		2010
		(in 000s)
Payroll and related costs		$	27,014	$	24,148
Royalties			3,772		3,045
Professional and consulting fees			2,748		2,857
Regulatory approval costs			2,182		1,604
Sales, use and gaming taxes			3,337		2,164
Interest rate derivative financial instrument liabilities			5,133		2,698
Foreign currency derivative financial instrument liability			586		—
Other			13,523		9,146
	Total accrued and other liabilities	$	58,295	$	45,662

9.     LONG-TERM DEBT

Long-term debt consists of the following:

		June 30,
		2011			2010
		(in 000s)
Revolving credit facility		$	219,000		$	—
Term loan facility			296,250			173,750
Other, generally unsecured			153			43
	Long-term debt		515,403			173,793
Less current maturities			(15,153	)		(42,543	)
	Long-term debt, net of current maturities	$	500,250		$	131,250

As of June 30, 2011, there was approximately $181.0 million of undrawn availability under the revolving credit facility. Availability under the revolving credit facility is reduced to the extent of outstanding letters of credit.

On April 15, 2011, the Company entered into an amended and restated credit agreement, that provides for a $700 million senior secured credit facility comprised of a $300 million, five-year term loan and a $400 million, five-year revolving credit facility, including a $50 million sublimit for the issuance of standby letters of credit, a $10 million sublimit for swingline loans and a $150 million sublimit for multicurrency borrowings approved under the credit facility.

The interest rate on the credit facility is subject to a leverage-based pricing grid. If the leverage ratio, as defined under the credit facility, is greater than 2.5, the interest rate will be LIBOR plus a margin of 2.00%; if the leverage ratio is between 2.0 and 2.5, the interest rate will be LIBOR plus a margin of 1.75%; if the leverage ratio is between 1.5 and 2.0, the interest rate will be LIBOR plus a margin of 1.50%; if the leverage ratio is between 1.0 and 1.5, the interest rate will be LIBOR plus a margin of 1.25%; and if the leverage ratio is below 1.0, the interest rate will be LIBOR plus a margin of 1.00%.

F-28

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Effective December 2008, the Company entered into a floating-to-fixed interest rate swap agreement with an original notional value of $218.8 million and a maturity date of September 26, 2012 to fix floating LIBOR based debt to fixed rate debt at an interest rate of 1.89%. Effective June 2011, the Company entered into a second floating-to-fixed rate swap agreement with an original notional value of $165.0 million and a maturity date of May 13, 2016 to fix a portion of the floating LIBOR based debt under the new term loan to fixed rate debt at an interest rate of 2.09%. At June 30, 2011, the combined swap agreements had a notional value of $296.3 million.

As of June 30, 2011, the interest rate on the revolving credit facility was 2.29% and the interest rate on the term loan was 3.82%, after giving effect to the floating-to-fixed interest rate swaps.

Under the credit facility, the term loan requires quarterly principal reductions in an amount equal to 1.25% of the effective date term loan amount, or $3,750,000, through March 2013; an amount equal to 1.875% of the effective date term loan amount, or $5,625,000, through March 2014; an amount equal to 2.50% of the effective date term loan amount, or $7,500,000, from June 2014 until the term loan's maturity in May 2016 upon when the remaining outstanding principal balance of $187,500,000 is due.

The credit facility is collateralized by substantially all of the Company's domestic property and is guaranteed by each of the Company's domestic subsidiaries, excluding any noncontrolling interests, and is secured by a pledge agreement.

The fair value of long-term debt is estimated by discounting expected cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings and remaining maturities. As of June 30, 2011 and 2010, the fair value of long-term debt approximated the carrying value.

The credit facility contains a number of covenants that, among other things, restrict the Company's ability and certain of its subsidiaries to dispose of assets, incur additional indebtedness or issue preferred stock, pay dividends or make other distributions, enter into certain acquisitions, repurchase equity interests or subordinated indebtedness, issue or sell equity interests of our subsidiaries, engage in mergers or acquisitions or certain transactions with subsidiaries and affiliates, and that otherwise restrict corporate activities.

The financial covenants under the credit facility consist of a leverage ratio and an interest coverage ratio. The leverage ratio is computed as total debt outstanding at the end of the quarter divided by the trailing twelve months Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), excluding certain cash and non-cash charges. The interest coverage ratio is computed as EBITDA for the trailing twelve months divided by the trailing twelve months of interest charges.

A breach of any of the covenants or the inability to comply with the required financial ratios could result in a default under the credit facility. In the event of any such default, the lenders could elect to declare all borrowings outstanding under the credit facility, together with any accrued interest and other fees, to be due and payable. If the Company were unable to repay the indebtedness upon its acceleration, the lenders could proceed against the underlying collateral. The Company was in compliance with all of the credit facility covenants as of June 30, 2011.

Interest Rate Swap Agreements

The Company has documented and designated these interest rate swaps as cash flow hedges. Based on the assessment of effectiveness using statistical regression, the Company determined that the interest rate swaps are effective. Effectiveness testing of the hedge relationships and measurement to quantify ineffectiveness is performed each fiscal quarter using the hypothetical derivative method. As the

F-29

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

interest rate swaps qualify as cash flow hedges, the Company adjusts the cash flow hedges on a quarterly basis to their fair value with a corresponding offset to accumulated Other Comprehensive Income ("OCI"). The interest rate swaps have been and are expected to remain highly effective for the life of the hedges. Effective amounts are reclassified to interest expense as the related hedged expense is incurred. Any ineffectiveness is reclassified from accumulated other comprehensive income to other income (expense). As of June 30, 2011, the Company had no ineffectiveness on its cash flow hedges. Amounts related to the swaps expected to be reclassified from other comprehensive income to interest expense in the next twelve months total $4.9 million.

Additional information on the Company's interest rate swaps are as follows:

Interest Rate Swaps	Balance Sheet Location	Fair Value (in 000s)		Location of Offsetting Balance
Cash flow hedges—$296.3 million LIBOR based debt	Accrued and other liabilities	$	5,133
	Other assets, net		1,231
		$	3,902	Accumulated other comprehensive income (before income taxes)

Principal Repayments

The following annual principal maturities of the Company's term loan facility for each of the fiscal years ending subsequent to June 30, 2011, are as follows:

Year Ended June 30,	(in 000s)
2012	$	15,000
2013		16,875
2014		24,375
2015		30,000
2016		210,000
Total	$	296,250

10.   LEASES

The Company leases certain office space, equipment, autos, warehouse and repair facilities and other property locations under noncancelable operating leases which are generally included in selling, general and administrative expenses. Operating rental expense is as follows:

	Year Ended June 30,
	2011			2010			2009
	(in 000s)
Equipment and office space leases	$	9,060		$	8,325		$	6,969
Sublease rental income		(357	)		(251	)		(201	)
	$	8,703		$	8,074		$	6,768

F-30

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A schedule of future minimum rental payments required under noncancelable operating leases for each of the five fiscal years ending after June 30, 2011, is as follows:

Year Ended June 30,	Operating
2012	$	8,584
2013		6,410
2014		4,481
2015		2,541
2016		2,290
Thereafter		1,490
Total minimum payments	$	25,796

11.   RELATED PARTY TRANSACTIONS

In connection with the acquisition of SDG, the consideration paid included subordinated debt issued to the former principals of SDG. Certain of the former principals are now employees of the Company. At the Company's discretion, the principal and accrued interest thereon could have been paid in cash, or converted into shares of the Company's common stock using the average stock price for the 20 business days prior to the delivery of such shares. As of June 30, 2009, the subordinated debt totaled $2.8 million, all of which was included in current maturities. The subordinated debt was paid in full in December 2009.

12.   SHARE-BASED COMPENSATION

Employee Stock Purchase Plan

The 2008 ESPP provides that eligible employees are able to contribute up to 10% of their eligible earnings towards the quarterly purchase of the Company's common stock. The employee's purchase price is equal to 85% of the fair market value. During the years ended June 30, 2011, 2010 and 2009, employees purchased 67,730, 53,716 and 88,774 shares of common stock for approximately $2.1 million, $1.9 million and $1.7 million, respectively.

Share-Based Award Plans

The Company's 2010 Long-Term Incentive Plan, which was an amendment and restatement of the Company's 2001 Long-Term Incentive Plan, as amended, (the "2010 Plan") provides for the issuance of up to 15,050,000 shares of common stock to Company employees, directors and designated paid consultants. At the Company's 2010 Annual Meeting, the 2010 Plan was amended to increase the number of shares issuable pursuant to awards of restricted stock, restricted stock units ("RSUs") or incentive bonuses granted after the 2010 Annual Meeting shall count against the overall share limit as 1.75 shares for every share granted. Prior to the 2010 Annual Meeting, the number of shares issuable pursuant to awards of restricted stock or RSUs was capped at 1,400,000 shares. Generally, options are granted at the fair value of the Company's common stock at the date of grant and are exercisable over five to ten years.

The Company's 1996 Long-Term Incentive Plan (the "1996 Plan") provided for the issuance of up to 3,428,000 shares of common stock to Company employees, directors and designated paid consultants. Generally, options were granted at the fair value of the Company's common stock at the date of grant

F-31

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

and are exercisable over five to ten years. No shares of common stock remain available under the 1996 Plan for the grant of new awards.

The Company issues new shares for shares delivered under the 1996 Plan and the 2010 Plan (collectively, the "Plans").

Stock option activity as of and for the year ended June 30, 2011 is summarized below:

					Weighted Average
		Shares			Exercise Price		Remaining Contractual Term		Aggregate Intrinsic Value
		(in 000s)			(per share)		(years)		(in 000s)
Balance outstanding as of June 30, 2010			5,061		$	21.14			$	61,186
	Granted		368			36.13
	Exercised		(1,638	)		16.23
	Forfeited or expired		(109	)		33.76
Balance outstanding as of June 30, 2011			3,682			24.45		3.86	$	60,558
Exercisable as of June 30, 2011			2,782			21.09		3.35	$	54,817

Restricted stock and RSU activity as of and for the year ended June 30, 2011 is summarized below:

		Restricted Stock			Weighted Average Grant Date Fair Value		RSUs			Weighted Average Grant Date Fair Value
		(in 000s)			(per share)		(in 000s)			(per share)
Balance outstanding as of June 30, 2010			329		$	35.66		642		$	18.27
	Granted		206			38.77		97			42.01
	Released		(130	)		34.73		(139	)		31.98
	Forfeited or expired		(68	)		33.16		—			—
Balance outstanding as of June 30, 2011			337		$	38.42		600		$	18.92
Vested as of June 30, 2011								534		$	16.04

F-32

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following is additional information about stock options, restricted stock and RSUs exercised, granted and vested during the periods:

		Year Ended June 30,
		2011		2010		2009
		(in 000s, except per share amounts)
Weighted average grant-date fair value per share:
	Stock options granted	$	16.86	$	19.56	$	10.62
	Stock options vested	$	11.47	$	10.71	$	9.23
	Restricted stock and RSUs vested	$	33.31	$	29.99	$	20.16
Total grant-date fair value of stock options vested		$	6,458	$	7,123	$	13,186
Total grant-date fair value of restricted stock and RSUs vested		$	8,962	$	4,384	$	3,758
Exercises under all share-based payment arrangements:
	Total intrinsic value	$	37,915	$	59,583	$	7,297
	Cash received	$	26,314	$	30,074	$	9,628
	Tax benefit realized	$	8,718	$	16,730	$	688

Shares Reserved

The following shares are reserved for stock options and RSUs issued and available for issue under the Plans and the 2008 ESPP:

		(in 000s)
Stock options and RSUs issued and currently outstanding			4,282
Shares available for future issuance			3,230
	Total		7,512

Share-Based Compensation

The following table presents share-based compensation expense and related effect of the income tax benefit included in the Company's consolidated statements of operations:

			Year Ended June 30,
			2011			2010			2009
			(in 000s)
Selling, general and administrative			$	9,624		$	10,382		$	13,377
Research and development				3,104			3,231			2,736
Cost of gaming equipment and systems and operations				179			180			146
Share-based compensation expense before tax			$	12,907		$	13,793		$	16,259
	Income tax benefit			(4,517	)		(4,828	)		(5,691	)
		Net share-based compensation expense	$	8,390		$	8,965		$	10,568

Share-based compensation expense from discontinued operations before income tax was $137,000 and $146,000 for the years ended June 30, 2010 and 2009, respectively.

F-33

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Included in share-based compensation expense in the consolidated statements of operations for the years ended June 30, 2011, 2010 and 2009 is restricted stock amortization of $7.0 million, $6.4 million and $4.6 million, respectively.

During the year ended June 30, 2009, the Company modified certain fully vested stock options, previously issued to certain members of the Company's Board of Directors, extending the contractual term for 2.15 years. The modification resulted in the recognition of additional share-based compensation expense of approximately $400,000, which was equal to the net increase in the fair value of the modified stock option.

Additionally, during the year ended June 30, 2009, the Company's Board of Directors approved the accelerated vesting of all unvested stock options previously issued to the Company's former Chief Technology Officer. This accelerated vesting affected options for approximately 360,000 shares of the Company's common stock and resulted in the acceleration of $1.4 million in share-based compensation.

As of June 30, 2011, there was $11.2 million of total unrecognized compensation expense related to the unvested portion of stock options which will be recognized over the subsequent 1.89 years. In addition, as of June 30, 2011, there was $12.0 million of total unrecognized compensation expense related to the unvested portion of restricted stock and RSUs which will be recognized over the subsequent 1.76 years.

The Company estimates the fair value of stock options using the Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the option, the expected option term, the expected volatility of the Company's common stock over the option's expected term, the risk-free interest rate over the option's expected term and the Company's expected annual dividend yield. The Company believes that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of the Company's stock options granted. Estimates of fair value are not intended to predict actual future events, or the value ultimately realized by the recipients of equity awards.

The fair value of each option granted during the periods referenced below was estimated on the grant date using the Black-Scholes valuation model with the following assumptions:

	Year Ended June 30,
	2011			2010			2009
Weighted Average:
Expected option term (in years)		4.61			4.66			4.53
Expected volatility		54.91	%		56.04	%		51.07	%
Risk-free interest rate		1.76	%		2.23	%		2.63	%
Expected annual dividend yield		0	%		0	%		0	%

For the years ended June 30, 2010 and 2009, the expected option term was determined using the simplified method for share based payments as the Company did not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. During fiscal year 2011, the Company ceased using the simplified method and began using its historical exercise activity to estimated expected term. Expected volatility is based on historical market factors related to the Company's common stock. Risk-free interest rate is based on U.S. Treasury rates appropriate for the expected term.

F-34

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13.   STOCKHOLDERS' EQUITY, OPTIONS, WARRANTS AND RIGHTS

Warrants

The Company previously issued 100,000 stock purchase warrants in connection with a prior acquisition. The strike price of the warrant was $24.69 with a term of seven years. During the years ended June 30, 2011 and 2010, 125 and 95,375 stock purchase warrants were exercised and converted into 125 and 40,080 shares of the Company's common stock, respectively. The majority of the exercises were cashless and net shares were issued for the difference between the strike price of the warrant and the market value of the Company's common stock upon exercise.

Share Repurchase Plan

The Company's Board of Directors have approved a variety of share repurchase plans under which, subject to price and market conditions, purchases of shares can be made from time to time in the open market or in privately negotiated transactions using available cash.

On April 4, 2010, the Company's Board of Directors approved a new share repurchase plan to purchase up to $150 million of common stock which replaced the previous plan. On April 6, 2011, the Company's Board of Directors increased the share-repurchase plan amount to $550 million minus the amount repurchased in the tender offer. On May 12, 2011, the Company concluded a modified Dutch auction tender offer purchasing 9.9 million shares at $40.18 per share for $398.3 million.

As of June 30, 2011, $151.7 million remained available under the plan for repurchase in future periods.

For the years ended June 30, 2011, 2010 and 2009, the Company made the following purchases under its share purchase plans:

		Year Ended June 30,
		Shares		Average Price per share		Amount (in 000s)
For the year ended June 30, 2009			1,557,216	$	24.58	$	38,275
For the year ended June 30, 2010			2,297,278	$	39.71		91,221
For the year ended June 30, 2011			11,957,208	$	39.65		474,054
	Total		15,811,702	$	38.17	$	603,550

Special Stock

The Company's Articles of Incorporation authorize the issuance of up to 10,000,000 shares of special stock ("Special Stock"). The Special Stock may be issued from time to time in one or more series, each having such designations, preferences and relative, participating, optional or other special rights, qualifications, limitations or restrictions as shall be stated and expressed in the resolution providing for the issuance of Special Stock or any series thereof adopted by the Board of Directors. Special Stock consists of non-voting stock where no holder of the Special Stock shall be entitled to vote at any meeting of stockholders or otherwise, except as may be specifically provided by law or as approved by the Board of Directors in certain limited circumstances at the time of the stock issuance.

To date, there have been four series of Special Stock authorized for issuance: the Initial Series, the Series B, the Series E and the Series F. In June 1996, the Company issued shares of Series E Special Stock to certain holders of the Company's 7¹/2% Convertible Subordinated Debentures (which were

F-35

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

retired in 1996) who elected to receive such stock in lieu of receiving common stock. The holders of shares of Series E Special Stock have no voting rights except as required by law. A total of 115 shares of Series E Special Stock remain outstanding. No other shares of Special Stock remain outstanding.

14.   INCOME TAXES

Consolidated income from continuing operations before taxes and noncontrolling interest for domestic and foreign operations is as follows:

	Year Ended June 30,
	2011		2010		2009
	(in 000s)
United States	$	131,668	$	160,265	$	169,756
Foreign		11,725		10,553		15,204
Total	$	143,393	$	170,818	$	184,960

The components of the Company's income tax expense from continuing operations are as follows:

		Year Ended June 30,
		2011			2010			2009
		(in 000s)
Current:
	Federal	$	12,614		$	59,626		$	26,956
	State		5,585			5,928			4,820
	Foreign		3,245			5,057			3,711
			21,444			70,611			35,487
Deferred:
	Federal		23,984			(9,261	)		26,458
	State		(919	)		(796	)		2,770
	Foreign		673			167			66
			23,738			(9,890	)		29,294
Income tax expense		$	45,182		$	60,721		$	64,781

F-36

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The difference between the U.S. statutory federal income tax rate and the Company's effective income tax rate is as follows:

	Year Ended June 30,
	2011			2010			2009
U.S. federal statutory income tax rate		35.0	%		35.0	%		35.0	%
Change in income tax contingencies		(2.5	)		(0.9	)		1.2
State income taxes, net of federal benefit		2.0			2.0			3.5
Foreign earnings subject to U.S. tax		2.9			1.2			2.2
Change in valuation allowance		(0.2	)		(0.3	)		(0.2	)
Tax credits		(4.7	)		(1.7	)		(6.7	)
Domestic production activities deduction		(1.5	)		(0.4	)		(1.9	)
Other, net		0.5			0.6			1.9
		31.5	%		35.5	%		35.0	%

The major components of the deferred tax assets and liabilities from continuing operations are as follows:

		June 30,
		2011			2010
		(in 000s)
Deferred tax assets:
	Share-based compensation	$	11,405		$	13,621
	Deferred revenue, net of deferred costs		9,326			10,124
	Accruals not currently deductible for tax purposes		13,243			13,516
	Property and equipment		—			7,663
	Inventory		4,640			3,985
	Net operating loss carryforwards		3,466			3,800
	Intangible assets		4,029			1,563
	Allowance for doubtful accounts		4,607			4,428
	Foreign tax credit carryforwards		2,154			1,902
	Other tax credits		2,086			1,448
	Other		1,838			4,625
Total gross deferred tax assets			56,794			66,675
Less: Valuation allowance			(1,186	)		(1,526	)
Deferred tax assets		$	55,608		$	65,149
Deferred tax liabilities:
	Property and equipment	$	12,734		$	—
	Other		2,293			100
Total gross deferred tax liabilities		$	15,027		$	100
Net deferred tax assets		$	40,581		$	65,049

Current deferred income tax liabilities of $439,000 and $362,000 of as of June 30, 2011 and 2010, respectively, are included in accrued and other liabilities and noncurrent deferred income tax liabilities of $418,000 and $542,000 as of June 30, 2011 and 2010, respectively, are included in other liabilities in the accompanying Consolidated Balance Sheets.

F-37

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company has not provided income taxes on approximately $9.7 million and $15.4 million of undistributed earnings as of June 30, 2011 and 2010, respectively, from certain foreign subsidiaries. The Company plans to permanently invest the earnings in the foreign subsidiaries and therefore has not recorded a deferred tax liability associated with the undistributed earnings.

At June 30, 2011, the Company had net operating loss carryforwards for U.S. federal income tax purposes of approximately $5.6 million. The entire amount of the net operating loss carryforwards are subject to limitations under Section 382 of the Internal Revenue Code. Section 382 limits the amount of carryforwards available per year for use against future taxable income. Based on the Company's recent history of taxable income and projections of taxable income in the future, the Company expects to utilize all of its federal net operating loss carryforwards. The Company also has net operating losses in several foreign jurisdictions, mainly the United Kingdom and Australia. Due to a history of net operating losses in the United Kingdom, management has determined that it is more likely than not that these losses will not be realized and therefore has established a full valuation allowance. The Company forecasts future taxable income sufficient to utilize all net operating losses in Australia, therefore, no valuation allowance has been established for these losses.

The Company's subsidiary in India operated under a tax holiday which expired in March 2011.

The Company recorded $8.7 million and $16.7 million as an increase to stockholder's equity for certain tax benefits from employee share-based compensation for the years ended June 30, 2011 and 2010, respectively.

The Company had $8.4 million and $11.6 million of liabilities for unrecognized tax benefits as of June 30, 2011 and 2010, respectively. Of these amounts, $8.2 million and $10.2 million, respectively, if recognized, would impact our effective tax rate. The Company recognizes interest and penalties related to unrecognized tax benefits as tax expense. As of June 30, 2011 and 2010, the Company had accrued interest and penalties of $1.3 million and $3.7 million, respectively. The Company decreased the accrual of interest and penalties by $2.5 million and $1.9 million during the years ended June 30, 2011 and 2010, respectively.

Changes to the balance of unrecognized tax benefits are as follows:

	June 30,
	2011			2010
	(in 000s)
Balance, beginning of year	$	11,637		$	19,049
Additions based on tax provisions related to current year		1,035			463
Additions for tax positions of prior years		2,812			330
Reductions for tax positions of prior years		(6,687	)		(2,485	)
Settlements		—			(5,395	)
Lapse of statute of limitations		(541	)		(213	)
Foreign currency translation adjustment		108			(112	)
Balance, end of year	$	8,364		$	11,637

The Internal Revenue Service ("IRS") commenced examination of the Company's United States federal income tax returns for 2003 through 2005 in the fourth quarter of 2006. Throughout the examination, the IRS proposed, and management agreed to certain adjustments related to the open tax years that were recorded in the income tax provision. In January 2009, the IRS completed its field examination of the open tax years and issued a Revenue Agent's Report. Also in January 2009, the

F-38

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Company paid $3.4 million in tax and $1.2 million in interest to the IRS to settle certain agreed adjustments. The Company filed a formal protest regarding certain unagreed adjustments and the case was assigned to the IRS Las Vegas Appeals Office in July 2009. In June 2010, the Company agreed to settle all remaining issues with the IRS. Formal closure of the case occurred in October 2010 and the Company has received a refund from the IRS of $2.3 million, including $0.6 million in interest.

In the second quarter of fiscal year 2011, the Company was notified by the IRS that they will be examining the United States federal income tax returns for 2007 through 2009. The IRS commenced the examination in the third quarter of 2011. During the fourth quarter of 2011, the IRS notified the Company that the 2006 United States federal income tax return will be included in the examination.

The Company files numerous consolidated and separate income tax returns in the United States and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to United States federal income tax examinations for years before 2006 and is no longer subject to state and local, or foreign income tax examinations for years before 2003.

It is reasonably possible that the Company's amount of unrecognized tax benefits may decrease within the next twelve months by a range up to $0.3 million.

15.   COMMITMENTS AND CONTINGENCIES

Commitments

The Company is obligated under several agreements to pay certain royalties on the sale or rental of gaming devices. Total royalty expense for the Company for the years ended June 30, 2011, 2010 and 2009 was $11.5 million, $8.3 million and $15.6 million, respectively, and is included in the cost of gaming equipment and systems in the accompanying consolidated statements of operations. In addition, the Company has obtained the rights to certain game themes and intellectual property that call for payment of royalties based on either fixed amounts or variable amounts based on game performance.

Litigation

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, or other sources are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. The Company has not recorded any loss accruals for these contingencies unless otherwise noted below.

On October 16, 2010, WMS Gaming Inc. ("WMS") filed a patent infringement lawsuit against the Company in the United States District Court for the District of Northern Illinois. The complaint asserts that several of the Company's products using iReel displays, including Cash Spin, Dragon Dynasty, Twin Tigers, and Sky Spirits, infringe two WMS patents, and seeks injunctive relief and unspecified damages. WMS later amended its complaint to assert three additional patents related to the use of a video screen in conjunction with a gaming machine using mechanical reels. The amended complaint names the following additional games: Plum Wild, Crazy Winners, Hot N' Wild Ruby Rush, Hot N' Wild Blazing Stars, Hot N' Wild Sapphire Sky, and Quick Hit Triple Blazing 7s Wild Jackpot (5R). As part of its response, the Company has asserted counterclaims against WMS's Lord of the Rings and Star Trek games, for violation of the Company's patents. The Company is seeking damages and other relief against WMS, including claims that the WMS patents are invalid, unenforceable, and not infringed. It is anticipated trial will be set for early 2012.

In April 2006, IGT filed a patent infringement lawsuit against the Company in the United States District Court for the District of Delaware. The complaint asserted that the Company's Bally Power

F-39

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Bonusing products infringe patents held by IGT, and sought injunctive relief and damages in unspecified amounts. Of the nine patents and 200 claims originally filed in the case by IGT, all but three patents and eight claims were dismissed. On April 28, 2009, the District Court issued an order finding that the Company's Power Promotions, Power Bank, and SDS/CMP Power Winners products do not infringe IGT's patents. The court also found that the Company's ACSC Power Winners and ACSC Power Reward products infringe some patent claims asserted by IGT, but not others. Appeals by both parties are pending. In the meantime, the Company has undertaken technical changes to ensure non-infringement for the two products partially in question. The Company does not believe that potential infringement damages, if any, would be material to its financial position as the revenues from these two products to date have not been material.

On December 7, 2004, International Game Technology ("IGT") filed a patent infringement lawsuit against the Company in the United States District Court for the District of Nevada. The complaint asserted that the Company's wheel-based games, such as Monte, Carlo Lucky Wheel™ and Cash For Life™, its games with a reel in the top box, such as Bonus Frenzy™, and its iVIEW products infringed on patents held by IGT, and sought injunctive relief and damages in unspecified amounts. As part of the defense, the Company asserted counterclaims seeking damages and other relief against IGT, including claims that IGT's patents were invalid, unenforceable and not infringed, as well as several claims that IGT engaged in anti-competitive conduct in violation of state and federal antitrust laws. In October 2008, the court granted the Company's motions for summary judgment, ruling that IGT's two "wheel" patents and a touch-screen player-tracking patent were invalid; that even if the patents were valid, the Company's wheel-based games at issue would not infringe; and that certain of its iVIEW products do not infringe the two asserted player-tracking patents. The summary judgment determinations were upheld by the Federal Circuit Court of Appeals. Upon remand, the District Court granted summary judgment in favor of IGT on the remaining portion of the case regarding IGT's alleged antitrust violations and in favor of Bally on IGT's remaining claim that Bally infringed an IGT player tracking patent. An appeal of the summary judgment on Bally's antitrust claims against IGT is currently pending.

The Company is also a party to various lawsuits relating to routine matters incidental to its business. Management does not believe that the outcome of such litigation, including the matters discussed above, in the aggregate, will have a material effect on its consolidated financial position, results of operations or cash flows.

16.   SEGMENT AND GEOGRAPHICAL INFORMATION

The Company's revenue consists of three sources: Gaming Equipment, which includes the sale of gaming devices and related equipment, parts and conversion kits; Gaming Operations, which includes the operation of wide-area progressive, video lottery and centrally determined systems and the rental of gaming devices and content; and Systems, which includes the sale and support of computerized monitoring systems and related recurring hardware and software maintenance revenue.

F-40

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following is a summary of revenues and gross margin:

				Year Ended June 30,
				2011		2010		2009
				(in 000s)
Revenues:
		Gaming Equipment and Systems
			Gaming Equipment	$	246,514	$	273,718	$	357,037
			Gaming Operations		318,621		286,950		274,965
			Systems		193,020		217,523		211,758
	Total revenues			$	758,155	$	778,191	$	843,760
Gross Margin(1):
		Gaming Equipment and Systems
			Gaming Equipment	$	112,096	$	138,000	$	166,826
			Gaming Operations		229,801		203,844		194,882
			Systems		142,602		156,542		150,259
	Total gross margin			$	484,499	$	498,386	$	511,967

(1)

Gross Margin from Gaming Equipment and Systems excludes amortization related to certain intangibles including core technology and license rights, which are included in depreciation and amortization.

Revenues from discontinued operations related to the Rainbow Casino were $34.3 million and $39.7 million for the years ended June 30, 2010 and 2009, respectively. Gross margin from discontinued operations was $20.3 million and $22.9 million for the years ended June 30, 2010 and 2009, respectively.

The Company has operations based primarily in the United States as well as significant sales and distribution offices based in Europe, and other foreign locations, including South America. The table

F-41

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

below presents information as to the Company's revenues, operating income and identifiable assets by geographic region which is determined by country of destination:

		Year Ended June 30,
		2011		2010		2009
		(in 000s)
Revenues:
	United States and Canada	$	619,219	$	621,205	$	701,817
	International		138,936		156,986		141,943
Total revenues		$	758,155	$	778,191	$	843,760
Operating income:
	United States and Canada	$	135,096	$	144,060	$	170,727
	International		16,439		40,050		32,291
Total operating income		$	151,535	$	184,110	$	203,018
Identifiable assets:
	United States and Canada	$	692,778	$	743,426	$	736,634
	International		234,616		169,750		144,248
Total identifiable assets		$	927,394	$	913,176	$	880,882

Operating income from discontinued operations was $10.6 million and $11.7 million for the years ended June 30, 2010 and 2009, respectively.

17.   401(k) PLAN

The Company is the sponsor of the Bally Technologies, Inc. 401(k) Savings Plan (the "401(k) Plan"). The 401(k) Plan was adopted for domestic employees of Bally Technologies, Inc. and all its domestic subsidiaries. Employees may enroll in the plan after meeting certain age and length of employment criteria, and plan participants may defer up to 25% of their compensation, up to certain IRS imposed limitations.

The Company matches 50% of any participant's contributions, up to the first 6% of their compensation (as defined in the plan document). Company matching contributions totaled approximately $1.9 million for each of the years ended June 30, 2011, 2010 and 2009, respectively.

For participants hired through December 31, 2000, employee and employer matching contributions are 100% vested immediately. For employees hired on or after January 1, 2001, vesting of the employer match is on a 20%, 5-year vesting schedule. Effective October 1, 2005, vesting of employer match is on a 25%, 4-year vesting schedule.

F-42

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18.   SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables set forth unaudited quarterly financial information for the years ended June 30, 2011 and 2010.

		Fiscal Year 2011 Quarterly Results
		September 30,			December 31,			March 31,			June 30,
		(in 000s, except per share data)
Statement of Operations Data:
Revenues		$	170,808		$	182,726		$	190,941		$	213,680
Cost of revenues			59,179			65,722			68,181			80,574
Selling, general and administrative			51,614			55,185			57,562			60,672
Research and development costs			21,384			21,360			22,088			23,254
Income from continuing operations before income taxes			33,937			33,616			37,429			38,411
Income tax expense			(12,285	)		(6,347	)		(13,651	)		(12,899	)
Income from continuing operations			21,652			27,269			23,778			25,512
Gain (loss) on sale of discontinued operations, net of tax			(403	)		—			—			—
Net income			21,249			27,269			23,778			25,512
Less net income (loss) attributable to noncontrolling interests			(540	)		17			12			56
Net income attributable to Bally Technologies, Inc.		$	21,789		$	27,252		$	23,766		$	25,456
Basic earnings per share attributable to Bally Technologies, Inc.:
	Income from continuing operations	$	0.42		$	0.51		$	0.45		$	0.53
	Gain (loss) on sale of discontinued operations		(0.01	)		—			—			—
Basic earnings per share		$	0.41		$	0.51		$	0.45		$	0.53
Diluted earnings per share attributable to Bally Technologies, Inc.:
	Income from continuing operations	$	0.40		$	0.49		$	0.43		$	0.51
	Gain (loss) on sale of discontinued operations		(0.01	)		—			—			—
Diluted earnings per share		$	0.39		$	0.49		$	0.43		$	0.51

F-43

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

		Fiscal Year 2010 Quarterly Results
		September 30,			December 31,			March 31,			June 30,
		(in 000s, except per share data)
Statement of Operations Data:
Revenues		$	187,330		$	204,973		$	190,640		$	195,248
Cost of revenues			69,463			74,701			66,455			69,186
Selling, general and administrative			45,196			53,721			52,545			51,733
Research and development costs			19,471			19,571			20,279			20,980
Impairment charges(1)			—			—			11,379			—
Income from continuing operations before income taxes			45,863			48,629			31,992			44,334
Income tax expense			(16,255	)		(16,456	)		(11,262	)		(16,748	)
Income from continuing operations			29,608			32,173			20,730			27,586
Income from discontinued operations, net of tax			1,749			1,430			2,363			1,639
Gain (loss) on sale of discontinued operations, net of tax			—			—			—			22,079
Net income			31,357			33,603			23,093			51,304
Less net income attributable to noncontrolling interests			733			350			534			263
Net income attributable to Bally Technologies, Inc.		$	30,624		$	33,253		$	22,559		$	51,041
Basic earnings per share attributable to Bally Technologies, Inc.:
	Income from continuing operations	$	0.53		$	0.59		$	0.37		$	0.50
	Income from discontinued operations		0.03			0.02			0.04			0.03
	Gain (loss) on sale of discontinued operations		—			—			—			0.40
Basic earnings per share		$	0.56		$	0.61		$	0.41		$	0.93
Diluted earnings per share attributable to Bally Technologies, Inc.:
	Income from continuing operations	$	0.50		$	0.56		$	0.36		$	0.48
	Income from discontinued operations		0.03			0.02			0.03			0.03
	Gain (loss) on sale of discontinued operations		—			—			—			0.38
Diluted earnings per share		$	0.53		$	0.58		$	0.39		$	0.89

(1)

Impairment charges of $11.4 million were recognized in the third quarter related to the Alabama charitable bingo market (see Note 4, Impairment Charges).

F-44

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
Years ended June 30, 2011, 2010 and 2009

	Balance at Beginning of Year		Additions			Net Write-offs/ (Recoveries)		Balance at End of Year
	(in 000s)
Allowance for doubtful accounts (current and long-term):
Year Ended June 30, 2011(1)	$	15,143	$	7,963		$	11,540	$	11,566
Year Ended June 30, 2010(1)	$	8,897	$	8,382		$	2,136	$	15,143
Year Ended June 30, 2009	$	12,027	$	(57	)	$	3,073	$	8,897

(1)

Net Write-offs in fiscal year 2011 and additions in fiscal year 2010 include $5.5 million related to the Alabama charitable bingo market (see Note 4, Impairment Charges).

F-45

QuickLinks

TABLE OF CONTENTS
PART I

ITEM 1. BUSINESS

ITEM 1A. RISK FACTORS
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2. PROPERTIES
ITEM 3. LEGAL PROCEEDINGS
ITEM 4. (REMOVED AND RESERVED)

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

ITEM 6. SELECTED FINANCIAL DATA

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9B. OTHER INFORMATION

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

SIGNATURES
BALLY TECHNOLOGIES, INC. INDEX TO FINANCIAL INFORMATION
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2011 AND 2010
BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE YEARS ENDED JUNE 30, 2011
BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE THREE YEARS ENDED JUNE 30, 2011
BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE YEARS ENDED JUNE 30, 2011
BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EX-3.4

Exhibit 3.4

ALLIANCE GAMING CORPORATION

BYLAWS

ADOPTED FEBRUARY 11, 1998

BYLAWS

OF

ALLIANCE GAMING CORPORATION

ARTICLE I—OFFICES

The principal office of the Corporation shall be located at 3101 W. Spring Mountain Road, Las Vegas, Nevada, 89102, and it may be changed from time to time by the Board of Directors. The Corporation may also maintain offices at such other places within or without the United States as the Board of Directors may, from time to time, determine.

ARTICLE II—MEETING OF STOCKHOLDERS

Section 1—Annual Meetings:

Annual meetings shall be held at such date and time as the directors may from time to time fix; provided, however, that each annual meeting shall be held within fifteen months of the date of the preceding annual meeting. At such meetings directors shall be elected, reports of the affairs of the Corporation shall be considered, and any other business may be transacted which is within the powers of the stockholders.

Section 2—Special Meetings:

Special meetings of the stockholders may be called at any time only by a majority of the Board of Directors, by the Chairman of the Board, by the President, or as otherwise required by law. The business of a special meeting shall be confined to the purpose or purposes stated in the notice of such meeting.

Section 3—Place of Meetings:

All meetings of the stockholders shall be held at the principal office of the Corporation, or at such other places as shall be designated in the notices or waivers of notice of such meetings.

Section 4—Notice of Meetings:

(a)Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting and the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the written notice of any meeting shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation.

(b)Attendance at a meeting of stockholders, in person or by proxy, constitutes a waiver of notice of the meeting, except when the stockholder attends a meeting for the express purpose of

1

objecting at the beginning of the meeting to the transaction of any business on grounds that the meeting is not lawfully called or convened.

Section 5—Quorum:

(a)The presence in person or by proxy of the persons entitled to vote a majority of the voting shares at any meeting shall constitute a quorum for the transaction of business. The stockholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum.

(b)Despite the absence of a quorum at any annual or special meeting of stockholders, the stockholders, by a majority of the votes cast by the holders of shares entitled to vote thereat, may adjourn the meeting. At any such adjourned meeting at which a quorum is present, any business may be transacted at the meeting as originally called if a quorum had been present.

Section 6—Voting:

(a)Unless otherwise provided in the Articles of Incorporation of the Corporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by him which has voting power upon the matter in question. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for him by proxy, but no such proxy shall be voted or acted upon after six months from its date, unless coupled with an interest, or unless the proxy provides for a longer period which in no case shall exceed seven years from the date of its execution. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only so long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary. Voting at meetings of stockholders need not be by written ballot and need not be conducted by inspectors unless the holders of a majority of the outstanding shares of all classes of stock entitled to vote thereon present in person or by proxy at such meeting shall so determine. Directors shall be elected in accordance with the Articles of Incorporation of the Corporation and these by-laws by a plurality of the votes cast at an election by the holders of shares entitled to vote thereon. All other elections and questions shall, unless otherwise provided by law or by the Articles of Incorporation of the Corporation or these by-laws, be decided by the vote of the holders of a majority of the outstanding shares of stock entitled to vote thereon present in person or by proxy at the meeting.

(b)No action required or permitted to be taken by the stockholders of the Corporation may be effected by any consent in writing in lieu of a meeting.

(c)Sections 2 to 14, inclusive, of Assembly Bill No. 748, amending Chapter 78 of the Nevada Revised Statutes, shall not apply to any acquisition of a controlling interest (as defined in such Bill) in the Corporation.

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Section 7—Notice of Stockholder Business and Nominations:

(a)(1) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (A) by or at the direction of the Chairman of the Board or the Board of Directors pursuant to a resolution adopted by a majority of the whole Board or (B) by any stockholder of the Corporation who is entitled to vote at the meeting with respect to the election of directors or the business to be proposed by such stockholder, as the case may be, who complies with the notice procedures set forth in clauses (2) and (3) of paragraph (a) of this Section 7 and who is a stockholder of record at the time such notice is delivered to the Secretary of the Corporation as provided below.

(2)For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (B) of paragraph (a)(1) of this Section 7, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such business must be a proper subject for stockholder action under applicable law. To be timely, a stockholder’s notice shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not less than sixty days nor more than ninety days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than thirty days, or delayed by more than sixty days, from such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the ninetieth day prior to such annual meeting and not later than the close of business on the later of the sixtieth day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made. Such stockholder’s notice shall set forth (A) as to each person whom the stockholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (B) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner and (ii) the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner.

(3)Notwithstanding anything in the second sentence of paragraph (a)(2) of this Section 7 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least eighty days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by paragraph (a)(2) of this Section 7 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business

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on the tenth day following the day on which such public announcement is first made by the Corporation.

(b)Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected (i) by or at the direction of the Chairman of the Board or the Board of Directors pursuant to a resolution adopted by a majority of the whole Board or (ii) by any stockholder of the Corporation who is entitled to vote at the meeting with respect to the election of directors, who complies with the notice procedures set forth in this paragraph (b) and who is a stockholder of record at the time such notice is delivered to the Secretary of the Corporation as provided below. Nominations by stockholders of persons for election to the Board of Directors may be made at such a special meeting of stockholders if the stockholder’s notice as required by paragraph (a)(2) of this Section 7 shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not earlier than the ninetieth day prior to such special meeting and not later than the close of business on the later of the sixtieth day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.

(c)(1)Only persons who are nominated in accordance with the procedures set forth in this Section 7 shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 7.

(2)Except as otherwise provided by law, the Articles of Incorporation or this Section 7, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Section 7 and, if any proposed nomination or business is not in compliance with this Section 7, to declare that such defective nomination or proposal shall be disregarded.

(3)For purposes of this Section 7, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(4)Notwithstanding the foregoing provisions of this Section 7, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 7. Nothing in this Section 7 shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals in the Corporation’s proxy materials with respect to a meeting of stockholders pursuant to Rule 14a-8 under Exchange Act or (ii) of the holders of any series of Special Stock or any other series or class of stock as set forth in the Articles of Incorporation to elect directors under specified circumstances or to consent to specific actions taken by the Corporation.

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Section 8—Presiding Officer; Order of Business; Conduct of Meeting:

(a)Meetings of the stockholders shall be presided over by such person as shall be designated by the board of directors or if no designation is made, then by the Chairman of the Board, or in his absence or if there is no Chairman of the Board, then the President. The Secretary of this corporation, or in his absence, an Assistant Secretary, shall act as Secretary of the meeting, or in the absence of an Assistant Secretary, the chairman of the meeting may appoint any person to act as secretary of the meeting.

(b)Subject to the following, meetings of stockholders shall generally follow accepted rules of parliamentary procedure:

(1)The chairman of the meeting shall have absolute authority over matters of procedure and there shall be no appeal from the ruling of the chairman. If the chairman, in his absolute discretion, deems it advisable to dispense with the rules of parliamentary procedure as to any one meeting of stockholders or a part thereof, the chairman shall so state and shall clearly state the rules under which the meeting or appropriate part thereof shall be conducted.

(2)If disorder shall arise which prevents continuation of the legitimate business of the meeting, the chairman may quit the chair and announce the adjournment of the meeting; and upon his so doing, the meeting is immediately adjourned.

(3)The chairman may ask or require that anyone not a bona fide stockholder or proxy holder leave the meeting.

(4)A resolution or motion shall be only considered for a vote if proposed by a stockholder or duly authorized proxy, and seconded by an individual, who is a stockholder or a duly authorized proxy, other than the individual who proposed the resolution or motion.

ARTICLE III—BOARD OF DIRECTORS

Section 1—Powers:

Subject to limitations of the Articles of Incorporation and statute as to action to be authorized or approved by the stockholders, and subject to the duties of directors as prescribed by the by-laws, all corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be controlled by, the board of directors. Without prejudice to such general powers, but subject to the same limitations, it is hereby expressly declared that the directors shall have the following powers, to wit:

First—To select and remove all the officers, agents and employees of the Corporation, prescribe such powers and duties for them as may not be inconsistent with law, with the Articles of Incorporation or the by-laws, fix their compensation and require from them security for faithful service. To select the outside auditors of the Corporation.

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Second—To conduct, manage and control the affairs and business of the corporation and to make such rules and regulations therefor not inconsistent with law, or with the Articles of Incorporation or the by-laws, as they may deem best.

Third—To change the principal executive office and principal office for the transaction of the business of the Corporation from one location to another; to fix and locate from time to time one or more subsidiary offices of the Corporation within or without the State of Nevada; to designate any place within or without the State of Nevada for the holding of any stockholders’ meeting or meetings; and to adopt, make and use a corporate seal, and to prescribe the forms of certificates of stock, and to alter the form of such seal and of such certificates from time to time, as in their judgment they may deem best, provided such seal and such certificates shall at all times comply with the provisions of law.

Fourth—To authorize the issue of shares of stock of the Corporation from time to time, upon such terms as may be lawful.

Fifth—To borrow money and incur indebtedness for the purposes of the Corporation, and to cause to be executed and delivered therefor, in the corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations or other evidences of debt and securities therefor.

Sixth—By resolution adopted by a majority of the authorized number of directors, to designate an executive and other committees, each consisting of two or more directors, to serve at the pleasure of the board, and to prescribe the manner in which proceedings of such committee shall be conducted. Unless the Board of Directors shall otherwise prescribe the manner of proceedings of any such committee, meetings of such committee may be regularly scheduled in advance and may be called at any time by any two members thereof; otherwise, the provisions of these by-laws with respect to notice and conduct of meetings of the board shall govern. Any such committee, to the extent provided in a resolution of the Board, may have all of the authority of the board, except with respect to:

(i)the approval of any action for which state statute or the articles of incorporation also require stockholder approval;

(ii)the filing of vacancies of the Board or in any committee;

(iii)the fixing of compensation of the directors for serving on the Board or on any committee;

(iv)the adoption, amendment or repeal of by-laws;

(v)the amendment or repeal of any resolution of the Board;

(vi)any distribution to the stockholders, except at a rate or in a periodic amount or within a price range determined by the Board;

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(vii)the appointment of other committees of the Board or the members thereof; and

(viii)the authorization of issuance of shares of stock of the Corporation or the grant of options or other rights to purchase shares of stock of the Corporation.

Section 2—Number and Qualification of Directors:

The number of directors of the Corporation shall not be less than three (3) nor more than nine (9) until changed by amendment of the Articles of Incorporation or by a by-law amending this Section 2 duly adopted by the vote or written consent of holders of a majority of the outstanding shares entitled to vote. The exact number of directors shall be fixed from time to time, within the limits specified in the Articles of Incorporation or in this Section 2, by resolution adopted by a majority of the then authorized number of directors.

Section 3—Election and Term of Office:

The directors are hereby divided into three classes, each class to consist, as nearly as may be, of one-third of the number of directors then constituting the whole Board. The term, of office of the first class of directors shall expire at the annual meeting of stockholders held in 1984. The term of office of the second class shall expire one year thereafter and the term of office of the third class shall expire two years thereafter. At each succeeding annual meeting of stockholders, the directors elected shall be chosen for a full term of three years to succeed those whose terms expire. The directors, who need not be stockholders, shall be elected at each annual meeting by a plurality of votes cast at a meeting of stockholders, by the holders of shares of stock present in person or by proxy, entitled to vote in the election. Each director shall hold office until the next annual meeting of stockholders at which his term expires, and until his successor is elected and qualified, or until his prior death, resignation or removal.

Section 4—Annual and Regular Meetings; Notice:

(a)A regular annual meeting of the Board of Directors shall be held immediately following the annual meeting of the stockholders, at the place of such annual meeting of stockholders.

(b)The Board of Directors, from time to time, may provide by resolution for the holding of other regular meetings of the Board of Directors, and may fix the time and place thereof.

(c)Notice of any regular meeting of the Board of Directors shall not be required to be given, and, if given, need not specify the purpose of the meeting; provided, however, that in case the Board of Directors shall fix or change the time or place of any regular meeting, notice of such action shall be given to each director who shall not have been present at the meeting at which such change was made within the time limited, and in the manner set forth in Paragraph (b) Section 5 of this Article III, with respect to special meetings, unless such notice shall be waived in the manner set forth in Paragraph (c) of such Section 5.

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Section 5—Special Meetings; Notice:

(a)Special meetings of the Board of Directors shall be held whenever called by the President, Chairman, Vice Chairman, or by one of the remaining directors, at such time and place as may be specified in the respective notices or waivers of notice thereof.

(b)Except as otherwise required by statute, notice of special meetings shall be mailed directly to each director, addressed to him at his residence or usual place of business at least four (4) days before the day on which the meeting is to be held, or shall be sent to him at such place by telegram, facsimile transmission, radio or cable, or shall be delivered to him personally or given to him orally, not later than the day before the day on which the meeting is to be held. A notice, or waiver of notice, except as required by Section 9 of this Article III, need not specify the purpose of the meeting.

(c)Notice of any special meeting shall not be required to be given to any director who shall attend such meeting without protesting prior thereto or at its commencement, the lack of notice to him, or who submits a signed waiver of notice, whether before or after the meeting. Notice of any adjourned meeting shall not be required to be given.

Section 6—Chairman:

At all meetings of the Board of Directors, the Chairman of the Board, if any and if present, shall preside. If there shall be no Chairman, or he shall be absent, then the Vice Chairman shall preside, and in his absence, a Chairman chosen by the directors shall preside.

Section 7—Quorum and Adjournments:

(a)At all meetings of the Board of Directors, the presence of a majority of the entire Board shall be necessary and sufficient to constitute a quorum for the transaction of business, except as otherwise provided by law, by the Articles of Incorporation, or by these By-Laws.

(b)A majority of the directors present at the time and place of any regular or special meeting, although less than a quorum, may adjourn the same from time to time without notice, until a quorum shall be present.

Section 8—Manner of Acting:

(a)At all meetings of the Board of Directors, each director present shall have one vote, irrespective of the number of shares of stock, if any, which he may hold.

(b)Except as otherwise provided by statute, by the Articles of Incorporation, or by these by-laws, the action of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors.

(c)Unless otherwise required by the Articles of Incorporation or statute, any action required or permitted to be taken at any meeting of the Board of Directors or any Committee thereof

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may be taken without a meeting if a written consent thereto is signed by all the Members of the Board or Committee. Such written consent shall be filed with the minutes of the proceedings of the Board or Committee.

(d)Unless otherwise prohibited by the Articles of Incorporation or statute, members of the Board of Directors or of any Committee of the Board of Directors may participate in a meeting of such Board or Committee by means of a conference telephone network or a similar communications method by which all persons participating in the meeting can hear each other. Such participation constitutes the presence of all of the participating persons at such meeting, and each person participating in the meeting shall sign the minutes thereof, which may be signed in counterparts.

Section 9—Vacancies:

Any vacancy in the Board of Directors, occurring by reason of an increase in the number of directors, or by reason of the death, resignation, disqualification, removal (unless a vacancy created by the removal of a director by the stockholders shall be filled by the stockholders at the meeting at which the removal was effected) or inability to act of any director, or otherwise, shall be filled for the unexpired portion of the term by a majority vote of the remaining directors, though less than a quorum, at any regular meeting or special meeting of the Board of Directors called for that purpose.

Section 10—Resignation:

Any director may resign at any time by giving written notice to the Board of Directors, the President or the Secretary of the Corporation. Unless otherwise specified in such written notice, such resignation shall take effect upon receipt thereof by the Board of Directors or by such officer, and the acceptance of such resignation shall not be necessary to make it effective.

Section 11—Removal:

Any director may be removed with or without cause at any time by the affirmative vote of stockholders holding of record in the aggregate at least two-thirds of the outstanding shares of stock of the Corporation at a special meeting of the stockholders called for that purpose, and may be removed for cause by action of the Board.

Section 12—Compensation:

Directors, and members of any committee of the board of directors, shall be entitled to such reasonable compensation for their services as directors, as members of any such committee or in any other capacity as shall be fixed from time to time by resolution of the Board of Directors and shall also be entitled to reimbursement for any reasonable expenses incurred in attending such meetings. The compensation of directors may be on such basis as is determined by the resolution of the Board of Directors. Any director receiving compensation under these provisions shall not be barred from serving the Corporation in any other capacity and receiving reasonable compensation for such other services.

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Section 13—Contracts:

(a)No contract or other transaction between this Corporation and one or more of its directors or officers, or between this Corporation and any corporation, firm or association in which one or more of the directors or officers of this Corporation is a director or officer or is financially interested, shall be affected, impaired, invalidated or voidable solely for this reason or solely because any such director or officer is present at the meeting of the Board of Directors or a committee thereof that authorizes or approves the contract or transaction, or because the vote of any common or interested director is counted for such purpose, if the circumstances specified in any of the following paragraphs exist:

(i)The fact of the common directorship or financial interest is disclosed or known to the Board of Directors or committee and noted in the minutes, and the Board or committee authorizes, approves or ratifies the contract or transaction in good faith by a vote sufficient for the purpose without counting the vote or votes of such director or directors; or

(ii)The fact of the common directorship or financial interest is disclosed or known to the stockholders, and they approve or ratify the contract or transaction in good faith by a majority vote or written consent of stockholders holding a majority of the shares entitled to vote; or

(iii)The contract or transaction is fair as to the Corporation at the time it is authorized or approved.

(b)Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or a committee thereof which authorizes, approves or ratifies a contract or transaction, and if the votes of the common or interested directors are not counted at such meeting, then a majority of the disinterested directors may authorize, approve or ratify a contract or transaction.

Section 14—Loans to Officers and Directors:

The Corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the Corporation or of any subsidiary of the Corporation, including any officer or employee who is a director of the Corporation or any subsidiary, whenever, in the judgment of the Board of Directors, such loan, guaranty or assistance may reasonably be expected to benefit the Corporation. Such loan, guaranty or other assistance may be with or without interest, and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, by a pledge of shares of the Corporation. The authority of the Board of Directors may be general or confined to specific instances, and the Board of Directors may delegate to its Executive Committee the power to grant, administer and determine the terms and condition of any loan, guaranty or assistance to be made or given pursuant to a general authorization of tile Board of Directors.

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Section 15—Indemnification:

(a)The Corporation shall, to the maximum extent permitted by law, indemnify each person against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding arising by reason of the fact that such person has served, at any time after May 10, 1987, as an Agent of the Corporation, and may so indemnify any person in connection with any proceeding arising by reason of the fact that such person has served, at any time prior to May 11, 1987, as an Agent of the Corporation. For purposes of this Section, the term “Agent” shall include any person who is or was a director, officer, employee or other agent of the Corporation; the term “Corporation” shall include any predecessor of the Corporation and any constituent corporation (including any constituent of a constituent) absorbed by the Corporation in a consolidation or merger; the term “other enterprise” shall include any corporation, partnership, joint venture, trust or employee benefit plan; service “at the request of the Corporation” shall include service as an Agent of the Corporation that imposes duties on, or involves services by, such Agent with respect to any other enterprise or any employee benefit plan, its participants or beneficiaries; any excise taxes assessed on a person with respect to an employee benefit plan shall be deemed to be indemnifiable expenses; and action by a person with respect to any employee benefit plan which such person reasonably believes to be in the interest of the participants and beneficiaries of such plan shall be deemed to be action not opposed to the best interests of the Corporation. Expenses incurred in defending any such action, suit or proceeding by any person who the Corporation is required to indemnify as set forth above shall be paid or reimbursed by the Corporation promptly upon receipt by it of an undertaking of such person to repay such expenses if it should ultimately be determined that such person was not entitled to be indemnified by the Corporation. The rights provided to any person by this Section shall be enforceable against the Corporation by such person who shall be presumed to have relied upon it in serving or continuing to serve as an Agent of the Corporation as defined above. No amendment of this Section shall impair the rights of any person arising at any time with respect to events occurring prior to such amendment. The indemnification and advancement of expenses provided by, or granted pursuant to, this Section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be an Agent of the Corporation and shall inure to the benefit of the heirs, executors and administrators of such a person.

(b)The provisions of this Article shall be deemed to be a contract between the Corporation and each such person who serves in any such capacity at any time while this Article and the relevant provisions of the Nevada General Corporation Law or other applicable laws, if any, are in effect, and any repeal or modification of any such laws or of this Article shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought or threatened based in whole or in part upon any such state of facts. The Corporation shall also enter into such express agreements as the Board of Directors deems appropriate for the indemnification of present or future Agents of the Corporation, consistent with the Corporation’s Articles of Incorporation, these by-laws and applicable law.

Section 16—Insurance:

Upon a determination of the Board of Directors to purchase liability insurance, this Corporation shall purchase and maintain insurance on behalf of each Agent identified by the Board

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against any liability asserted against or incurred by the Agent in such capacity or arising out of the Agent’s status as such whether or not this Corporation would have the power to indemnify the Agent against such liability under the provisions of section 15.

Section 17—Transfer Agents and Registrars:

The Board of Directors may appoint one or more transfer agents or transfer clerks, and one or more registrars, either domestic or foreign, who shall be appointed at such times and places as the requirements of the Corporation may necessitate and the Board of Directors may designate.

ARTICLE IV—OFFICERS

Section 1—Number, Qualifications, Election and Term of Office:

(a)The officers of the Corporation shall consist of a President, Secretary, Treasurer and such other officers, including a Chairman of the Board of Directors, a Vice Chairman of the Board of Directors and one or more Vice Presidents, as the Board of Directors may from time to time deem advisable. Any officer other than the Chairman or Vice Chairman of the Board of Directors may be, but is not required to be, a director of the Corporation. Any two or more offices may be held by the same person.

(b)The officers of the Corporation shall be elected by the Board of Directors at the regular annual meeting of the Board following the annual meeting of stockholders.

(c)Each officer shall hold office until the annual meeting of the Board of Directors next succeeding his election, and until his successor shall have been elected and qualified, or until his death, resignation or removal.

Section 2—Resignation:

Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, or to the President or the Secretary of the Corporation. Unless otherwise specified in such written notice, such resignation shall take effect upon receipt thereof by the Board of Directors or by such officer, and the acceptance of such resignation shall not be necessary to make it effective.

Section 3—Removal:

Any officer may be removed, either with or without cause, and a successor elected by a majority vote of the Board of Directors at any time.

Section 4—Vacancies:

A vacancy in any office by reason of death, resignation, inability to act, disqualification, or any other cause, may at any time be filled for the unexpired portion of the term by a majority vote of the Board of Directors.

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Section 5—Duties of Officers:

(a)Chairman of the Board. The Chairman of the Board shall, when present, preside at all meetings of the stockholders and of the Board of Directors, and shall have such other powers and duties as may be delegated to him by the Board of Directors. He may from time to time, with the approval of a majority of the Board, delegate to the Vice Chairman of the Board, if any, or the President, the duties of presiding at meetings of stockholders and of the Board of Directors.

(b)Vice Chairman of the Board. In the absence or the incapacity of the Chairman of the Board, the Vice Chairman of the Board shall preside at all meetings of the stockholders and of the Board of Directors, but shall not have any other duties or powers of the Chairman of the Board with respect to supervision or control of the business or other officers of the Corporation, except insofar as such duties or powers may be expressly delegated to him by the Chairman of the Board or the Board of Directors.

(c)President. The President shall be the chief executive officer of the Corporation. In the absence or incapacity of the Chairman of the Board and subject to the duties and powers granted the Vice Chairman of the Board, he shall perform all the duties and functions and shall have all the powers of the Chairman of the Board. The President shall have the power to execute certificates for shares of Common Stock and other documents as is normally accorded the President and chief executive officer of a Corporation under Nevada and other applicable law. He shall have general supervision over the business affairs and other officers of the Corporation and shall perform such other duties as may be prescribed by the Board of Directors from time to time.

(d)Vice President. In the absence or disability of the President, the Vice Presidents in order of their rank as fixed by the Board of Directors or, if not ranked, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or the by-laws.

(e)Secretary. The Secretary shall record or cause to be recorded, and shall keep or cause to be kept, at the principal executive office and such other place as the Board of Directors may order, a book of minutes of actions taken at all meetings of directors and stockholders, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice thereof given, the names of those present at directors’ meetings, the number of shares present or represented at stockholders’ meetings, and the proceedings thereof.

The Secretary shall keep, or cause to be kept, at the principal executive office or at the office of the Corporation’s transfer agent, a share register, or a duplicate share register, showing the names of the stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation.

The Secretary shall give, or cause to be given, notice of all the meetings of the stockholders and of the Board of Directors required by the by-laws or by law to be given, and shall keep the seal

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of the corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by the by-laws.

(f)Treasurer. The Treasurer shall be the chief financial officer of the Corporation and shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, surplus and shares. The books of account shall at all reasonable times be open to inspection by any director.

The Treasurer shall deposit, or cause to be deposited, all monies and other valuables in the name and to the credit of the Corporation with such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the Board of Directors, shall render to the Chairman of the Board, the President and the Board of Directors, whenever they request it, an account of all of his transactions as chief financial officer and of the financial condition of the Corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by the by-laws.

Section 6—Salaries:

The salaries for the principal officers of the Corporation shall be fixed, from time to time, by the Board of Directors. No officer shall be disqualified from receiving a salary by reason of his also being a director of the corporation.

Section 7—Sureties and Bonds:

In case the Board of Directors shall so require, any officer, employee or agent of the Corporation shall execute to the Corporation a bond in such sum, and with such surety or sureties as the Board of Directors may direct, conditioned upon the faithful performance of his duties to the Corporation, including responsibility for negligence and for the accounting for all property, funds or securities of the Corporation which may come into his hands.

Section 8—Shares of Stock of Other Corporations:

Whenever the Corporation is the holder of shares of stock of any other corporation, any right or power of the Corporation as such stockholder (including the attendance, acting and voting at stockholders’ meetings and execution of waivers, consents, proxies or other instruments) may be exercised on behalf of the Corporation by the President, any Vice President, or such other person as the Board of Directors may authorize.

ARTICLE V—SHARES OF STOCK

Section 1—Certificates of Stock:

(a)The certificates representing shares of the Corporation’s stock shall be in such form as shall be adopted by the Board of Directors, and shall be numbered and registered in the order issued. They shall bear the holder’s name and the number of shares of stock and shall be signed by

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(i) the Chairman of the Board or the President or a Vice President, and (ii) the Secretary or Treasurer, or any Assistant Secretary or Assistant Treasurer, and shall bear the corporate seal. All of such signatures may be facsimiles.

(b)No certificate representing shares of stock shall be issued until the full amount of consideration therefor has been paid, except as otherwise permitted by law.

(c)To the extent permitted by law, the Board of Directors may authorize the issuance of certificates for fractions of a share of stock which shall entitle the holder to exercise voting rights, receive dividends and participate in liquidating distributions, in proportion to the fractional holdings; or it may authorize the payment in cash of the fair value of fractions of a share of stock as of the time when those entitled to receive such fractions are determined; or it may authorize the issuance, subject to such conditions as may be permitted by law, of scrip in registered or bearer form over the signature of an officer or agent of the Corporation, exchangeable as therein provided for full shares of stock, but such scrip shall not entitle the holder to any rights of a stockholder, except as therein provided.

Section 2—Lost or Destroyed Certificates:

The holder of any certificate representing shares of stock of the Corporation shall immediately notify the Corporation of any loss or destruction of the certificate representing the same. The Corporation may issue a new certificate in the place of any certificate theretofore issued by it, alleged to have been lost or destroyed. On production of such evidence of loss or destruction as the Board of Directors in its discretion may require, the Board of Directors may, in its discretion, require the owner of the lost or destroyed certificate, or his legal representatives, to give the Corporation a bond in such sum as the Board may direct, and with such surety or sureties as may be satisfactory to the Board, to indemnify the Corporation against any claims, loss, liability or damage it may suffer on account of the issuance of the new certificate. A new certificate may be issued without requiring any such evidence or bond when, in the judgment of the Board of Directors, it is proper so to do.

Section 3—Transfers of Shares:

(a)Transfers of shares of stock of the Corporation shall be made on the stock ledger of the Corporation only by the holder of record thereof, in person or by his duly authorized attorney, upon surrender for cancellation of the certificate or certificates representing such shares of stock with an assignment or power of transfer endorsed thereon or delivered therewith, duly executed, with such proof of title authenticity of the signature and of authority to transfer and of payment of taxes as the Corporation or its agents may require.

(b)The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the absolute owner thereof for all purposes and, accordingly, shall not be bound to recognize any legal, equitable or other claim to, or interest in, such share or shares of stock on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by law.

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Section 4—Record Date:

In lieu of closing the stock ledger of the Corporation, the Board of Directors may fix, in advance, a date not exceeding sixty (60) days, nor less than ten (10) days, as the record date for the determination of stockholders entitled to receive notice of, or to vote at, any meeting of stockholders, or to consent to any proposal without a meeting, or for the purpose of determining stockholders entitled to receive payment of any dividends, or allotment of any rights, or for the purpose of any other action. If no record date is fixed, the record date for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if no notice is given, the day preceding the day on which the meeting is held; the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the resolution of the directors relating thereto is adopted. When a determination of stockholders of record entitled to notice of or to vote at any meeting of stockholders has been made as provided for herein, such determination shall apply to any adjournment thereof, unless the directors fix a new record date for the adjourned meeting.

Section 5—Shareholders of Record:

Voting by stockholders shall in all cases be subject to the following provisions:

(a)Subject to clause (g) of this Section 5, shares held by an administrator, executor, guardian, conservator or custodian may be voted by such holder either in person or by proxy, without a transfer of such shares into the holder’s name; and shares standing in the name of a trustee may be voted by the trustee, either in person or by proxy, but no trustee shall be entitled to vote shares held by such trustee without a transfer of such shares into the trustee’s name.

(b)Shares standing in the name of a receiver may be voted by such receiver; and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into the receiver’s name if authority to do so is contained in the order of the court by which such receiver was appointed.

(c)Subject to the provisions of applicable law, and except where otherwise agreed in writing between the parties, a stockholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.

(d)Shares standing in the name of a minor may be voted and the Corporation may treat all rights incident thereto as exercisable by the minor, in person or by proxy, whether or not the Corporation has notice, actual or constructive, of the non-age, unless a guardian of the minor’s property has been appointed and written notice of such appointment given to the Corporation.

(e)Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent or proxy holder as the by-laws of such other corporation may prescribe or, in the absence of such provision, as the board of directors of such other corporation may determine or, in the absence of such determination, by the chairman of the board, president or any vice president of such other corporation, or by any other person authorized to do so by the board,

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president or any vice president of such other corporation. Shares which are purported to be voted or any proxy purported to be executed in the name of a corporation (whether or not any title of the person signing is indicated), shall be presumed to be voted or the proxy executed in accordance with the provisions of this subdivision, unless the contrary is shown.

(f)Shares of the Corporation owned by any subsidiary shall not be entitled to vote on any matter.

(g)Shares held by the Corporation in a fiduciary capacity, and shares of the Corporation held in a fiduciary capacity by any subsidiary, shall not be entitled to vote on any matter, except to the extent that the settlor or beneficial owner possesses and exercises a right to vote or to give the corporation binding instructions as to how to vote such shares.

(h)If shares stand of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, husband and wife as community property, tenants by the entirety, voting trustees, persons entitled to vote under a stockholder voting agreement or otherwise, or if two or more persons (including proxy holders) have the same fiduciary relationship respecting the same shares, unless the Secretary of the Corporation is given written notice to the contrary and is furnished with a copy of the instrument or order appointment them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect:

(i)If only one vote, such act binds all;

(ii)If more than one vote, the act of the majority so voting binds all;

(iii)If more than one vote, but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionately. If the instrument so filed or the registration of the shares shows that any such tenancy is held in unequal interests, a majority or even split for the purpose of this section shall be a majority or even split in interest.

ARTICLE VI—MISCELLANEOUS

Section 1—Checks, Drafts, Etc.:

All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board of Directors.

Section 2—Contracts, Etc., How Executed:

The Board of Directors, except as in the by-laws otherwise provided, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances; and, unless so authorized by the Board of Directors, no officer, agent or employee shall

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have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose of for any amount. Subject to the provisions of applicable law, any note, mortgage, evidence of indebtedness, contract, share certificate, conveyance, or other instrument in writing and any assignment or endorsements thereof executed or entered into between this Corporation and any other person, when signed by the Chairman of the Board, the President or any Vice President, and the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of this Corporation shall be valid and binding on this Corporation in the absence of actual knowledge on the part of the other person that the signing officers had not authority to execute the same.

Section 3—Seal:

The Corporation shall adopt and use a corporate seal consisting of a circle setting forth on its circumference the name of the Corporation and showing the state of incorporation.

Section 4—Fiscal Year:

The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

Section 5—Loans:

No loans shall be contracted on behalf of the Corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors; such authority may be general or confined to specific instances.

Section 6—Deposits:

The Board of Directors shall select banks, trust companies or other depositories in which all funds of the Corporation not otherwise employed shall, from time to time, be deposited to the credit of the Corporation.

Section 7—Dividends:

Subject to applicable law, dividends may be declared and paid out of any funds available therefor, as often, in such amounts, and at such time or times as the Board of Directors may determine.

Section 8—Construction and Definitions:

Unless the context otherwise requires, the general provisions, rules of construction and definitions contained in the laws of the State of Nevada shall govern the construction of these by-laws. Without limiting the generality of the foregoing, the masculine gender includes the feminine and neuter, the singular number includes the plural and the plural number includes the singular, and the term “person” includes a corporation as well as a natural person.

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ARTICLE VII—AMENDMENTS

Section 1—By Stockholders:

All by-laws of the Corporation shall be subject to alteration or repeal, and new by-laws may be made, by the affirmative vote of stockholders holding of record in the aggregate at least 80 percent of the outstanding shares of stock entitled to vote in the election of directors at any annual or special meeting of stockholders, provided that the notice or waiver of notice of such meeting shall have summarized or set forth in full therein, the proposed amendment.

Section 2—By Directors:

The Board of Directors shall have power to make, adopt, alter, amend and repeal, from time to time, by-laws of the Corporation; provided, however, that the stockholders entitled to vote with respect thereto as in this Article VII above-provided may alter, amend or repeal by-laws made by the Board of Directors; and further provided, that the Board of Directors shall have no power to change the quorum for meetings of stockholders or of the Board of Directors, or to change any provisions of the by-laws with respect to the removal of directors or the filling of vacancies in the Board resulting from the removal by the stockholders. If any by-law regulating an impending election of directors is adopted, amended or repealed by the Board of Directors, there shall be set forth in the notice of the next meeting of stockholders for the election of directors, the by-law so adopted, amended or repealed, together with a concise statement of the changes made.

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EX-10.6

Exhibit 10.6

ALLIANCE GAMING CORPORATION

STOCK OPTION AGREEMENT

Optionee:	Grant Date:		Per Share Exercise Price: $
Number of Shares:	Plan:	2001 Long Term Incentive Plan	Option Type:	[Incentive]/
			[Non-Oualifiedl]

STOCK OPTION AGREEMENT dated as of the Grant Date specified above between Alliance Gaming Corporation, a Nevada corporation (the “Company”), and the Optionee specified above, pursuant to the Plan specified above as in effect and as amended from time to time.

1.Incorporation By Reference.  This Agreement is subject in all respects to the terms and provisions of the Plan, all of which are by this reference made a part of and incorporated in this Agreement. Any capitalized term not defined in this Agreement shall have the meaning ascribed to it in the Plan. If and to the extent this Agreement and the Plan conflict, the Plan shall control.

2.Grant of Option.  The Company grants to the Optionee, as of the Grant Date specified above, an option (the “Option”) to acquire the Number of Shares of the Company’s common stock specified above (the “Option Shares”) from the Company at the Per Share Exercise Price specified above. The Option [is]/[is not] intended to qualify as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code.

3.Exercise of the Option.  Subject to the relevant provisions of the Plan, the Option shall vest (i.e., become exercisable) in [    ] installments of [    ] shares each (with any odd share(s) necessary to achieve the Number of Shares specified above vesting with the final installment), with the first installment vesting on the [first anniversary of the] Grant Date and with each successive installment vesting on successive anniversaries of the Grant Date. The Option may not be exercised for a fractional share of common stock.

4.Method of Exercise and Payment.  To exercise the Option, the Optionee must deliver a written notice, in such manner and form as the Company may require, to the Company’s corporate secretary or the secretary’s designee on any business day. The notice must specify the number of the Option Shares the Optionee wants to acquire, the date of grant of the Option, the aggregate purchase price for the shares with respect to which the Option is exercised, and the effective date of exercise (no earlier than the date of receipt of such notice by the Company). The notice must be accompanied by payment, made in the manner set forth in the Plan, of (i) the aggregate purchase price for the Option Shares to be acquired, and (ii) unless the Plan administrator determines otherwise, the amount of any taxes (including, but not limited to, any FICA, FUTA, and similar taxes) required to be withheld and paid by the Company or its subsidiary in connection with the exercise of the Option, as determined by the Plan administrator.

5.Termination.  Unless terminated earlier in accordance with this Agreement, the Option shall terminate as and to the extent provided in the Plan, and, in any event, the Option shall expire ten years after the Grant Date and thereafter shall no longer be exercisable.

6.Dividends.  The Option shall not entitle the Optionee to receive any dividend declared on the Company’s common stock.

7.Non-transferability.  Neither the Optionee nor the Optionee’s beneficiaries shall sell, exchange, transfer, assign, or otherwise dispose of the Option or any rights or interests therein, other than by testamentary disposition by the Optionee or the laws of descent and distribution. Neither the Optionee nor the Optionee’s beneficiaries shall pledge, encumber, or otherwise hypothecate the Option or any rights or interests therein in any way at any time.  The Option shall not be subject to execution, attachment, or similar legal process. Any attempted sale, pledge, or other disposition of the Option in violation of this paragraph shall be void and of no force or effect.

8.Entire Agreement; Amendment.  This Agreement contains the entire agreement between the parties and supersedes other oral and written agreements previously entered into by the parties concerning the same subject matter. This Agreement may be modified or rescinded only with the written consent of both parties.

9.Governing Law.  Nevada law shall govern this Agreement and its interpretation. The issuance of the Option (and the Option Shares upon exercise of this Option) pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any federal and state securities laws, rules, and regulations (including but not limited to the Securities Act, the Exchange Act, and the respective rules and regulations promulgated thereunder) and any other applicable law or regulation.

10Binding Effect.  This Agreement shall bind and inure to the benefit of the Company and its successors and assigns.

11Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

ALLIANCE GAMING CORPORATION

By:

EX-10.7

Exhibit 10.7

ALLIANCE GAMING CORPORATION
STOCK OPTION AGREEMENT

Optionee:	Grant Date:		Per Share Exercise Price:
Number of Shares:	Plan:	2001 Long Term Incentive Plan	Option Type:	Non-Qualified

STOCK OPTION AGREEMENT dated as of the Grant Date specified above between Alliance Gaming Corporation, a Nevada corporation (the “Company”), and the Optionee specified above, pursuant to the Plan specified above as in effect and as amended from time to time.

1.  Incorporation By Reference. This Agreement is subject in all respects to the terms and provisions of the Plan, all of which are by this reference made a part of and incorporated in this Agreement. Any capitalized term not defined in this Agreement shall have the meaning ascribed to it in the Plan. If and to the extent this Agreement and the Plan conflict, the Plan shall control.

2.  Grant of Option. The Company grants to the Optionee, as of the Grant Date specified above, an option (the “Option” ) to acquire the Number of Shares of the Company’s common stock specified above (the “Option Shares”) from the Company at the Per Share Exercise Price specified above. The Option is not intended to qualify as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code.

3.  Exercise of the Option. Subject to the relevant provisions of the Plan, the Option shall vest (i.e., become exercisable) in its entirety on the Grant Date. The Option may not be exercised for a fractional share of common stock.

4.  Method of Exercise and Payment. To exercise the Option, the Optionee must deliver a written notice, in such manner and form as the Company may require, to the Company’s corporate secretary or the secretary’s designee on any business day. The notice must specify the number of the Option Shares the Optionee wants to acquire, the date of grant of the Option, the aggregate purchase price for the shares with respect to which the Option is exercised, and the effective date of exercise (no earlier than the date of receipt of such notice by the Company). The notice must be accompanied by payment, made in the manner set forth in the Plan, of (i) the aggregate purchase price for the Option Shares to be acquired, and (ii) unless the Plan administrator determines otherwise, the amount of any taxes (including, but not limited to, any FICA, FUTA, and similar taxes) required to be withheld and paid by the Company or its subsidiary in connection with the exercise of the Option, as determined by the Plan administrator.

5.  Termination. The Option shall expire ten years after the Grant Date and shall be exercisable by the Optionee during the ten-year period whether or not the Optionee continues to be a director of the Company, unless, before the expiration of the term as director the Optionee is serving as of the Grant Date, the Optionee is removed as director for cause or resigns, in which event the Option shall expire in accordance with the Plan.

6.  Dividends. The Option shall not entitle the Optionee to receive any dividend declared on the Company’s common stock.

7.  Non-transferability. Neither the Optionee nor the Optionee’s beneficiaries shall sell, exchange, transfer, assign, or otherwise dispose of the Option or any rights or interests therein, other than by testamentary disposition by the Optionee or the laws of descent and distribution. Neither the Optionee nor the Optionee’s beneficiaries shall pledge, encumber, or otherwise hypothecate the Option or any rights or interests therein in any way at any time. The Option shall not be subject to execution, attachment, or similar legal process. Any attempted sale, pledge, or other disposition of the Option in violation of this paragraph shall be void and of no force or effect.

8.  Entire Agreement; Amendment. This Agreement contains the entire agreement between the parties and supersedes other oral and written agreements previously entered into by the parties concerning the same subject matter. This Agreement may be modified or rescinded only with the written consent of both parties.

9.  Governing Law. Nevada law shall govern this Agreement and its interpretation. The issuance of the Option (and the Option Shares upon exercise of this Option) pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any federal and state securities laws, rules, and regulations (including but not limited to the Securities Act, the Exchange Act, and the respective rules and regulations promulgated thereunder) and any other applicable law or regulation.

10.  Binding Effect. This Agreement shall bind and inure to the benefit of the Company and its successors and assigns.

11.  Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

ALLIANCE GAMING CORPORATION

By:

EX-10.8

Exhibit 10.8

ALLIANCE GAMING CORPORATION

STOCK OPTION AGREEMENT

Optionee:	Grant Date:		June 13, 2005	Per Share Exercise Price:
Number of Shares:	Plan:	2001 Long Term Incentive Plan		Option Type:

STOCK OPTION AGREEMENT dated as of the Grant Date specified above between Alliance Gaming Corporation, a Nevada corporation (the “Company”), and the Optionee specified above, pursuant to the Plan specified above as in effect and as amended from time to time.

1.Incorporation By Reference.  This Agreement is subject in all respects to the terms and provisions of the Plan, all of which are by this reference made a part of and incorporated in this Agreement. Any capitalized term not defined in this Agreement shall have the meaning ascribed to it in the Plan. If and to the extent this Agreement and the Plan conflict, the Plan shall control.

2.Grant of Option.  The Company grants to the Optionee, as of the Grant Date specified above, an option (the “Option”) to acquire the Number of Shares of the Company’s common stock specified above (the “Option Shares”) from the Company at the Per Share Exercise Price specified above. The Option is not intended to qualify as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code.

3.Exercise of the Option.  Subject to the relevant provisions of the Plan, the Option shall vest (i.e., become exercisable) in its entirety on the Grant Date, provided, however, that any shares acquired on exercise of the Option may not be sold or otherwise transferred by the Optionee prior to January 1, 2007. The Option may not be exercised for a fractional share of common stock.

4.Method of Exercise and Payment.  To exercise the Option, the Optionee must deliver a written notice, in such manner and form as the Company may require, to the Company’s corporate secretary or the secretary’s designee on any business day. The notice must specify the number of the Option Shares the Optionee wants to acquire, the date of grant of the Option, the aggregate purchase price for the shares with respect to which the Option is exercised, and the effective date of exercise (no earlier than the date of receipt of such notice by the Company). The notice must be accompanied by payment, made in the manner set forth in the Plan, of (i) the aggregate purchase price for the Option Shares to be acquired, and (ii) unless the Plan administrator determines otherwise, the amount of any taxes (including, but not limited to, any FICA, FUTA, and similar taxes) required to be withheld and paid by the Company or its subsidiary in connection with the exercise of the Option, as determined by the Plan administrator.

5.Termination.  The Option shall expire ten years after the Grant Date and shall be exercisable by the Optionee during the ten-year period whether or not the Optionee continues to be a director of the Company, unless, before the expiration of the term as director the Optionee is serving as of the Grant Date, the Optionee is removed as director for cause or resigns, in which event the Option shall expire in accordance with the Plan.

6.Dividends.  The Option shall not entitle the Optionee to receive any dividend declared on the Company’s common stock.

7.Non-transferability.  Neither the Optionee nor the Optionee’s beneficiaries shall sell, exchange, transfer, assign, or otherwise dispose of the Option or any rights or interests therein, other than by testamentary disposition by the Optionee or the laws of descent and distribution. Neither the Optionee nor the Optionee’s beneficiaries shall pledge, encumber, or otherwise hypothecate the Option or any rights or interests therein in any way at any time. The Option shall not be subject to execution, attachment, or similar legal process. Any attempted sale, pledge, or other disposition of the Option in violation of this paragraph shall be void and of no force or effect.

8.Entire Agreement; Amendment.  This Agreement contains the entire agreement between the parties and supersedes other oral and written agreements previously entered into by the parties concerning the same subject matter. This Agreement may be modified or rescinded only with the written consent of both parties.

9.Governing Law.  Nevada law shall govern this Agreement and its interpretation. The issuance of the Option (and the Option Shares upon exercise of this Option) pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any federal and state securities laws, rules, and regulations (including but not limited to the Securities Act, the Exchange Act, and the respective rules and regulations promulgated there under)and any other applicable law or regulation.

10.Binding Effect.  This Agreement shall bind and inure to the benefit of the Company and its successors and assigns.

11.Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

ALLIANCE GAMING CORPORATION
By:	[Director]

EX-10.11

Exhibit 10.11

RESTRICTED STOCK AGREEMENT

Grantee:		Richard M. Haddrill	Grant Date:	June 30, 2004
Plan:	2001 Long-Term Incentive Plan		Number of Units:		377,030

RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) dated as of the Grant Date specified above between Alliance Gaming Corporation, a Nevada corporation (the “Company”), and the Grantee specified above, pursuant to the Plan specified above as in effect and as amended from time to time.

1.Incorporation By Reference.  This Agreement is subject in all respects to the terms and provisions of the Plan, all of which are by this reference made a part of and incorporated in this Agreement.  Any capitalized term not defined in this Agreement shall have the meaning ascribed to it in the Plan.  If and to the extent this Agreement and the Plan conflict, the Plan shall control.

2.Grant of Restricted Stock Units.  The Company grants to the Grantee, as of the Grant Date specified above, an award of a number of restricted stock units equal to the Number of Units specified above (the “Restricted Stock Units”).  Each Restricted Stock Unit represents the right of the Grantee to receive one share of the common stock, $.10 par value, of the Company (the “Shares”) pursuant to the terms and conditions of this Agreement.

3.Vesting of the Restricted Stock Units.  Except as otherwise provided in the Employment Agreement, dated as of June 30, 2004, between the Company and the Grantee, as amended (the “Employment Agreement”), the Restricted Stock Units shall vest (i.e., become nonforfeitable) in three equal installments (each equal to one-third of the total number of Restricted Stock Units), with the first installment vesting on October 1, 2005, the second installment vesting on October 1, 2006 and the third installment vesting on October 1, 2007, in each case, so long as the Grantee remains continuously employed by the Company as its Chief Executive Officer through each respective vesting date.  Restricted Stock Units that have vested and are no longer subject to forfeiture are referred herein to as “Vested Units.”  Restricted Stock Units that have not yet vested and thus remain subject to forfeiture are referred herein to as “Unvested Units.”

4.Settlement of Restricted Stock Units.  Each Vested Unit represents the Grantee’s right to receive one Share as follows:

(a)75% of the Shares represented by the Vested Units shall be issued to the Grantee (1) on the later of (a) October 1, 2007 or (b) the first date on which such payment or any portion thereof is no longer subject to the limits of section 162(m) of the Internal Revenue Code in which case that portion of the payment that is no longer subject to such limits shall be issued to the Grantee at the time such limits become inapplicable, or (2) in the event that the Grantee’s employment with the Company is terminated prior to October 1, 2007, on the first date in which such payment or any portion thereof is no longer subject to the limits of Section 162(m) of the Internal Revenue Code in which case that portion of the payment that is no longer subject to such limits shall be issued to the Grantee at the time such limits become inapplicable.

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(b)25% of the Shares represented by the Vested Units shall be issued to the Grantee (1) on the later of (a) October 1, 2008 or (b) the first date on which such payment or any portion thereof is no longer subject to the limits of section 162(m) of the Internal Revenue Code in which case that portion of the payment that is no longer subject to such limits shall be issued to the Grantee at the time such limits become inapplicable, or (2) in the event that the Grantee’s employment with the Company is terminated prior to October 1, 2008, on the first date in which such payment or any portion thereof is no longer subject to the limits of Section 162(m) of the Internal Revenue Code in which case that portion of the payment that is no longer subject to such limits shall be issued to the Grantee at the time such limits become inapplicable.

(c)Notwithstanding anything herein to the contrary, if the vesting of any Restricted Stock Units shall be taxable to the Grantee prior to the date on which the Grantee is otherwise entitled to receive Shares pursuant to this paragraph 3 with respect to such Vested Units, then the Company shall promptly upon request issue to the Grantee all of the Shares represented by such Vested Units that have become taxable, which Shares shall be freely transferable by the Grantee subject only to any applicable securities laws.

5.Rights as a Stockholder.  The Grantee shall have no rights as a stockholder (including, without limitation, any voting rights with respect to the Shares subject to the Restricted Stock Units) with respect to either the Restricted Stock Units granted hereunder or the Shares underlying the Restricted Stock Units, unless and until such Shares are issued in respect of Vested Units, and then only to the extent of such issued Shares.

6.Forfeiture of Unvested Units.  Except as otherwise provided in the Employment Agreement, if the Grantee’s ceases to serve as the Company’s Chief Executive Officer, all Unvested Units shall be immediately forfeited.

7.Withholding Taxes.  The Company has the right to deduct or otherwise effect a withholding of the amount of any taxes (including, but not limited to, any FICA, FUTA, and similar taxes) required by federal, state, local or foreign laws to be withheld or otherwise deducted and paid with respect to the grant, vesting or settlement of the Restricted Stock Units; or, in lieu of such withholding, to require that the Grantee pay to the Company in cash (or, at the sole discretion of the Board or the Committee, in the form of Shares) the amount of any taxes required to be withheld or otherwise deducted and paid by the Company or its Subsidiary in connection with the grant, vesting or settlement of the Restricted Stock Units.  Unless the tax withholding obligations of the Company or any affiliate are satisfied, the Company will have no obligation to issue a certificate for any of the Shares subject to the Restricted Stock Units (whether vested or unvested).

8.Non-transferability.  Neither the Grantee nor the Grantee’s beneficiaries shall sell, exchange, transfer, assign, or otherwise dispose of any Restricted Stock Units (whether vested or unvested) or any rights or interests therein (including any Shares subject to Restricted Stock Units (whether vested or unvested) that have not yet been delivered to the Grantee).  The Grantee shall pledge, encumber, or otherwise hypothecate the Restricted Stock Units (whether vested or unvested) or any rights or interests therein (including any Shares subject to Restricted Stock Units (whether vested or unvested) that have not yet been delivered to the Grantee) in any way at any time.  The Restricted Stock Units (and any undelivered Shares subject thereto) shall not be subject to execution,

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attachment, or similar legal process.  Any attempted sale, pledge, or other disposition of the Restricted Stock Units (or any undelivered Shares subject thereto) in violation of this paragraph shall be void and of no force or effect.

9.Entire Agreement; Amendment.  This Agreement contains the entire agreement between the parties and supersedes other oral and written agreements previously entered into by the parties concerning the same subject matter.  This Agreement may be modified or rescinded only with the written consent of both parties.

10.Governing Law.  Nevada law shall govern this Agreement and its interpretation.  The issuance of the Restricted Stock pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any federal and state securities laws, rules, and regulations (including but not limited to the Securities Act, the Exchange Act, and the respective rules and regulations promulgated thereunder) and any other applicable law or regulation.

11.Binding Effect.  This Agreement shall bind and inure to the benefit of the Company and its successors and assigns.

12.Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

ALLIANCE GAMING CORPORATION
By:	/s/ Mark Lerner	/s/ Richard M. Haddrill
	Mark Lerner, Secretary	Richard M. Haddrill

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EX-10.12

Exhibit 10.12

STOCK OPTION AGREEMENT

Optionee:		Richard Haddrill		Grant Date:	June 30. 2004
Per Share Exercise Price:			$17.16	Number of Shares:			405,000
Plan:	2001 Long-Term Incentive Plan			Option Type:		Nonqualified Stock Options

STOCK OPTION AGREEMENT (this “Agreement”) dated as of the Grant Date specified above between Alliance Gaming Corporation, a Nevada corporation (the “Company”), and the Optionee specified above, pursuant to the Plan specified above as in effect and as amended from time to time.

1.   Incorporation By Reference.   This Agreement is subject in all respects to the terms and provisions of the Plan, all of which are by this reference made a part of and incorporated in this Agreement. Any capitalized term not defined in this Agreement shall have the meaning ascribed to it in the Plan. If and to the extent this Agreement and the Plan conflict, the Plan shall control.

2.   Grant of Option.   The Company grants to the Optionee, as of the Grant Date specified above, an option (the “Option”) to acquire the Number of Shares of the Company’s common stock specified above (the “Option Shares”) from the Company at the Per Share Exercise Price specified above. The Option is not intended to qualify as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code.

3.   Exercise of the Option.   Subject to the relevant provisions of the Plan and the Agreement dated June 30, 2004, between the Company and the Optionee, as amended or extended from time to time, the Option shall become exercisable on October 1, 2012, if the Optionee is an employee of the Company on October 1, 2012, and shall remain exercisable until October 1, 2014, at which time any unexercised Options shall expire. Options shall become exercisable earlier than October 1, 2012, as follows:

(a)   One twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value (as defined below) of the Company’s common stock is at least $30 and (ii) October 1, 2005; but only if the Fair Market Value of the Company’s common stock is at least $30 on or before October 1, 2007.

(b)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $35 and (ii) October 1, 2005; but only if the Fair Market Value of the Company’s common stock is at least $35 on or before October 1, 2007.

(c)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s stock is at least $40 and (ii) October 1, 2005; but only if the Fair Market value of the Company’s common stock is at least $40 on or before October 1, 2008.

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(d)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $45 and (ii) October 1, 2005; but only if (x) the Fair Market Value of the Company’s common stock is at least $45 on or before October 1, 2008, or (y) the Fair Market Value of the Company’s stock is at least $40 on or before October 1, 2008, and at least $45 on or before October 1, 2009.

(e)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $30 and (ii) October 1, 2006; but only if the Fair Market Value of the Company’s common stock is at least $30 on or before October 1, 2007.

(f)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $35 and (ii) October 1, 2006; but only if the Fair Market Value of the Company’s stock is at least $35 on or before October 1, 2007.

(g)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s stock is at least $40 and (ii) October 1, 2006; but only if the Fair Market Value of the Company’s common stock is at least $40 on or before October 1, 2008.

(h)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $45 and (ii) October 1, 2006; but only if (x) the Fair Market Value of the Company’s common stock is at least $45 on or before October 1, 2008, or (y) the Fair Market Value of the Company’s common stock is at least $40 on or before October 1, 2008, and at least $45 on or before October 1, 2009.

(i)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $30 and (ii) October 1, 2007; but only if the Fair Market Value of the Company’s common stock is at least $30 on or before October 1, 2007.

(j)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $35 and (ii) October 1,2007; but only if the Fair Market Value of the Company’s common stock is at least $35 on or before October 1, 2007.

(k)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $40 and (ii) October 1, 2007; but only if the Fair Market Value of the Company’s common stock is at least $40 on or before October 1, 2008.

(1)   An additional one-twelfth of such Options shall become exercisable on the

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later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $45 and (ii) October 1, 2007; but only if (x) the Fair Market Value of the Company’s common stock is at least $45 on or before October 1, 2008, or (y) the Fair Market Value of the Company’s common stock is at least $40 on or before October 1, 2008, and at least $45 on or before October 1, 2009.

The term “Fair Market Value” with respect to the Company’s common stock as of a particular date shall mean the average per share closing price of the Company’s common stock on the stock exchange on which the stock is principally traded for the 20 business days immediately prior to such date.

4.   Method of Exercise and Payment.   To exercise the Option, the Optionee must deliver a written notice, in such manner and form as the Company may require, to the Company’s corporate secretary or the secretary’s designee on any business day. The notice must specify the number of the Option Shares the Optionee wants to acquire, the date of grant of the Option, the aggregate purchase price for the shares with respect to which the Option is exercised, and the effective date of exercise (no earlier than the date of receipt of such notice by the Company). The notice must be accompanied by payment, made in the manner set forth in the Plan, of (i) the aggregate purchase price for the Option Shares to be acquired, and (ii) unless the Committee administering the Plan determines otherwise, the amount of any taxes (including, but not limited to, any FICA, FUTA, and similar taxes) required to be withheld and paid by the Company or its subsidiary in connection with the exercise of the Option, as determined by the Committee.

5.Dividends.   The Option shall not entitle the Optionee to receive any dividend declared on the Company’s common stock.

6.   Non-transferability.   Neither the Optionee nor the Optionee’s beneficiaries shall sell, exchange, transfer, assign, or otherwise dispose of the Option or any rights or interests therein, other than by testamentary disposition by the Optionee or the laws of descent and distribution. Neither the Optionee nor the Optionee’s beneficiaries shall pledge, encumber, or otherwise hypothecate the Option or any rights or interests therein in any way at any time. The Option shall not be subject to execution, attachment, or similar legal process. Any attempted sale, pledge, or other disposition of the Option in violation of this paragraph shall be void and of no force or effect.

7.   Entire Agreement; Amendment.   Except as otherwise provided herein, this Agreement contains the entire agreement between the parties and supersedes other oral and written agreements previously entered into by the parties concerning the same subject matter. This Agreement may be modified or rescinded only with the written consent of both parties. The Options are granted pursuant to the June 30, 2004, Employment Agreement between the Company and the Optionee, the terms of which shall prevail in the event of a conflict with this Stock Option Agreement.

8.   Governing Law.   Nevada law shall govern this Agreement and its interpretation. The issuance of the Option (and the Option Shares upon exercise of this Option) pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any federal and state securities laws, rules, and regulations (including but not limited to the Securities Act, the

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Exchange Act, and the respective rules and regulations promulgated thereunder) and any other applicable law or regulation.

9.Binding Effect.   This Agreement shall bind and inure to the benefit of the Company and its successors and assigns.

10.   Counterparts.   This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

ALLIANCE GAMING CORPORATION
By:	/s/ Mark Lerner	/s/ Richard Haddrill
Mark Lerner, Secretary		Richard Haddrill

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EX-10.13

Exhibit 10.13

STOCK OPTION AGREEMENT

Optionee:		Richard Haddrill		Grant Date:	October 27, 2004
Per Share Exercise Price:			$17.16	Number of Shares:			95,000
Plan:	2001 Long-Term Incentive Plan			Option Type:		Nonqualified Stock Options

STOCK OPTION AGREEMENT (this “Agreement”) dated as of the Grant Date specified above between Alliance Gaming Corporation, a Nevada corporation (the “Company”), and the Optionee specified above, pursuant to the Plan specified above as in effect and as amended from time to time.

1.   Incorporation By Reference    This Agreement is subject in all respects to the terms and provisions of the Plan, all of which are by this reference made a part of and incorporated in this Agreement. Any capitalized term not defined in this Agreement shall have the meaning ascribed to it in the Plan. If and to the extent this Agreement and the Plan conflict, the Plan shall control.

2.   Grant of Option.   The Company grants to the Optionee, as of the Grant Date specified above, an option (the “Option”) to acquire the Number of Shares of the Company’s common stock specified above (the “Option Shares”) from the Company at the Per Share Exercise Price specified above. The Option is not intended to qualify as an incentive stock option within the meaning of Section 422 of the Intemal Revenue Code.

3.   Exercise of the Option.   Subject to the relevant provisions of the Plan and the Agreement dated June 30, 2004, between the Company and the Optionee, as amended or extended from time to time, the Option shall become exercisable on October 1, 2012, if the Optionee is an employee of the Company on October 1, 2012, and shall remain exercisable until October 1, 2014, at which time any unexercised Options shall expire. Options shall become exercisable earlier than October 1, 2012, as follows:

(a)   One twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value (as defined below) of the Company’s common stock is at least $30 and (ii) October 1, 2005; but only if the Fair Market Value of the Company’s common stock is at least $30 on or before October 1, 2007.

(b)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $35 and (ii) October 1, 2005; but only if the Fair Market Value of the Company’s common stock is at least $35 on or before October 1, 2007.

(c)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s stock is at least $40 and (ii) October 1, 2005; but only if the Fair Market value of the Company’s common stock is at least $40 on or before October 1, 2008.

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(d)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $45 and (ii) October 1, 2005; but only if (x) the Fair Market Value of the Company’s common stock is at least $45 on or before October 1, 2008, or (y) the Fair Market Value of the Company’s stock is at least $40 on or before October 1, 2008, and at least $45 on or before October 1, 2009.

(e)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $30 and (ii) October 1, 2006; but only if the Fair Market Value of the Company’s common stock is at least $30 on or before October 1, 2007.

(f)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $35 and (ii) October 1, 2006; but only if the Fair Market Value of the Company’s stock is at least $35 on or before October 1, 2007.

(g)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s stock is at least $40 and (ii) October 1, 2006; but only if the Fair Market Value of the Company’s common stock is at least $40 on or before October 1, 2008.

(h)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $45 and (ii) October 1, 2006; but only if (x) the Fair Market Value of the Company’s common stock is at least $45 on or before October 1, 2008, or (y) the Fair Market Value of the Company’s common stock is at least $40 on or before October 1, 2008, and at least $45 on or before October 1, 2009.

(i)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $30 and (ii) October 1, 2007; but only if the Fair Market Value of the Company’s common stock is at least $30 on or before October 1, 2007.

(j)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $35 and (ii) October 1, 2007; but only if the Fair Market Value of the Company’s common stock is at least $35 on or before October 1, 2007.

(k)   An additional one-twelfth of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $40 and (ii) October 1, 2007; but only if the Fair Market Value of the Company’s common stock is at least $40 on or before October 1, 2008.

(1)   An additional one-twelfth of such Options shall become exercisable on the

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later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $45 and (ii) October 1, 2007; but only if (x) the Fair Market Value of the Company’s common stock is at least $45 on or before October 1, 2008, or (y) the Fair Market Value of the Company’s common stock is at least $40 on or before October 1, 2008, and at least $45 on or before October 1, 2009.

The term “Fair Market Value” with respect to the Company’s common stock as of a particular date shall mean the average per share closing price of the Company’s common stock on the stock exchange on which the stock is principally traded for the 20 business days immediately prior to such date.

4.   Method of Exercise and Payment.   To exercise the Option, the Optionee must deliver a written notice, in such manner and form as the Company may require, to the Company’s corporate secretary or the secretary’s designee on any business day. The notice must specify the number of the Option Shares the Optionee wants to acquire, the date of grant of the Option, the aggregate purchase price for the shares with respect to which the Option is exercised, and the effective date of exercise (no earlier than the date of receipt of such notice by the Company). The notice must be accompanied by payment, made in the manner set forth in the Plan, of (i) the aggregate purchase price for the Option Shares to be acquired, and (ii) unless the Committee administering the Plan determines otherwise, the amount of any taxes (including, but not limited to, any FICA, FUTA, and similar taxes) required to be withheld and paid by the Company or its subsidiary in connection with the exercise of the Option, as determined by the Committee.

5.Dividends.   The Option shall not entitle the Optionee to receive any dividend declared on the Company’s common stock.

6.   Non-transferability.   Neither the Optionee nor the Optionee’s beneficiaries shall sell, exchange, transfer, assign, or otherwise dispose of the Option or any rights or interests therein, other than by testamentary disposition by the Optionee or the laws of descent and distribution. Neither the Optionee nor the Optionee’s beneficiaries shall pledge, encumber, or otherwise hypothecate the Option or any rights or interests therein in any way at any time. The Option shall not be subject to execution, attachment, or similar legal process. Any attempted sale, pledge, or other disposition of the Option in violation of this paragraph shall be void and of no force or effect.

7.   Entire Agreement; Amendment.   Except as otherwise provided herein, this Agreement contains the entire agreement between the parties and supersedes other oral and written agreements previously entered into by the parties concerning the same subject matter. This Agreement may be modified or rescinded only with the written consent of both parties. The Options are granted pursuant to the June 30, 2004, Employment Agreement between the Company and the Optionee, the terms of which shall prevail in the event of a conflict with this Stock Option Agreement.

8.   Governing Law.   Nevada law shall govern this Agreement and its interpretation. The issuance of the Option (and the Option Shares upon exercise of this Option) pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any federal and state securities laws, rules, and regulations (including but not limited to the Securities Act, the

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Exchange Act, and the respective rules and regulations promulgated thereunder) and any other applicable law or regulation.

9.Binding Effect.   This Agreement shall bind and inure to the benefit of the Company and its successors and assigns.

10.   Counterparts.   This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

ALLIANCE GAMING CORPORATION
By:	/s/ Mark Lerner	/s/ Richard Haddrill
Mark Lerner, Secretary		Richard Haddrill

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EX-10.14

Exhibit 10.14

RESTRICTED STOCK AGREEMENT

Grantee:		Richard M. Haddrill	Grant Date:	December 22, 2004
Plan:	2001 Long-Term Incentive Plan		Number of Units:		156,507

RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) dated as of the Grant Date specified above between Alliance Gaming Corporation, a Nevada corporation (the “Company”), and the Grantee specified above, pursuant to the Plan specified above as in effect and as amended from time to time.

1.Incorporation By Reference.  This Agreement is subject in all respects to the terms and provisions of the Plan, all of which are by this reference made a part of and incorporated in this Agreement.  Any capitalized term not defined in this Agreement shall have the meaning ascribed to it in the Plan.  If and to the extent this Agreement and the Plan conflict, the Plan shall control.

2.Grant of Restricted Stock Units.  The Company grants to the Grantee, as of the Grant Date specified above, an award of a number of restricted stock units equal to the Number of Units specified above (the “Restricted Stock Units”).  Each Restricted Stock Unit represents the right of the Grantee to receive one share of the common stock, $.10 par value, of the Company (the “Shares”) pursuant to the terms and conditions of this Agreement.

3.Vesting of the Restricted Stock Units.  Except as otherwise provided in the Employment Agreement, dated as of June 30, 2004, between the Company and the Grantee, as amended (the “Employment Agreement”), the Restricted Stock Units shall vest (i.e., become nonforfeitable) on October 1, 2010, so long as the Grantee remains continuously employed by the Company as its Chief Executive Officer through such date; provided that the vesting of 50% of the Restricted Stock Units will be accelerated to each of October 1, 2005 and October 1, 2006 upon the attainment, in each case, of strategic and/or financial measures specified for the approximately nine month period ending October 1, 2005 and for the twelve month period ending October 1, 2006 to be mutually agreed to between the Board of Directors of the Company and the Grantee.  Restricted Stock Units that have vested and are no longer subject to forfeiture are referred herein to as “Vested Units.”  Restricted Stock Units that have not yet vested and thus remain subject to forfeiture are referred herein to as “Unvested Units.”

4.Settlement of Restricted Stock Units.  Each Vested Unit represents the Grantee’s right to receive one Share as follows:

(a)75% of the Shares represented by the Vested Units shall be issued to the Grantee (1) on the later of (a) October 1, 2007 or (b) the first date on which such payment or any portion thereof is no longer subject to the limits of section 162(m) of the Internal Revenue Code in which case that portion of the payment that is no longer subject to such limits shall be issued to the Grantee at the time such limits become inapplicable, or (2) in the event that the Grantee’s employment with the Company is terminated prior to October 1, 2007, on the first date in which such payment or any portion thereof is no longer subject to the limits of Section 162(m) of the Internal Revenue Code in

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which case that portion of the payment that is no longer subject to such limits shall be issued to the Grantee at the time such limits become inapplicable.

(b)25% of the Shares represented by the Vested Units shall be issued to the Grantee (1) on the later of (a) October 1, 2008 or (b) the first date on which such payment or any portion thereof is no longer subject to the limits of section 162(m) of the Internal Revenue Code in which case that portion of the payment that is no longer subject to such limits shall be issued to the Grantee at the time such limits become inapplicable, or (2) in the event that the Grantee’s employment with the Company is terminated prior to October 1, 2008, on the first date in which such payment or any portion thereof is no longer subject to the limits of Section 162(m) of the Internal Revenue Code in which case that portion of the payment that is no longer subject to such limits shall be issued to the Grantee at the time such limits become inapplicable.

5.Rights as a Stockholder.  The Grantee shall have no rights as a stockholder (including, without limitation, any voting rights with respect to the Shares subject to the Restricted Stock Units) with respect to either the Restricted Stock Units granted hereunder or the Shares underlying the Restricted Stock Units, unless and until such Shares are issued in respect of Vested Units, and then only to the extent of such issued Shares.

6.Forfeiture of Unvested Units.  Except as otherwise provided in the Employment Agreement, if the Grantee’s ceases to serve as the Company’s Chief Executive Officer, all Unvested Units shall be immediately forfeited.

7.Withholding Taxes.  The Company has the right to deduct or otherwise effect a withholding of the amount of any taxes (including, but not limited to, any FICA, FUTA, and similar taxes) required by federal, state, local or foreign laws to be withheld or otherwise deducted and paid with respect to the grant, vesting or settlement of the Restricted Stock Units; or, in lieu of such withholding, to require that the Grantee pay to the Company in cash (or, at the sole discretion of the Board or the Committee, in the form of Shares) the amount of any taxes required to be withheld or otherwise deducted and paid by the Company or its Subsidiary in connection with the grant, vesting or settlement of the Restricted Stock Units.  Unless the tax withholding obligations of the Company or any affiliate are satisfied, the Company will have no obligation to issue a certificate for any of the Shares subject to the Restricted Stock Units (whether vested or unvested).

8.Non-transferability.  Neither the Grantee nor the Grantee’s beneficiaries shall sell, exchange, transfer, assign, or otherwise dispose of any Restricted Stock Units (whether vested or unvested) or any rights or interests therein (including any Shares subject to Restricted Stock Units (whether vested or unvested) that have not yet been delivered to the Grantee).  The Grantee shall pledge, encumber, or otherwise hypothecate the Restricted Stock Units (whether vested or unvested) or any rights or interests therein (including any Shares subject to Restricted Stock Units (whether vested or unvested) that have not yet been delivered to the Grantee) in any way at any time.  The Restricted Stock Units (and any undelivered Shares subject thereto) shall not be subject to execution, attachment, or similar legal process.  Any attempted sale, pledge, or other disposition of the Restricted Stock Units (or any undelivered Shares subject thereto) in violation of this paragraph shall be void and of no force or effect.

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9.Entire Agreement; Amendment.  This Agreement contains the entire agreement between the parties and supersedes other oral and written agreements previously entered into by the parties concerning the same subject matter.  This Agreement may be modified or rescinded only with the written consent of both parties.

10.Governing Law.  Nevada law shall govern this Agreement and its interpretation.  The issuance of the Restricted Stock pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any federal and state securities laws, rules, and regulations (including but not limited to the Securities Act, the Exchange Act, and the respective rules and regulations promulgated thereunder) and any other applicable law or regulation.

11.Binding Effect.  This Agreement shall bind and inure to the benefit of the Company and its successors and assigns.

12.Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

ALLIANCE GAMING CORPORATION

By:	/s/ Mark Lerner	/s/ Richard M. Haddrill
	Mark Lerner, Secretary	Richard M. Haddrill

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EX-10.17

Exhibit 10.17

SECOND AMENDMENT TO
HADDRILL EMPLOYMENT AGREEMENT

This Second Amendment to the Employment Agreement (the “Second Amendment”) is made and entered into as of June 13, 2005 (the “Effective Date”), by and between Alliance Gaming Corporation, a Nevada corporation (the “Company”), and Richard Haddrill (“Haddrill”).

WHEREAS, the Company and Haddrill are parties to that certain Employment Agreement dated as of June 30, 2004 (the “Employment Agreement”) pursuant to which Haddrill is employed as the Company’s Chief Executive Officer;

WHEREAS, the Company and Haddrill are parties to that certain Amendment to the Employment Agreement dated as of December 22, 2004 (the “First Amendment”);

WHEREAS, pursuant to the Employment Agreement, the Company granted to Haddrill non-statutory stock options to acquire 500,000 shares of the Company’s common stock (the “Employment Agreement Options”) pursuant to the Company’s 2001 Long Term Incentive Plan (the “Plan”);

WHEREAS, the award of the Employment Agreement Options has been evidenced by those certain Stock Option Agreements between the Company and Haddrill dated June 30, 2004 (the “June Stock Option Agreement”) and October 27, 2004 (the “October Stock Option Agreement”);

WHEREAS, pursuant to that certain Stock Option Agreement between the Company and Haddrill dated January 8, 2004 (the “January Stock Option Agreement”), the Company granted to Haddrill non-statutory stock options to acquire 195,000 shares of the Company’s common stock pursuant to the Plan (the “January Options” and together with the Employment Agreement Options, the “Accelerated Options”);

WHEREAS, pursuant to that certain Stock Option Agreement between the Company and Haddrill dated April 23, 2003 (the “April Stock Option Agreement” and together with the June Stock Option Agreement, the October Stock Option Agreement and the January Stock Option Agreement, the “Stock Option Agreements”), the Company granted to Haddrill non-statutory stock options to acquire 50,000 shares of the Company’s common stock pursuant to the Plan (the “April Options” and together with the Accelerated Options, the “Pre-Amendment Options”);

WHEREAS, the Board of Directors of the Company has determined that it is in the best interests of the Company to accelerate the vesting of the Accelerated Options;

WHEREAS, the Company has determined that the terms of certain of the Stock Option Agreements do not accurately reflect the agreed upon terms of the Pre-Amendment Options with respect to the post-termination exercise period applicable to such Pre-Amendment Options; and

WHEREAS, the Company and Haddrill desire to amend the Employment Agreement to (i) accelerate the vesting of the Accelerated Options and (ii) clarify the post-termination exercise provisions of the Pre-Amendment Options in accordance with and subject to the terms and conditions of this Second Amendment.

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NOW THEREFORE, on the basis of the foregoing premises and in consideration of the mutual covenants and agreements contained herein, the parties hereto agree as follows:

1.Effective as of the Effective Date, the Accelerated Options shall be fully vested and immediately exercisable in their entirety by Haddrill.

2.Notwithstanding anything in the Employment Agreement, the First Amendment, the Plan or the Stock Option Agreements to the contrary, Haddrill and the Company hereby agree that Haddrill may not sell, encumber, pledge or otherwise transfer any of the shares of the Company’s common stock received upon exercise of the Accelerated Options until the dates set forth in the following schedule and that any attempted transfer shall be without force or effect:

(a)With respect to 100% of the shares subject to the January Options, such shares shall become freely transferable on January 1, 2008.

(b)With respect to the shares subject to the Employment Agreement Options, (i) one-third of such shares shall become freely transferable on October 1, 2006, (ii) an additional one-third of such shares shall become freely transferable on October 1, 2007 and (iii) the remaining one-third of the shares shall become freely transferable on October 1, 2008.

(c)In the event of Change in Control (as defined in the First Amendment), all of the transfer restrictions described in this paragraphs 2(a) and 2(b) hereof shall immediately lapse.

(d)In the event that Haddrill’s employment is terminated under paragraphs 7(b) or 7(c) of the Employment Agreement, the transfer restrictions described in paragraphs 2(a) and 2(b) hereof shall lapse with respect to a pro rated number of shares based upon the number of full months between October 1, 2004 and the date of Haddrill’s termination of employment divided by 36 months.

3.The Pre-Amendment Options shall become “Portable Options” and subject to the applicable extended post-termination exercise period described in paragraph 4(b) of this Second Amendment in accordance with the following schedule:

(a)100% of the April Options shall be considered Portable Options as of the Effective Date.

(b)100% of the January Options shall become Portable Options October 1, 2007; provided that Haddrill remains continuously employed by the Company as Chief Executive Officer until such date.

(c)With respect to the Employment Agreement Options, (i) one-third of such options shall become Portable Options on October 1, 2005, (ii) an additional one-third of such options shall become Portable Options on October 1, 2006 and (iii) the remaining one-third of such options shall become Portable Options on October 1, 2007, in each case, provided that Haddrill remains continuously employed by the Company as Chief Executive Officer until the applicable date.

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(d)In the event that a Change in Control (as defined in the First Amendment) occurs prior to a termination of Haddrill’s employment with the Company, 100% of the Pre-Amendment Options shall immediately become Portable Options upon the consummation of such Change in Control.

(e)In the event that Haddrill’s employment is terminated under paragraphs 7(b) or 7(c) of the Employment Agreement prior to October 1, 2007, a pro rated portion of both the January Options and the Employment Agreement Options that have not yet become Portable Options shall become Portable Options based upon the number of full months between October 1, 2004 and the date of Haddrill’s termination of employment divided by 36 months.

4.Notwithstanding anything in the Employment Agreement, the First Amendment, the Plan or the Stock Option Agreements to the contrary, Haddrill and the Company hereby agree that following a termination of Haddrill’s employment with the Company for any reason (a) that portion of each of the Pre-Amendment Options that have not become Portable Options pursuant to paragraph 3 of this Second Amendment shall terminate sixty (60) days following the date of termination of employment, unless exercised during such 60-day period, and (b) that portion of each of the Pre-Amendment Options that have become Portable Options pursuant to paragraph 3 of this Second Amendment shall remain exercisable until (i) in the case of the Employment Agreement Options, October 1, 2014, (ii) in the case of the April Options, April 23, 2013, and (iii) in the case of the January Options, July 8, 2011 or the Extension Date (as such term is defined in the January Stock Option Agreement).

5.The Company and Haddrill further agree that, in the case of the January Options, should Haddrill remain continuously employed by the Company as Chief Executive Officer until October 1, 2007, he shall be deemed to have satisfied Section 4(c)(v) of the January Stock Option Agreement (which provision provides for an extended post-termination exercise period for the January Options following Haddrill’s resignation from the Board of Directors at the request of the Board of Directors).

6.Section 3 of Schedule B-1 to the First Amendment are hereby amended and restated in their entirety to read as follows:

“3.Each vested Additional RSU represents Haddrill’s right to receive one (1) share of Company common stock, as follows:

a.75% of the shares represented by the vested Additional RSUs shall be issued to Haddrill (1) on the later of (a) October 1, 2007 or (b) the first date on which such payment or any portion thereof is no longer subject to the limits of section 162(m) of the Internal Revenue Code in which case that portion of the payment that is no longer subject to such limits shall be issued to Haddrill at the time such limits become inapplicable, or (2) in the event that Haddrill’s employment with the Company, as amended, is terminated prior to October 1, 2007, on the first date in which such payment or any portion thereof is no longer subject to the limits of Section 162(m) of the Internal Revenue Code in which case that portion of the payment that is no longer subject to such limits shall be issued to Haddrill at the time such limits become inapplicable.

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b.The remaining 25% of the shares represented by the vested Additional RSUs shall be issued to Haddrill (1) on the later of (a) October 1, 2008 or (b) the first date on which such payment or any portion thereof is no longer subject to the limits of section 162(m) of the Internal Revenue Code in which case that portion of the payment that is no longer subject to such limits shall be issued to Haddrill at the time such limits become inapplicable, or (2) in the event that Haddrill’s employment with the Company is terminated prior to October 1, 2008, on the first date in which such payment or any portion thereof is no longer subject to the limits of Section 162(m) of the Internal Revenue Code in which case that portion of the payment that is no longer subject to such limits shall be issued to Haddrill at the time such limits become inapplicable.”

7.Except as expressly modified by this Second Amendment, the Employment Agreement, the First Amendment and the Stock Option Agreements shall remain unchanged and shall remain in full force and effect.

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IN WITNESS WHEREOF, the Company and Haddrill have duly executed this Second Amendment as of the date first above written.

ALLIANCE GAMING CORPORATION
By:	/s/ Mark Lerner
Name:			Mark Lerner
Title:		Secretary
/s/ Richard Haddrill
Richard Haddrill

[Signature Page to Second Amendment to Haddrill Employment Agreement]

EX-10.18

Exhibit 10.18

THIRD AMENDMENT TO
HADDRILL EMPLOYMENT AGREEMENT

This Third Amendment to the Employment Agreement (the “Third Amendment”) is made and entered into as of June   , 2006 (the “Effective Date”), by and between Bally Technologies, Inc., a Nevada corporation (the “Company”), and Richard Haddrill (“Haddrill”).

WHEREAS, the Company and Haddrill are parties to that certain Employment Agreement dated as of June 30, 2004, as amended on December 22, 2004 and June 13, 2005 (as amended, “Employment Agreement”) pursuant to which Haddrill is employed as the Company’s Chief Executive Officer;

WHEREAS, the Employment Agreement is scheduled to terminate on October 1, 2007 (the “Original Expiration Date”); and

WHEREAS, the Company and Haddrill desire to further amend the Employment Agreement to grant additional non-statutory stock options and restricted stock and to extend the term of the Employment Agreement until January 1, 2009, in each case, in accordance with and subject to the terms and conditions of this Third Amendment.

NOW THEREFORE, on the basis of the foregoing premises and in consideration of the mutual covenants and agreements contained herein, the parties hereto agree as follows:

1.The Company and Haddrill agree that the term of the Employment Agreement and Haddrill’s employment by the Company is hereby extended until, and that the Employment Agreement shall terminate in accordance with Section 3 thereof on January 1, 2009, unless otherwise terminated as provided in the Employment Agreement or renewed as mutually agreed between the parties. The period commencing on the Original Expiration Date and ending on the date Haddrill’s employment with the Company terminates is referred to herein as the “Extension Term.”

2.During the Extension Term Haddrill shall continue to serve as Chief Executive Officer of the Company on the terms and conditions described in Section 2 of the Employment Agreement.

3.During the Extension Term, in consideration of Haddrill’s continued service as Chief Executive Officer, Haddrill shall continue to receive the compensation and benefits currently provided to him on the terms and conditions set forth in Sections 4(a) and (b) of the Employment Agreement, except that effective as of July 1, 2006, (i) Haddrill’s base salary shall be increased to $998,000 per year (rather than $980,000 as currently provided for under the Employment Agreement) and (ii) Haddrill shall be entitled to five weeks of vacation time per year (rather than four weeks as currently provided for under the Employment Agreement).

4.As soon as practicable following the Effective Date, subject to approval by the Compensation Committee of the Board of Directors of the Company (the “Committee”), the Company shall grant Haddrill additional non-statutory stock options (the “Extension Options”) to acquire 200,000 shares of the Company’s common stock under the Company’s Amended and Restated 2001 Long Term Incentive Plan (the “Plan”), at an exercise price per share equal to the fair market value of a share of the Company’s common stock on the date of grant (as determined

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in accordance with the Plan). The Extension Options shall vest and be subject to the terms and conditions set forth on Schedule A-2 hereto.

5.The Company hereby agrees that, subject to approval by the Committee, Haddrill will be permitted to transfer his outstanding stock options and other equity compensation awards to a trust in which Haddrill and his immediate family members have more than fifty percent of the beneficial interest and that Hadrrill retains the voting power of, for estate planning purposes; provided that any such trust agrees that the awards remain subject to all of their existing terms and conditions and executes documentation reasonably satisfactory to the Company evidencing such agreement.

6.As soon as practicable following the Effective Date, subject to approval by the Committee, the Company shall grant Haddrill a number of shares of restricted stock under the Plan (the “Extension Restricted Stock”), having a value equal to $1.4 million dollars, as calculated as of the date of grant in accordance with Schedule B-2 hereto. The Extension Restricted Stock shall vest and be subject to the terms and conditions set forth on Schedule B-2 hereto.

7.The Company hereby confirms that in accordance with the Section 9 of the Employment Agreement, Haddrill shall, subject to applicable law and the Company’s insider trading policy, be entitled to sell the shares of the Company’s common stock acquired by Haddrill pursuant to the Employment Agreement on or before June 30, 2005, at any time after September 30, 2006.

8.Except as expressly modified by this Third Amendment, the Employment Agreement shall remain unchanged and shall remain in full force and effect.

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IN WITNESS WHEREOF, the Company and Haddrill have duly executed this Third Amendment as of the date first above written.

BALLY TECHNOLOGIES, INC.
	By:
	Name:
	Title:
	Richard Haddrill

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Schedule A-2

EXTENSION OPTIONS

1.The Company shall grant to Haddrill, as soon as practicable following the Effective Date, the Extension Options pursuant to the terms of the Plan.

2.The Extension Options shall vest as follows:  (i) 66,667 shares shall vest on February 28, 2008, (ii) an additional 66,667 shares shall vest on July 31, 2008, and (iii) the final 66,666 shares shall vest on January 1, 2009, in each case, subject to Haddrill’s continuous employment by the Company as Chief Executive Officer through each such date.

3.If Haddrill’s employment with the Company is terminated under paragraphs 7(b) or 7(c) of the Employment Agreement, and such termination of employment occurs after October 1, 2007, in addition to the other compensation and benefits provided under the Employment Agreement, the vesting of the Extension Options shall be pro-rated through the month in which the date of termination occurs (taking into account that portion of the award that has already vested in accordance with its terms), based upon the number of full months between October 1, 2007 and the date of Haddrill’s termination of employment divided by 15 months.

4.In addition to the above, notwithstanding any provision of the Employment Agreement, or the Plan to the contrary, in the event of a Change of Control (as defined in the Employment Agreement): (i) if such Change of Control is consummated on or prior to October 1, 2007, and, within one year following such Change of Control Haddrill’s employment with the Company (or any successor) is terminated under paragraphs 7(b) or 7(c) of the Employment Agreement, the Extension Options shall become immediately and fully vested and exercisable effective as of immediately prior to the date of such termination of employment and (ii) if such Change of Control is consummated after October 1, 2007, the Extension Options shall become immediately and fully vested and exercisable effective as of immediately prior to such Change of Control.

5.Once the Extension Options become vested and exercisable hereunder, they shall remain exercisable until the tenth anniversary of the date of grant thereof without regard to whether Haddrill continues to be employed by the Company prior to or on such date.

6.Except as described in this Schedule A-2, upon a termination of Haddrill’s employment with the Company (or any successor) for any reason, the unvested portion of the Extension Options at the time of such termination of employment (after giving effect to the pro-rated or accelerated vesting described in this Schedule A-2, if any) shall terminate effective as of the date of termination.

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Schedule B-2

EXTENSION RESTRICTED STOCK

1.The Company shall grant to Haddrill, as soon as practicable following the Effective Date, the Extension Restricted Stock pursuant to the terms of the Plan. The number of shares of common stock subject to the Extension Restricted stock shall be determined by dividing $1.4 million dollars by the average per share closing price of the Company’s common stock on the stock exchange in which the stock is principally traded for the 20 business days immediately prior to the date of the grant or such other method as the parties shall mutually agree to, provided that such method complies with the Plan.

2.The Extension Restricted Stock shall vest as follows:  (i) 28.6% of the shares shall vest on July 1, 2008 and (ii) the remaining shares shall vest on January 1, 2009, in each case, subject to Haddrill’s continuous employment by the Company as Chief Executive Officer through each such date.

3.If Haddrill’s employment with the Company is terminated under paragraphs 7(b) or 7(c) of the Employment Agreement, in addition to the other compensation and benefits provided under the Employment Agreement, the vesting of the Extension Restricted Stock shall be pro-rated through the 12-month period following the month in which the date of termination occurs (taking into account that portion of the award that has already vested in accordance with its terms), based upon the number of full months between July 1, 2006 and the date that is 12 months following the date of Haddrill’s termination of employment divided by 30 months.

4.In addition to the above, notwithstanding any provision of the Employment Agreement, or the Plan to the contrary, in the event of a Change of Control (as defined in the Employment Agreement) the Extension Restricted Stock shall become immediately and fully vested effective as of immediately prior to such Change of Control.

5.Except as described in this Schedule B-2, upon a termination of Haddrill’s employment with the Company (or any successor) for any reason, the unvested portion of the Extension Restricted Stock at the time of such termination of employment (after giving effect to the pro-rated or accelerated vesting described in this Schedule B-2, if any) shall be forfeited effective as of the date of termination.

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EX-10.28

Exhibit 10.28

June 19, 2006

Mr. Michael Gavin Isaacs

RE:Employment offer

Dear Mr. Isaacs:

Bally Gaming, Inc. (the “Company”) is pleased to offer you employment under the following terms and conditions. You will start to work at the Company on the earlier of September 1, 2006, or any date prior to September 1, 2006 when you are released from non-competition obligations, if any, that would prohibit you from working for the Company (the “Effective Date”). If you accept employment with the Company you will be an at will employee and, as such, either you or the Company may terminate your employment at any time with or without cause, with the rights and obligations of the parties upon termination of your employment limited strictly to the terms of this letter agreement.

1.Definitions.

“Cause” means any of the following:  (1) an act or omission which is dishonest or fraudulent involving work related conduct or the commission by you of any act or the suffering by you of any occurrence or state of facts, which renders you incapable of performing your duties under this letter agreement, or which adversely affects or could reasonably be expected to adversely affect the Company’s business reputation, (2) a formal charge or conviction of a felony,  a gross misdemeanor involving moral turpitude or criminal conduct against any person or property, including without limitation, the Company, (3) your failure to diligently or effectively perform and comply with your duties under any provision of this letter agreement or any duty as directed from time to time by the Company, including the Company’s then current policies, procedures and rules, (4) any breach by you of any of the terms of, or the failure to perform any covenant contained in, this letter agreement, (5) your disclosure, improper use or of or failure to protect the Company’s confidential, proprietary or trade secret information, (6) your death or upon some other condition which renders you unable to perform the essential functions of your job, with or without accommodation,  (7) failure to comply with any provision of the gaming laws of the State of Nevada or the rules and regulations of the Nevada Gaming Control Board or the Nevada Gaming Commission or any gaming law, ordinance, rule or regulation of any city or county having jurisdiction, or the gaming laws, regulations and rules of any other nation, state, county or other jurisdiction in which the Company may be doing business at any time which will materially and negatively affect the registration and licensing of the Company, including failure to maintain or have suspended, revoked or denied any applicable license, permit or card required by the state or a political subdivision thereof, or (8) your commission of any action or the existence of any state of facts which would constitute “cause” under Nevada law.

“Salary Continuation” means the Company’s continued payment of (1) your then-current base salary on normal paydays following termination of your employment with the Company and (2) during the first two years of this Agreement, the allowance provided for under Section 2(G) of this letter agreement, paid under such

circumstances described in further detail in this letter agreement, less standard withholding and offset by all income earned from other employment during any period of time that you receive any Salary Continuation.

2.Compensation and Duties.

A.Position and Title. You are offered the position of Executive Vice President and Chief Operating Officer (COO). You will report to the Chief Executive Officer of the Company. Your duties will include responsibility for the Bally Gaming business unit, along with any other related duties that the Chief Executive Officer may assign to you. However, the duties set forth above shall be subject to the following express and strict limitations:

a.For a period of one year from the Effective Date of this agreement you will not solicit any employee from your former employer.

b.You will maintain strict compliance with any obligations that you may have to any third party, including your former employer, to maintain their confidential, proprietary or trade secret information. In this regard, if any of the job duties or tasks assigned to you during your employment with the Company might (no matter how small the risk) require you to use or disclose confidential, proprietary or trade secret information of your former employer, you must inform our legal department of this risk prior to engaging in the task or duty. This reporting mechanism will allow us to adjust, modify or eliminate such duties or task. You should inform our legal department of the problem without disclosing the underlying confidential, proprietary or trade secret information.

c.By your signature below, you agree and acknowledge that you believe that you can perform the duties set forth above and simultaneously maintain compliance with any obligations that you may have to any third party, including your former employer, to maintain their confidential, proprietary or trade secrets information, that the Company has not induced you to breach any terms of any agreement that you may have and that the Company’s assessment that you can perform the duties without breaching your former employer’s confidences or using their confidential, proprietary or trade secret information is based, in part, on your representations to us.

B.Salary; Signing Bonus. Your base salary will be $340,000 a year beginning on the Effective Date. On the second and third anniversary of the Effective Date and each year thereafter, your performance and salary will be reviewed by the CEO and or the Board of Directors as they determine appropriate.

In addition to salary compensation, you will be eligible to participate in certain employee benefit programs established by Bally upon fulfillment of the eligibility requirements for each program. These programs include medical, dental, vision, FSA, life and disability insurance. Participation in these plans is optional and you share a portion of the expense. Bally also offers a 401(k) savings plan to employees after three months of employment. Bally reserves the right to modify or discontinue any benefit program which it maintains.

You accrue vacation from the date of hire not to be taken until your six-month anniversary. You will be entitled to a maximum of twenty days paid vacation per year subject to company policy on carryover provisions during the term of your employment, the time for such vacation to be determined by mutual agreement.

You will be paid, within ten (10) days of signing this letter agreement, a signing bonus of $10,000 dollars.

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C.Stock Options. Subject to the approval of the Board of Directors of Bally Technologies Inc., on the Effective Date you will be granted an option to acquire 150,000 shares of Bally Technologies Inc. common stock at the per-share exercise price which will be equal to the market price of a common share of Bally Technologies Inc. as of the close of business on the Effective Date, referred to below as the “Option”. You acknowledge and agree that these Options constitute a material inducement for you to accept your new employment with the Company, that the Options will not be issued pursuant to the Company’s 2001 Long Term Incentive Plan but will be issued subject to substantially similar terms and conditions, and that the underlying shares will not be registered under the Securities Act of 1933, as amended (the “Securities Act”). As a result there will be certain federal security law restrictions on your ability to sell the underlying shares.

The Option shall become exercisable in four installments of 37,500 on each of the first four anniversary dates after the Effective Date, subject to your continued employment through each such date. The Option granted to you will be granted in accordance with the Company’s then-current policies and procedures and you agree that you will cooperate with the Company in completing any registrations, filings or other documentation that may be required in conjunction with the Option granted to you.

D.Restricted Stock. Subject to the approval of the Board of Directors of Bally Technologies Inc., on the Effective Date you will be granted 50,000 shares of Bally Technologies Inc. restricted common stock, referred to below as the “Restricted Stock”. These shares will be restricted such that, subject to compliance with federal and state securities laws, they will be available for sale by you as follows (subject to your continued employment through each such date):

25,000 shares after the second anniversary of the Effective Date;

12,500 shares after the third anniversary of the Effective Date; and

12,500 shares after the fourth anniversary of the Effective Date.

The Restricted Stock granted to you will be granted pursuant to the Company’s 2001 Long Term Incentive Plan and in accordance with the Company’s then-current policies and procedures and you agree that you will cooperate with the Company in completing any registrations, filings or other documentation that may be required in conjunction with the Restricted Stock granted to you.

E.Salary Continuation. If the Company terminates your employment without Cause after the Effective Date, the Company will pay you Salary Continuation for a period of twelve months immediately following such termination of your employment less standard withholdings and offset by any income you earn from any other employment during the Salary Continuation period. You will not receive Salary Continuation for any period of time following your termination if the Company terminates your employment for Cause or if you terminate this letter agreement for any reason at any time, except as follows:

a.If you terminate your employment as a result of and within one year of a reduction in salary, the Company will pay you Salary Continuation for a period of twelve months immediately following such termination of employment less standard withholdings and offset by any income you earn from any other employment during the Salary Continuation period.

b.If the Company increases your salary to less than $490,000 on the second anniversary of the Effective Date, you will have the option of either (i) accepting the compensation offered by the Company as your new salary, or (ii) within 30 days of the second anniversary of the Effective Date, terminating your employment, in which event the Company will have the option to either (1) discontinue any payments due to you pursuant to this letter agreement,

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including but not limited to the Salary Continuation, in which event your obligations in the Covenant not to Compete in Section 3(A) of this letter agreement would terminate immediately or (2) pay you the Salary Continuation for a period of twelve months immediately following such termination of your employment less standard withholdings and offset by any income you earn from any other employment during the Salary Continuation period, in which event all of your other obligations under this letter agreement, including but not limited to your obligations pursuant to the Covenant not to Compete in Section 3(A) of this letter agreement, would remain in full force and effect. In the event that you do not terminate your employment pursuant to clause (ii) above within such 30 day period, you will be deemed to have accepted the compensation pursuant to clause (i) above.

Notwithstanding anything to the contrary in this letter agreement, if the Company determines (a) that on the date your employment with the Company terminates or at such other time that the Company determines to be relevant, you are a “specified employee” (as such term is defined under Section 409A of the Internal Revenue Code of 1986 (the “Code”)) of the Company and (b) that any payments to be provided to you pursuant to this Agreement are or may become subject to the additional tax under Section 409A(a)(1)(B) of the Code or any other taxes or penalties imposed under Section 409A of the Code (“Section 409A Taxes”) if provided at the time otherwise required under this Agreement then such payments shall be delayed until the date that is six months after date of your “separation from service” (as such term is defined under Section 409A of the Code) with the Company, or such shorter period that, as determined by the Company, is sufficient to avoid the imposition of Section 409A Taxes.

F.Management Incentive Program. You will be entitled to participate in the Company’s Management Incentive Program (“MIP”), which along with all Company incentive programs is subject to change at any time. The current MIP entitles you to receive a target performance bonus in the amount of $204,000 per year, with a maximum of $347,000 per year. You will be subject to the terms and conditions of the MIP, which will be provided to you separately from this letter agreement. For the Company’s 2007 fiscal year ending on June 30, 2007 (“FY 2007”), you will receive a pro rata portion of the existing MIP based on your tenure during FY 2007. The Company may pay you up to 30% of the amount of any performance bonus you have earned in shares of restricted stock of the Company that shall vest and become exercisable by you at the discretion of the Board of Directors up to two years after such shares are granted. The allowance provided for pursuant to Section 2(G) shall not be calculated as part of your salary for determining incentive targets and awards under the MIP.

G.Other Consideration. During the first two full years of your employment, you will be provided a $150,000 annual allowance, to be paid quarterly, in order to transition you from the former status of an expatriate to the new status as a permanent US-based employee. The allowance is intended to support other benefits currently being provided to you and all of which may be taxable to you. On the second anniversary of your employment, the allowance will end.

3.Employment Covenants.

A.Covenant not to compete. You agree not to compete with the Company for as long as the Company employs you. You agree not to compete with the Company for one year after your employment with the Company terminates if the Company terminates you for Cause, or subject to Section 2(E)(b)(ii)(1) of this letter agreement, if you quit for any reason (the “Non-Compete Period”); provided however, that the Non-Compete Period shall be reduced to three months in the event that (a) Aristocrat Gaming or any of its affiliates (as such

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term is defined in Rule 405 of the Securities Act) acquire a controlling interest in Bally Technologies, Inc., and (b) you decide to quit for any reason within three months of the completion of such acquisition.

If you are terminated without Cause or you terminate due to a reduction in salary, you agree not to compete with the Company for twelve months following your termination.

To “compete” means to establish, engage, or be connected with, directly or indirectly, any person or entity engaged in a business in competition with the business of the Company (including any of the Company’s subsidiaries or affiliates) in any area where the Company does business, whether as an employee, owner, partner, agent, employee, officer, consultant, advisor, stockholder (except as the beneficial owner of not more than 5 percent of the outstanding shares of a corporation, any of the capital stock of which is listed on any national or regional securities exchange or quoted in the daily listing of over-the-counter market securities and, in each case, in which you do not undertake any management or operational or advisory role) or in any other capacity, for your own account or for the benefit of any person or entity.

You acknowledge and agree that the scope and duration of this covenant not to compete are reasonable and fair. However, if a court of competent jurisdiction determines that this covenant is overly broad or unenforceable in any respect, you and the Company agree that the covenant shall be enforced to the greatest extent the court deems appropriate and that the court may modify this covenant to that extent.

B.Covenant not to solicit customers, employees, or consultants. You agree that during your employment with the Company and for one year after your employment ends for any reason, you shall not, directly or indirectly, (i) aid or endeavor to solicit or induce any other employee or consultant of the Company to leave the Company to accept employment of any kind with any other person or entity, or (ii) solicit the trade or patronage of any of the Company’s customers (which includes customers of any of the Company’s subsidiaries or affiliates) or of anyone who has traded or dealt with the Company with respect to any technologies, services, products, trade secrets, or other matters in which the Company is active.

C.Confidential information. You agree that your work for the Company will give you access to confidential matters of the Company not publicly known such as proprietary matters of a technical nature (including but not limited to know-how, technical data, gaming processes, gaming equipment, techniques, developments) and proprietary matters of a business nature (including but not limited to information about costs, profits, markets, sales, lists of customers, and matters received by the Company in confidence from other parties), collectively referred to as “Confidential Matters.” Some Confidential Matters may be entitled to protection as “Trade Secrets,” as that term is defined in N.R.S. 600A.030(5), the Restatement of Torts, and case law interpreting the same.

You agree to keep secret all such Confidential Matters and agree not to directly or indirectly, other than is necessary in the business of the Company and the scope of your employment, disclose or use any such Confidential Matters at any time except (i) with prior written consent of the Company, (ii) as necessary in any judicial or arbitration action to enforce the provisions of this letter agreement, (iii) in connection with any judicial or administrative proceeding to the extent required by law, and (iv) as otherwise required by law. You agree that all written materials (including correspondence, memoranda, manuals, notes, and notebooks) and all models, mechanisms, devices, drawings, and plans in your possession from time to time (whether or not written or prepared by you) embodying Confidential Matters shall be and remain the sole property of the Company, and you will use all reasonable precautions to assure that all such written materials and models, mechanisms, devices, drawings, and plans are properly protected and kept from unauthorized persons. You further agree to

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deliver all Confidential Matters, including copies, immediately to the Company on termination of your employment for any reason, or at any time the Company may request.

After termination of your employment with the Company for any reason, you shall not reveal directly or indirectly to any person or entity or use for your personal benefit (including without limitation, for the purpose of soliciting business, whether or not competitive with any business of the Company) any Confidential Matters. To the extent that any Confidential Matters are considered by the Company as Trade Secrets, you agree that all limitations on use of these Trade Secrets shall last forever. You further agree that immediately upon or after termination, you will deliver to the Company all memoranda, notes, reports, lists, models, mechanisms, devices, drawings or plans and other documents (and all copies thereof) in your possession relating to the business of the Company or its subsidiaries and affiliates.

D.Intellectual Property. You shall promptly disclose in writing to the Company all inventions, discoveries, concepts, ideas, developments, improvements, and innovations, whether or not patentable, and the expressions of all inventions, discoveries, concepts, ideas, developments, improvements, and innovations, whether or not copyrightable (collectively “Inventions”), conceived, developed, or first actually reduced to practice by you, either alone or with others, during your employment with the Company or during the first six months after your employment with the Company ends for any reason, that (i) relate in any manner to the existing or contemplated business or research activities of the Company, (ii) are suggested by or result from your work for the Company; or (iii) result from the use of time, materials, or facilities of the Company. All Inventions you conceive, develop, or first actually reduce to practice, either alone or with others, while employed by the Company that relate in any manner to the existing or contemplated business or research activities of the Company shall be the exclusive property of the Company. You assign to the Company your entire right, title, and interest in and to all such Inventions and to all unpatented Inventions that you now own, except those specifically described in a statement that has been separately executed by you and an officer of the Company and attached hereto, provided, however, that if no such list is attached, you represent and warrant that there are no such Inventions. You will, at the request and expense of the Company, execute specific assignments to any such Inventions and execute, acknowledge, and deliver patent applications and such other documents (including but not limited to all provisionals, continuations, continuations-in-part, continued prosecution applications, extensions, re-issues, re-examinations, divisionals and foreign counterparts) and take such further action as may be considered necessary by the Company at any time, whether during your employment with the Company or after it terminates for any reason, to obtain and define letters patent in any and all countries and to vest title to such Inventions and related patents or patent applications in the Company or its assignees. Any Invention that you disclose to a third person or describe in a patent application filed by you or in your behalf during your employment with the Company or within six months after your employment with the Company terminates for any reason shall be presumed to have been conceived or made by you during your employment with the Company unless proved to have been conceived and made by you after the expiration or termination of this letter agreement.

E.Non-disparagement. You and the Company each agree that, during your employment with the Company and after your employment with the Company terminates for any reason, neither shall, publicly or privately, disparage or make any statements (written or oral) that could impugn the integrity, acumen (business or otherwise), ethics, or business practices of the other (including, in the case of the Company, its affiliates and subsidiaries), except, in each case, to the extent (but solely to the extent) necessary (i) in any judicial or arbitration action to enforce the provisions of this letter agreement, or (ii) in connection with any judicial or administrative proceeding to the extent required by applicable law, or (iii) as otherwise required by law.

6

F.Injunctive relief; jurisdiction. You acknowledge that the Company will suffer irreparable injury, not readily susceptible of valuation in monetary damages, if you breach any of your obligations under this letter agreement. Accordingly, you agree that the Company will be entitled, at its option, to injunctive relief against any breach or prospective breach by you of your obligations under this section in any federal or state court of competent jurisdiction sitting in Nevada, in addition to monetary damages and any other remedies available at law or in equity. You hereby submit to the jurisdiction of such courts for the purposes of any actions or proceedings instituted by the Company to obtain such injunctive relief, and agree that process may be served on you by registered mail, addressed to your last address known to the Company, or in any other manner authorized by law. The Company may also suspend any salary continuation payments during any period that you are in breach of this letter agreement and the applicable restricted period shall be extended by any period that you are in breach.

G.Material inducements; Reliance. The restrictive covenants and other provisions in this letter agreement are material inducements to the Company entering into and performing its obligations under this letter agreement. Accordingly, in the event of any breach of the provisions of this section by you, in addition to all other remedies at law or in equity possessed by the Company, including but not limited to the right to enforce the covenants you have agreed to in this letter agreement, the Company shall have the right to terminate this letter agreement and your employment with the Company and not pay any amounts payable to you under this letter agreement. In the event any of the provisions of this letter agreement are individually deemed unlawful, any remaining provisions of this letter shall remain in full force and effect.

In addition, the Company is and will be acting in reliance upon your full compliance with this letter agreement, including but not limited to, employing you, foregoing looking at other candidates, the termination of high level employees, restructuring and reassigning employees and the Company’s payment to you of the signing bonus set forth in paragraph 2(B). In particular, you agree and the Company relies upon your agreement to not engage in any form of communication or discussion with any competitor of the Company, from the date you sign this letter agreement until one (1) year from the date you sign this letter agreement, for the purpose of the competitor retaining your services, whether as an employee, independent contractor or otherwise. This prohibition is meant to and does include your agreement not to discuss or communicate with any competitor of the Company on the subject of you becoming employed by the competitor in any capacity whatsoever.

Except as modified by this letter, the terms and conditions of your employment with the Company shall be subject to the Company’s regular employment policies and practices and benefits as may be in effect from time to time. This letter comprises the entire agreement between you and the Company and supersedes all other oral and written agreements previously entered into by you and the Company concerning the same subject matter. If accepted, this offer will not create an agreement of employment for any specific term or otherwise alter the at-will nature of your employment relationship with the Company. If you accept this offer, either you or the Company may terminate your employment at any time with or without cause.

7

If you accept this offer of employment, please sign below and return this letter to me. A copy is enclosed for your records. Once signed and returned, this letter will comprise a binding agreement between you and the Company. If you have any questions about its meaning, you are urged to consult with your attorney.

Sincerely,

Bally Gaming, Inc.

/s/ Richard Haddrill

By: Richard Haddrill

Chief Executive Officer

ACCEPTANCE

I have read the foregoing letter, and I have reviewed it with counsel or have had the opportunity to do so. I understand and accept its terms.

/s/ Michael Gavin Isaacs

Michael Gavin Isaacs

8

EX-21

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Exhibit 21

Subsidiaries						State or Country of Incorporation
All subsidiaries are wholly owned except as indicated.
Bally Technologies, Inc.						Nevada
Alliance Holding Company						Nevada
	Bally Gaming International, Inc.					Delaware
		Bally Gaming, Inc.				Nevada
			Bally Technologies India Private Limited			India
			Bally Gaming and Systems			France
			BGI Australia Pty. Limited			Australia
			BGI Gaming & Systems, S. de R.L. de C.V.			Mexico
				Bally Gaming Services, LLC		Nevada
				Bally Servicios, S. de R.I. de C.V.+		Mexico
			Bally Gaming Africa (Proprietary) Ltd.			South Africa
			Bally Gaming de Puerto Rico, Inc.			Puerto Rico
			Bally Gaming and Systems, S.A.			Uruguay
			Bally Gaming and Systems UK Limited			United Kingdom
			Bally Gaming Hong Kong Limited			Hong Kong
			Bally Gaming International GmbH			Germany
			Bally Macau Limited++			Macau
			Bally Technologies Spain, S.L.U.			Spain
			Bally Gaming Canada Ltd.			Canada
			Bally Gaming d.o.o.			Slovenia
			Bally Gaming GP, LLC			Nevada
			Bally Gaming LP, LLC			Nevada
				Bally Technologies Bermuda, L.P.+++		Bermuda
			Bally Gaming Netherlands I B.V.			Netherlands
			Bally Gaming Netherlands II B.V.			Netherlands
				Bally Gaming Netherlands III B.V.		Netherlands
					Importadora Bally Technologies Chile Limitada++++	Chile
				Bally Technologies Italy S.R.L. Unipersonale		Italy
				Bally Technologies Singapore PTE. Ltd.		Singapore
			Bally Gaming Columbia SAS			Columbia
			Compudigm Services, Inc.			Nevada
			Sierra Design Group			Nevada
				Arcade Planet, Inc.		California
Casino Electronics, Inc.						Nevada

+

99% owned by BGI Gaming & Systems and 1% owned by Bally Gaming, Inc.

++

90% owned by Bally Gaming, Inc. and 10% owned by Bally Gaming International, Inc.

+++

99% owned by Bally Gaming LP, LLC and 1% owned by Bally Gaming GP, LLC

++++

99% owned by Bally Gaming Netherlands III B.V. and 1% owned by Bally Gaming Netherlands I B.V.

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Exhibit 21

EX-23.1

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Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statements Nos. 33-75308, 33-45811, 333-105087, 333-81154, 333-34077, 333-115271, 333-149637, 333-122064 and 333-173190 on Form S-8 of our report dated August 26, 2011, relating to the consolidated financial statements and financial statement schedule of Bally Technologies, Inc. and subsidiaries (which report expresses an unqualified opinion and includes an explanatory paragraph for the adoption of a new accounting standard relating to accounting for multiple deliverable arrangements and certain revenue arrangements that include software elements), and the effectiveness of Bally Technologies, Inc. and subsidiaries internal control over financial reporting, appearing in this Annual Report on Form 10-K of Bally Technologies, Inc. and subsidiaries for the year ended June 30, 2011.

/s/ DELOITTE & TOUCHE LLP

Las Vegas, Nevada
August 26, 2011

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Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

EX-31.1

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Exhibit 31.1

CERTIFICATION

I, Richard Haddrill, certify that:

1.

I have reviewed this Annual Report on Form 10-K of Bally Technologies, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 26, 2011

/s/ Richard Haddrill
Richard Haddrill
Chief Executive Officer
(Principal Executive Officer)

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Exhibit 31.1

EX-31.2

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Exhibit 31.2

CERTIFICATION

I, Neil P. Davidson, certify that:

1.

I have reviewed this Annual Report on Form 10-K of Bally Technologies, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 26, 2011

/s/ Neil P. Davidson
Neil P. Davidson
Senior Vice President, Chief
Financial Officer and Treasurer
(Principal Financial Officer)

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Exhibit 31.2

EX-32.1

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Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K for the fiscal year ended June 30, 2011 of Bally Technologies, Inc. (the "Company"), as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Richard Haddrill, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated: August 26, 2011

/s/ Richard M. Haddrill
Richard M. Haddrill
Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

EX-32.2

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Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K for the fiscal year ended June 30, 2011 of Bally Technologies, Inc. (the "Company") as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Neil P. Davidson, Senior Vice President, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated: August 26, 2011

/s/ Neil P. Davidson
Neil P. Davidson
Senior Vice President, Chief
Financial Officer and Treasurer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

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OTHER CURRENT ASSETS (Details) (USD $) In Thousands	Jun. 30, 2011	Jun. 30, 2010
OTHER CURRENT ASSETS
Games on trial	$ 3,609	$ 2,744
Refundable deposits	1,224	413
Other	151	193
Total other current assets	$ 4,984	$ 3,350

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data	12 Months Ended
	Jun. 30, 2011		Jun. 30, 2010		Jun. 30, 2009
Revenues:
Gaming equipment and systems	$ 439,534		$ 491,241		$ 568,795
Gaming operations	318,621		286,950		274,965
Total revenues	758,155		778,191		843,760
Costs and expenses:
Cost of gaming equipment and systems	184,836	[1]	196,699	[1]	251,710	[1]
Cost of gaming operations	88,820		83,106		80,083
Selling, general and administrative	225,033		203,195		212,735
Research and development costs	88,086		80,301		77,277
Impairment charges			11,379
Depreciation and amortization	19,845		19,401		18,937
Total costs and expenses	606,620		594,081		640,742
Operating income	151,535		184,110		203,018
Other income (expense):
Interest income	4,960		3,310		3,392
Interest expense	(11,984)		(12,581)		(19,140)
Loss on extinguishment of debt	(4,119)				(786)
Other, net	3,001		(4,021)		(1,524)
Income from continuing operations before income taxes	143,393		170,818		184,960
Income tax expense	(45,182)		(60,721)		(64,781)
Income from continuing operations	98,211		110,097		120,179
Discontinued operations:
Income from discontinued operations, net of tax			7,181		8,057
Gain (loss) on sale of discontinued operations, net of tax	(403)		22,079
Income (loss) from discontinued operations, net of tax	(403)		29,260		8,057
Net income	97,808		139,357		128,236
Less net income (loss) attributable to noncontrolling interests	(455)		1,880		1,927
Net income attributable to Bally Technologies, Inc.	98,263		137,477		126,309
Basic earnings per share attributable to Bally Technologies, Inc.:
Income from continuing operations (in dollars per share)	$ 1.90		$ 2.00		$ 2.19
Income from discontinued operations (in dollars per share)			$ 0.11		$ 0.13
Gain (loss) on sale of discontinued operations (in dollars per share)	$ (0.01)		$ 0.41
Basic earnings per share (in dollars per share)	$ 1.89		$ 2.52		$ 2.32
Diluted earnings per share attributable to Bally Technologies, Inc.:
Income from continuing operations (in dollars per share)	$ 1.82		$ 1.89		$ 2.10
Income from discontinued operations (in dollars per share)			$ 0.11		$ 0.12
Gain (loss) on sale of discontinued operations (in dollars per share)	$ (0.01)		$ 0.38
Diluted earnings per share (in dollars per share)	$ 1.81		$ 2.38		$ 2.22
Weighted average shares outstanding:
Basic (in shares)	51,960		54,576		54,449
Diluted (in shares)	54,420		57,675		57,058
Amounts attributable to Bally Technologies, Inc.:
Income from continuing operations, net of tax	98,666		109,223		119,439
Income from discontinued operations, net of tax			6,175		6,870
Gain (loss) on sale of discontinued operations, net of tax	(403)		22,079
Net income	$ 98,263		$ 137,477		$ 126,309

[1] Cost of gaming equipment and systems exclude amortization related to certain intangibles, including core technology and license rights, which are included in depreciation and amortization.

XML



CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) In Thousands, except Share data	Total	Common Stock	Series E Special Stock	Treasury Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss) ("OCI")	Retained Earnings	Noncontrolling Interests	Comprehensive Income
Balances at Jun. 30, 2008	$ 325,107	$ 5,626	$ 12	$ (25,041)	$ 302,146	$ 1,268	$ 39,314	$ 1,782
Balances (in shares) at Jun. 30, 2008		56,318,000
Increase (Decrease) in Stockholders' Equity
Income from continuing operations, net of tax	120,179						119,439	740	120,179
Income from discontinued operations, net of tax	8,057						6,870	1,187	8,057
Foreign currency translation adjustment	(2,293)					(2,293)			(2,293)
Unrealized gain (loss) on derivative financial instruments, net of tax	255					255			255
Total comprehensive income	126,198								126,198
Distributions to noncontrolling interests	(1,266)							(1,266)
Issuance and receipt of restricted stock, ESPP shares, stock options and related tax and tax benefit	10,580	77		(1,411)	11,914
Issuance and receipt of restricted stock, ESPP shares, stock options and related tax and tax benefit (in shares)		773,000
Purchase of common stock for treasury	(38,275)			(38,275)
Share-based compensation	16,405				16,405
Balances at Jun. 30, 2009	438,749	5,703	12	(64,727)	330,465	(770)	165,623	2,443
Balances (in shares) at Jun. 30, 2009		57,091,000
Increase (Decrease) in Stockholders' Equity
Income from continuing operations, net of tax	110,097						109,223	874	110,097
Income from discontinued operations, net of tax	7,181						6,175	1,006	7,181
Gain (loss) on sale of discontinued operations, net of tax	22,079						22,079		22,079
Foreign currency translation adjustment	(266)					(266)			(266)
Unrealized gain (loss) on derivative financial instruments, net of tax	(2,008)					(2,008)			(2,008)
Total comprehensive income	137,083								137,083
Distributions to noncontrolling interests	(1,942)							(1,942)
Issuance and receipt of restricted stock, ESPP shares, stock options and related tax and tax benefit	47,593	236		(1,105)	48,462
Issuance and receipt of restricted stock, ESPP shares, stock options and related tax and tax benefit (in shares)		2,364,000
Purchase of common stock for treasury	(91,221)			(91,221)
Shares issued upon exercise of warrants		4			(4)
Shares issued upon exercise of warrants (in shares)	40,080	40,000
Share-based compensation	13,930				13,930
Balances at Jun. 30, 2010	544,192	5,943	12	(157,053)	392,853	(3,044)	303,100	2,381
Balances (in shares) at Jun. 30, 2010		59,495,000
Increase (Decrease) in Stockholders' Equity
Income from continuing operations, net of tax	98,211						98,666	(455)	98,211
Gain (loss) on sale of discontinued operations, net of tax	(403)						(403)		(403)
Foreign currency translation adjustment	762					762			762
Unrealized gain (loss) on derivative financial instruments, net of tax	(782)					(782)			(782)
Total comprehensive income	97,788								97,788
Distributions to noncontrolling interests	(239)							(239)
Issuance and receipt of restricted stock, ESPP shares, stock options and related tax and tax benefit	33,998	206		(3,161)	36,953
Issuance and receipt of restricted stock, ESPP shares, stock options and related tax and tax benefit (in shares)		2,046,000
Purchase of common stock for treasury	(474,054)			(474,054)
Shares issued upon exercise of warrants (in shares)	125
Share-based compensation	12,907				12,907
Balances at Jun. 30, 2011	$ 214,592	$ 6,149	$ 12	$ (634,268)	$ 442,713	$ (3,064)	$ 401,363	$ 1,687
Balances (in shares) at Jun. 30, 2011		61,541,000

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LONG-TERM DEBT (Details 2) (USD $)	12 Months Ended	1 Months Ended
	Jun. 30, 2011	Jun. 30, 2011 Interest rate swap agreement maturing on May 13, 2016	Jun. 30, 2011 Accrued and other liabilities.	Jun. 30, 2011 Other assets, net
Interest rate swap agreement
Variable interest rate description before hedging of debt	LIBOR	LIBOR
Amounts expected to be reclassified from other comprehensive income to interest expense in the next twelve months	$ 4,900,000
Amount of term loan facility debt hedged	296,250,000
Fair value of interest rate swap liability	3,902,000		5,133,000
Fair value of interest rate swap asset				1,231,000
Principal Repayments under the Company's term loan facility
2012	15,000,000
2013	16,875,000
2014	24,375,000
2015	30,000,000
2016	210,000,000
Total	$ 296,250,000

XML



401(k) PLAN

12 Months Ended

Jun. 30, 2011

401(k) PLAN

401(k) PLAN

17.   401(k) PLAN

The Company is the sponsor of the Bally Technologies, Inc. 401(k) Savings Plan (the "401(k) Plan"). The 401(k) Plan was adopted for domestic employees of Bally Technologies, Inc. and all its domestic subsidiaries. Employees may enroll in the plan after meeting certain age and length of employment criteria, and plan participants may defer up to 25% of their compensation, up to certain IRS imposed limitations.

The Company matches 50% of any participant's contributions, up to the first 6% of their compensation (as defined in the plan document). Company matching contributions totaled approximately $1.9 million for each of the years ended June 30, 2011, 2010 and 2009, respectively.

For participants hired through December 31, 2000, employee and employer matching contributions are 100% vested immediately. For employees hired on or after January 1, 2001, vesting of the employer match is on a 20%, 5-year vesting schedule. Effective October 1, 2005, vesting of employer match is on a 25%, 4-year vesting schedule.

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands	Jun. 30, 2011	Jun. 30, 2010
Current assets:
Cash and cash equivalents	$ 66,425	$ 145,089
Restricted cash	8,419	8,303
Accounts and notes receivable, net of allowances for doubtful accounts of $11,059 and $9,974	235,246	207,365
Inventories	68,634	42,806
Prepaid and refundable income tax	36,332	7,783
Deferred income tax assets	29,318	35,973
Deferred cost of revenue	13,795	14,568
Prepaid assets	10,524	11,172
Other current assets	4,984	3,350
Total current assets	473,677	476,409
Restricted long-term investments	12,485	13,075
Long-term accounts and notes receivables, net of allowances for doubtful accounts of $507 and $5,169	46,659	30,163
Property, plant and equipment, net	33,266	32,094
Leased gaming equipment, net	96,691	82,357
Goodwill	162,110	161,153
Intangible assets, net	34,865	34,048
Deferred income tax assets	12,120	29,980
Income tax receivable	10,972	8,688
Deferred cost of revenue	23,193	30,958
Other assets, net	21,356	14,251
Total assets	927,394	913,176
Current liabilities:
Accounts payable	38,411	23,775
Accrued and other liabilities	58,295	45,662
Customer deposits	4,930	10,185
Jackpot liabilities	11,894	11,531
Deferred revenue	28,900	33,875
Income tax payable	3,033	6,982
Current maturities of long-term debt	15,153	42,543
Total current liabilities	160,616	174,553
Long-term debt, net of current maturities	500,250	131,250
Deferred revenue	34,788	40,236
Other income tax liability	9,321	13,646
Other liabilities	7,827	9,299
Total liabilities	712,802	368,984
Commitments and contingencies (Note 15)
Stockholders' equity:
Special stock, 10,000,000 shares authorized: Series E, $100 liquidation value; 115 shares issued and outstanding	12	12
Common stock, $.10 par value; 100,000,000 shares authorized; 61,541,000 and 59,495,000 shares issued and 44,397,000 and 54,392,000 outstanding	6,149	5,943
Treasury stock at cost, 17,144,000 and 5,103,000 shares	(634,268)	(157,053)
Additional paid-in capital	442,713	392,853
Accumulated other comprehensive loss	(3,064)	(3,044)
Retained earnings	401,363	303,100
Total Bally Technologies, Inc. stockholders' equity	212,905	541,811
Noncontrolling interests	1,687	2,381
Total stockholders' equity	214,592	544,192
Total liabilities and stockholders' equity	$ 927,394	$ 913,176

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PROPERTY, PLANT AND EQUIPMENT AND LEASED GAMING EQUIPMENT (Details) (USD $) In Thousands	Jun. 30, 2011	Jun. 30, 2010
Property, plant and equipment and leased gaming equipment
Less accumulated depreciation	$ (51,570)	$ (47,714)
Property, plant and equipment, net	33,266	32,094
Leased gaming equipment	272,828	236,137
Less accumulated depreciation	(176,137)	(153,780)
Leased gaming equipment, net	96,691	82,357
Land and land improvements
Property, plant and equipment and leased gaming equipment
Property, plant and equipment	1,975	1,975
Buildings and leasehold improvements
Property, plant and equipment and leased gaming equipment
Property, plant and equipment	25,125	23,483
Gaming equipment
Property, plant and equipment and leased gaming equipment
Property, plant and equipment	25,734	26,508
Furniture, fixtures and equipment
Property, plant and equipment and leased gaming equipment
Property, plant and equipment	$ 32,002	$ 27,842

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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Jun. 30, 2011

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of presentation and consolidation

Principles of presentation and consolidation

The accompanying consolidated financial statements include the accounts of Bally Technologies, Inc., and its wholly owned and partially owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"), include all adjustments necessary to fairly present the Company's consolidated financial position, results of operations and cash flows for each period presented. References to specific U.S. GAAP within this report cite topics within the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC").

All intercompany accounts and transactions have been eliminated in consolidation.

Discontinued Operations

Discontinued Operations

The Company was the general partner of Rainbow Casino Vicksburg Partnership ("RCVP"), which operated the Rainbow Casino, a dockside riverboat casino in Vicksburg, Mississippi. On April 5, 2010, the Company entered into a definitive purchase agreement to sell the Rainbow Casino which closed on June 8, 2010. The Company's Casino Operations have been classified as discontinued operations in the accompanying financial statements. See Note 3 to consolidated financial statements, Discontinued Operations.

Use of estimates

Use of estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair value of financial instruments

Fair value of financial instruments

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amounts reflected in the accompanying consolidated balance sheets for cash equivalents, accounts and notes receivable, investment securities to fund jackpot liabilities, accounts payable, jackpot liabilities and long-term debt approximate their respective fair values.

All financial assets and liabilities are recognized or disclosed at fair value using a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value:

• •

  Level 1:    quoted prices in active markets for identical assets or liabilities;

  •

  Level 2:    inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

  •

  Level 3:    unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company transacts business in various foreign currencies and has international sales and expenses denominated in foreign currencies, subjecting the Company to foreign currency risk. The Company may enter into foreign currency forward contracts, generally with maturities of twelve months or less, to hedge recognized foreign currency assets and liabilities to reduce the risk that earnings and cash flows will be adversely affected by changes in foreign currency exchange rates. The gains or losses resulting from changes in the fair value of these forward contracts, which are not designated as accounting hedges, are reported in other income (expense) in the consolidated statements of operations, and generally offset the gains and losses associated with the underlying foreign-currency-denominated balances, which are also reported in other income (expense). As of June 30, 2011, total outstanding contracts were $35.9 million, or the notional equivalent of €25 million Euro.

The Company may use interest rate derivatives to manage the interest expense generated by variable rate debt and foreign currency derivatives to manage foreign exchange risk. The Company's derivative financial instruments are measured at fair value on a recurring basis, and the balances as of June 30, 2011 and 2010 (which is included in other assets, net and accrued and other liabilities in the consolidated balance sheets) were as follows:

		Fair Value Measurements Using Input Type
		Level 1		Level 2		Level 3
		(in 000s)
As of June 30, 2011:
Asset:
	Foreign currency derivative financial instrument	$	—	$	452	$	—
	Interest rate derivative financial instruments	$	—	$	1,231	$	—
Liability:
	Foreign currency derivative financial instrument	$	—	$	586	$	—
	Interest rate derivative financial instruments	$	—	$	5,133	$	—
As of June 30, 2010:
Liability:
	Interest rate derivative financial instruments	$	—	$	2,698	$	—

The valuation techniques used to measure the fair value of the derivative financial instruments above in which the counterparties have high credit ratings, were derived from pricing models, such as discounted cash flow techniques, with all significant inputs derived from or corroborated by observable market data. The Company's discounted cash flow techniques use observable market inputs, such as LIBOR-based yield curves and foreign currency forward rates. See Note 9 to consolidated financial statements, Long-Term Debt.

Accounting for Derivative Instruments and Hedging Activity

Accounting for Derivative Instruments and Hedging Activity

The Company assesses, both at the inception of each designated hedge and on an on-going basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of the hedged items. Such highly effective derivatives are granted hedge accounting treatment. The interest rate derivative instruments meet these requirements and are accounted for as a cash flow hedges.

The impact of the cash flow hedge and non-designated foreign currency derivatives on the consolidated financial statements is depicted below:

	Amount of Loss Recognized in OCI on Derivative (Effective Portion)							Amount of Loss Reclassified from Accumulated OCI into Income (Effective Portion)
Derivative in Cash Flow Hedging Relationship	Year Ended June 30, 2011			Year Ended June 30, 2010			Location of Loss Reclassified from Accumulated OCI into Income (Effective Portion)	Year Ended June 30, 2011			Year Ended June 30, 2010
	(in 000s)
Interest rate swap agreement	$	(3,661	)	$	(5,978	)	Interest expense	$	(2,458	)	$	(3,024	)

	Amount of Loss Recognized in Other Income (Expense)
Non-Designated Derivative	Year Ended June 30, 2011			Year Ended June 30, 2010		Year Ended June 30, 2009
Foreign Currency Forward Contract	$	(135	)	$	—	$	—

Cash and cash equivalents

Cash and cash equivalents

Cash and cash equivalents consist of highly liquid debt instruments purchased with an original maturity of three months or less at the date of purchase and are carried at cost, which approximates fair value.

Restricted cash

Restricted cash

The Company maintains jackpot funds totaling approximately $8.4 million and $8.3 million at June 30, 2011 and 2010, respectively, to ensure availability of funds to pay wide-area progressive jackpot awards.

Accounts and notes receivable, allowance for doubtful accounts and credit quality of financing receivables

Accounts and notes receivable, allowance for doubtful accounts and credit quality of financing receivables

Accounts and notes receivable are stated at face value less an allowance for doubtful accounts. The Company generally grants customers credit terms for periods of 30 to 120 days, but may also grant extended payment terms to some customers for periods up to three years, with interest at market rates.

Trade receivables with contract terms greater than one year relate to the sale of gaming equipment and, to a lesser extent, systems transactions that include software as a major component of the sale, and are generally collateralized by the related equipment sold, although the value of such equipment, if repossessed, may be less than the receivable balance outstanding. Sales-type leasing arrangements relate to gaming equipment and include options to purchase the equipment at the end of the lease term at established prices. These customers typically have a long-standing credit history with the Company. Revenue from these lease arrangements is not considered significant as it is less than 2% of revenue for the Company.

The Company has also provided development financing to certain customers in the form of notes receivable with repayment terms of three to ten years. These notes may also include accelerated payment terms based upon a percentage of net-win from gaming devices sold or leased to these customers.

The Company has one portfolio segment, the casino industry customer, and four classes of receivables including its trade receivables with a contract term less than one year, trade receivables with a contract term greater than one year, sales-type leasing arrangements, or lease receivables, and notes receivable, which are primarily for developmental financing loans. As of June 30, 2011, the Company's accounts and notes receivable were as follows:

		Accounts and Notes Receivable as of June 30, 2011
		Ending Balance		Ending Balance Individually Evaluated for Impairment		Ending Balance Collectively Evaluated for Impairment
		(in 000s)
Contract term less than one year:
Trade and other receivables, current		$	162,202	$	2,064	$	160,138
Contract term greater than one year:
Trade receivables, current			72,237		3,973		68,264
Trade receivables, noncurrent			15,111		213		14,898
			87,348		4,186		83,162
Lease receivables, current			10,245		10,245		—
Lease receivables, noncurrent			13,490		13,490		—
			23,735		23,735		—
Notes receivable, current			1,621		1,621		—
Notes receivable, noncurrent			18,565		18,565		—
			20,186		20,186		—
	Total current		246,305		17,903		228,402
	Total noncurrent		47,166		32,268		14,898
	Total	$	293,471	$	50,171	$	243,300

The activity related to the allowance for doubtful accounts since December 31, 2010, the date of adoption for new disclosure requirements related to the credit quality of financing receivables and the related allowance for credit losses, to June 30, 2011, is summarized below:

		Allowance for Doubtful Accounts
		Beginning Balance as of December 31, 2010			Charge- offs		Recoveries		Provision			Ending Balance as of June 30, 2011			Ending Balance Individually Evaluated for Impairment			Ending Balance Collectively Evaluated for Impairment
		(in 000s)
Contract term less than one year:
Trade and other receivables, current		$	(5,857	)	$	2,324	$	191	$	(2,533	)	$	(5,875	)	$	(2,064	)	$	(3,811	)
Contract term greater than one year:
Trade receivables, current			(3,329	)		1,615		53		(3,523	)		(5,184	)		(3,973	)		(1,211	)
Trade receivables, noncurrent			(498	)		204		—		(213	)		(507	)		(213	)		(294	)
			(3,827	)		1,819		53		(3,736	)		(5,691	)		(4,186	)		(1,505	)
Lease receivables, current			—			—		—		—			—			—			—
Lease receivables, noncurrent			—			—		—		—			—			—			—
			—			—		—		—			—			—			—
Notes receivable, current			—			—		—		—			—			—			—
Notes receivable, noncurrent			(5,169	)		5,169		—		—			—			—			—
			(5,169	)		5,169		—		—			—			—			—
	Total current		(9,186	)		3,939		244		(6,056	)		(11,059	)		(6,037	)		(5,022	)
	Total noncurrent		(5,667	)		5,373		—		(213	)		(507	)		(213	)		(294	)
	Total	$	(14,853	)	$	9,312	$	244	$	(6,269	)	$	(11,566	)	$	(6,250	)	$	(5,316	)

The Company accrues interest, if applicable, on its receivables per the terms of the agreement. Interest is not accrued on delinquent accounts that the Company has determined and specifically identified as not collectible. The Company's recorded investment in receivables on nonaccrual status as of June 30, 2011, excluding trade accounts receivable with a contract term less than one year, is as follows:

		Total
		(in 000s)
Trade receivables		$	4,186
Lease receivables			—
Notes receivables			—
	Total	$	4,186

The Company evaluates the credit quality of its accounts and notes receivable and establishes an allowance for doubtful accounts based on a combination of factors including, but not limited to, customer collection experience, economic conditions, and the customer's financial condition. In addition to specific account identification, the Company utilizes historic collection experience for the most recent twelve month period, where applicable, to establish an allowance for doubtful accounts receivable. Receivables are written off only after the Company has exhausted all collection efforts.

Gaming is a highly regulated industry requiring customers to obtain a gaming operator's license and verify with the applicable regulatory agency that they have the financial resources to operate a gaming establishment. Many of the Company's customers, including new casinos that have opened in recent years, are owned by existing multi-property customers that have established a favorable payment history with the Company. Customer accounts typically include a mix of trade receivables balances with terms for periods of 30 to 120 days and financing receivables resulting from extended payment terms.

The Company monitors the credit quality of its accounts and notes receivable by reviewing an aging of customer invoices. Invoices are considered past due if a scheduled payment is not received within contractually agreed upon terms. The Company also reviews a variety of other relevant qualitative information such as collection experience, economic conditions and specific customer financial conditions to evaluate credit risk in recording the allowance for doubtful accounts.

The following summarizes the aging of past due receivables, excluding trade accounts receivable with a contract term less than one year, as of June 30, 2011:

		1 to 90 Days Past Due		91 to 180 Days Past Due		181 + Days Past Due		Total Past Due		Current		Total Receivable		Recorded Investment 90 Days and Accruing
		(in 000s)
Trade receivables		$	7,655	$	4,790	$	6,205	$	18,650	$	68,698	$	87,348	$	—
Lease receivables			—		—		—		—		23,735		23,735		—
Notes receivable			—		—		—		—		20,186		20,186		—
	Total	$	7,655	$	4,790	$	6,205	$	18,650	$	112,619	$	131,269	$	—

The aging of customer invoices is based on their contractually agreed upon payment terms, which in certain rare circumstances have been modified from the original financing terms. The modifications of original financing terms have not been material to our total trade, lease and note receivable balances.

The Company's notes receivable are reviewed quarterly, at a minimum, for impairment. The customer's solvency, collection experience, legal and regulatory environment and other financial information may indicate that the loan is impaired. As of June 30, 2011, the Company had no impaired loans remaining in its accounts and notes receivable balances. As of June 30, 2010, the Company had one impaired loan to a customer in Alabama and the recorded investment and related allowance of $5.2 million were written off during fiscal year 2011. In fiscal year 2010, the legality of the charitable bingo market in Alabama was questioned and several operators in the region closed and the Company recognized an impairment charge on the notes receivable. No further interest is accrued once a loan is impaired.

The fair value of accounts and notes receivable, net, is estimated by discounting expected future cash flows using current interest rates at which similar loans would be made to borrowers, with similar credit ratings and remaining maturities. As of June 30, 2011 and 2010, respectively, the fair value of the accounts and notes receivable, net, approximate the carrying value.

Inventories

Inventories

Inventories are stated at the lower of cost, determined on a first in, first out basis, or market. Cost elements included in work-in-process and finished goods include raw materials, direct labor and manufacturing overhead. Inventories consist of the following:

		June 30,
		2011		2010
		(in 000s)
Raw materials		$	53,926	$	34,221
Work-in-process			1,630		1,101
Finished goods			13,078		7,484
	Total	$	68,634	$	42,806

The Company regularly reviews inventory quantities and updates estimates for the net realizable value of inventories. This process includes examining the carrying values of new and used gaming devices, parts and ancillary equipment in comparison to the current fair market values for such equipment (less costs to sell or dispose). Some of the factors involved in this analysis include the overall levels of inventories, current and projected sales levels and markets for such products, the costs required to sell the products, including refurbishment costs and importation costs for international shipments, and the overall projected demand for products once the next generation of products are scheduled for release.

The Company recorded inventory write-downs totaling approximately $3.6 million, $2.0 million and $4.5 million during the years ended June 30, 2011, 2010 and 2009, respectively. These charges are included in the cost of gaming equipment and systems in the consolidated statements of operations.

Deferred revenue and deferred cost of revenue

Deferred revenue and deferred cost of revenue

Deferred revenue arises from the timing differences between the shipment or installation of gaming equipment and systems products and the satisfaction of all revenue recognition criteria consistent with the Company's revenue recognition policy. Deferred cost of revenue consists of the direct costs associated with the manufacture of gaming equipment and systems products for which revenue has been deferred. Deferred revenue and deferred cost of revenue that are expected to be realized within one year are classified as current liabilities and current assets, respectively.

Restricted long-term investments

Restricted long-term investments

The Company purchases U.S. Treasury Strip Securities for the benefit of jackpot winners who elect to receive annual or weekly installment payments. These securities are held to maturity and recorded at cost plus interest accretion to date. Such securities are included in restricted long-term investments in the consolidated balance sheets, and totaled $12.5 million and $13.1 million as of June 30, 2011 and 2010, respectively.

Property, plant and equipment and leased gaming equipment

Property, plant and equipment and leased gaming equipment

Property, plant and equipment is stated at cost and depreciated over the estimated useful lives or lease term, if less, using the straight line method as follows: buildings and improvements, ten to forty years; furniture, fixtures and equipment, three to seven years; and leasehold improvements, the shorter of lease term or ten years. Leased gaming equipment is stated at cost and depreciated over the estimated useful lives ranging from two to three and one-half years. Depreciation and asset charges related to leased gaming equipment are recorded to cost of gaming operations in the consolidated statements of operations.

Significant replacements and improvements are capitalized while other maintenance and repairs are expensed. The cost and accumulated depreciation of assets retired or otherwise disposed of are eliminated from the accounts and any resulting gain or loss is credited or charged to income.

Depreciation and amortization expense

Depreciation and amortization expense

For the years ended June 30, 2011, 2010 and 2009, depreciation and amortization expense from continuing operations totaled $75.0 million, $73.9 million and $68.8 million, respectively. Of these amounts, $55.1 million, $54.5 million and $49.8 million of depreciation and amortization expense were included in cost of gaming operations in the consolidated statements of operations. Depreciation expense from leased gaming equipment under capital leases totaled $2.1 million for the year ended June 30, 2009.

For the years ended June 30, 2010 and 2009, depreciation and amortization expense from discontinued operations totaled $2.9 million and $3.3 million, respectively.

Impairment of long-lived assets and goodwill

Impairment of long-lived assets and goodwill

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets are measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset, undiscounted and without interest. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

The Company reviews goodwill for impairment annually at the beginning of its fourth fiscal quarter, or whenever events or circumstances indicate the carrying value may not be recoverable or warrant a revision to the estimated remaining useful life. The Company performs the impairment analysis of goodwill at a reporting unit level by comparing the fair value of a reporting unit with its carrying value, including goodwill. If the fair value is less than the carrying value, the impairment to be recognized is measured as the amount by which the carrying amount of the goodwill exceeds the fair value of the reporting unit goodwill.

During the year ended June 30, 2010, impairment charges of $5.9 million related to long-lived assets were recorded (see Note 4 to the consolidated financial statements, Impairment Charges). During the years ended June 30, 2011 and 2009, no impairment charges related to long-lived assets were recorded.

During the years ended June 30, 2011, 2010 and 2009, no impairment charges related to goodwill were recorded.

Jackpot liabilities

Jackpot liabilities

The Company recognizes jackpot expense, included in cost of gaming operations in the consolidated statements of operations, and a liability for jackpots incurred but not yet won in each jurisdiction based on the discounted net present value of the progressive meter liability. Jackpots are payable either in weekly or annual installments, or immediately in the case of instant win progressive jackpots. Winners may elect to receive a single payment for the present value of a jackpot discounted at applicable interest rates in lieu of annual installments. Interest rates used in the single payment calculation vary by jurisdiction and are impacted by market forces and other economic conditions.

Revenue recognition

Revenue recognition

The Company's revenue recognition policy is to record revenue when all of the following criteria have been satisfied:

• •

  Persuasive evidence of an arrangement exists;

  •

  The price or fee to the customer is fixed or determinable;

  •

  Collectability is reasonably assured;

  •

  Delivery has occurred; and

  •

  No significant contractual obligations remain.

Revenues are reported net of incentive rebates, discounts, sales taxes, and other taxes of a similar nature. For products sold under arrangements with extended payment terms the probability of collection is evaluated based on a review of the customer's credit worthiness and a review of historic collection experience on contracts with extended payment terms. As a result of such review, the Company recognizes revenue on extended payment term arrangements as the Company has determined that collectability is reasonably assured and the fees are fixed and determinable.

Games placed with customers on a trial basis are not recognized as revenue until the trial period ends, the customer accepts the games and all other relevant criteria have been met. Amounts billed to customers prior to completing the earnings process are deferred until the revenue recognition criteria are met.

Effective July 1, 2009, the Company adopted new accounting guidance related to revenue recognition for multiple deliverable arrangements and certain revenue arrangements that include software elements. The Company elected to adopt this guidance prior to the required effective date using the prospective method. Accordingly, this guidance was applied to all new or materially modified revenue arrangements entered into since the start of the Company's fiscal year of adoption, which was July 1, 2009.

Prior to the adoption of the new revenue recognition guidance, gaming equipment and systems revenue was recognized in accordance with software revenue recognition guidance. The new guidance amended the scope of software revenue recognition to exclude all tangible products containing both software and nonsoftware components that function together to deliver the product's essential functionality. As a result of applying the new guidance, certain products that were previously accounted for under the scope of software revenue recognition guidance are no longer accounted for as software.

Gaming Operations Revenue.    Gaming operations revenue consists of the operation of linked progressive systems and the rental of gaming devices, game content and the related systems placed with customers. Fees under these arrangements are earned and recognized based on a share of money wagered, a share of the net winnings, or on a fixed daily rate. The daily fee entitles the customer to full use of the gaming device and includes maintenance, licensing of the game content software and connection to a linked progressive system, where applicable. In certain markets, the Company also charges a daily system connection fee for the customer to connect to a central determination system and/or back-office system. The Company does not consider these arrangements to have multiple revenue-generating activities as the services offered are a comprehensive solution in exchange for a daily fee and all of the products and services are delivered contemporaneously. Gaming operations revenue is recognized under general revenue recognition guidance as the deliverables provide the customer with rights to use tangible gaming devices and software that is essential to the functionality of the gaming device.

Gaming Equipment Revenue.    Gaming Equipment revenue is generated from the sale of gaming devices and licensing rights to game content software that is installed in the gaming device, parts, and other ancillary equipment. Arrangements may also include sales of game content conversion kits which enable customers to replace game content without purchasing a new gaming device. Gaming equipment arrangements do not include maintenance and product support fees beyond a standard warranty period. The recognition of revenue from the sale of gaming devices occurs as title and risk of loss have passed to the customer and all other criteria have been satisfied.

As the combination of game content software and the tangible gaming device function together to deliver the product's essential functionality, revenue from the sale of gaming devices is recognized under general revenue recognition guidance. Prior to July 1, 2009, gaming devices were recognized under software revenue recognition guidance. Game content conversion kits are considered software deliverables and are recognized in accordance with software revenue recognition guidance.

Systems Revenue.    Systems revenue arrangements generally include a combination of systems software licenses, systems-based hardware products, maintenance and product support fees and professional services. The primary function of systems software licensed by the Company is to aid customers to more effectively run their business with marketing, data management and analysis, accounting, player tracking and security features.

Revenue for systems software and maintenance and product support fees is recognized under software revenue recognition guidance. Although the systems software and certain systems-based hardware function together, the primary functionality of the systems software is derived from the software and the systems software is not essential to the functionality of the systems-based hardware.

The Company licenses systems software on a perpetual basis or under time-based licenses. Revenue from perpetual license software is recognized at the inception of the license term if all revenue recognition criteria have been met. Revenue from maintenance and product support fees sold with perpetual licenses is recognized over the term of the support period. The Company's time-based licenses are generally for twelve month terms and are bundled with software maintenance and product support fees. All revenue from such arrangements is recognized over the term of the license.

Systems-based hardware includes embedded software that is essential to the functionality of the hardware. Accordingly, revenue related to all systems-based hardware sales and related maintenance and product support fees are recognized under general revenue recognition guidance. Prior to July 1, 2009, systems-based hardware was recognized under software revenue recognition guidance. Revenue from the sale of systems-based hardware is generally recognized upon delivery when title and risk of loss have passed to the customer and all other revenue recognition criteria are met. However, in the case of arrangements involving a systems installation, revenue on the systems-based hardware is generally not recognized until the system has been installed and the customer has accepted the system. Hardware maintenance and product support fees are recognized during the term of the support period which is generally 12 months.

Software maintenance and product support provides customers with rights to unspecified software product upgrades, maintenance and patches released during the term of the support period. The Company's software maintenance and product support arrangements are generally for 12 month periods. Software maintenance and product support is recognized on a straight-line basis over the term of the support period.

Multiple Element Arrangements.    The Company enters into revenue arrangements that may consist of multiple deliverables of its products and services. Customers may enter into arrangements with the Company for the implementation of systems software and the sale of gaming devices. Arrangements for the implementation of systems software will generally include a combination of systems software licenses, systems-based hardware products, maintenance and product support fees, and professional services. Certain gaming equipment arrangements may also include the sale of gaming devices and game conversion kits. Revenue arrangements with multiple deliverables are allocated to separate units of accounting if the deliverables meet both of the following criteria:

• •

  The delivered items have value to the customer on a stand-alone basis. The items have value on a standalone basis if they are sold separately by any vendor or the customer could resell the delivered items on a standalone basis; and

  •

  If the arrangement includes a general right of return relative to the delivered items, delivery or performance of the undelivered items is considered probable and substantially in the control of the Company.

At the inception of a multiple element arrangement, fees under the arrangement are allocated to the nonsoftware deliverables, and to the software deliverables as a group based on their relative selling price. Software deliverables are further subject to separation and allocation based on software revenue recognition guidance as described in the following paragraph. When applying the relative selling price method, a hierarchy is used for estimating the selling price based first on vendor-specific objective evidence ("VSOE"), then third-party evidence ("TPE") and finally management's estimate of the selling price ("ESP"). Revenue for each unit of accounting is recognized when the relevant recognition criteria for each respective element has been met.

In allocating arrangement fees under the relative selling price hierarchy, the Company uses VSOE for all products which have been sold on a stand-alone basis. As TPE is generally not available, the Company uses ESP for products that are not sold on a stand-alone basis and for recently introduced products that are sold on a stand-alone basis but for which a history of stand-alone sales has not yet been developed. Following these guidelines, the Company uses either VSOE or ESP for gaming devices, system-based hardware products, maintenance and product support fees associated with perpetual licenses and professional services; and ESP for perpetual and time-based software licenses and maintenance and product support fees associated with time-based licenses.

The Company uses the residual method to recognize revenue allocated to software deliverables. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is allocated to the delivered element and is recognized as revenue. In arrangements in which the Company does not have VSOE of fair value of all undelivered software elements, revenue is deferred until delivery occurs or VSOE of fair value has been established for any remaining undelivered software elements. In the event the only undelivered software element is maintenance and product support for which VSOE of fair value does not exist, the revenue is recognized ratably over the maintenance and product support period.

The establishment of VSOE requires judgment as to whether there is a sufficient quantity of items sold on a stand-alone basis and whether the prices demonstrate an appropriate level of concentration to conclude that VSOE exists. In determining ESP, management considers a variety of information including historic pricing and discounting practices, competitive market activity, internal costs, and the pricing and discounting practices of products sold in bundled arrangements.

Advertising costs

Advertising costs

The Company expenses advertising costs as incurred, which totaled $9.6 million, $9.1 million and $6.8 million from continuing operations for the years ended June 30, 2011, 2010 and 2009, respectively.

Warranty expense

Warranty expense

Gaming devices are typically sold with a 90-day parts and labor warranty. Warranty expense is calculated using historical experience, and totaled $2.5 million, $2.3 million and $3.3 million for the years ended June 30, 2011, 2010 and 2009, respectively.

Research and development

Research and development

Research and development expenses related to product development are expensed until technological feasibility has been established. The Company has determined that technological feasibility is not established for its products until completion of the regulatory approval process. As this process is completed shortly before the products are made available to customers, any development costs incurred after the establishment of technological feasibility are typically not significant and expensed as incurred.

Income taxes

Income taxes

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Taxes on income of the Company's foreign subsidiaries are provided at the tax rates applicable to the tax jurisdictions in which they are located.

The Company recognizes tax benefits from an uncertain position only if it is more likely than not that the position will be sustained upon examination by taxing authorities based on the technical merits of the issue. The amount recognized is the largest benefit that the Company believes has greater than a 50% likelihood of being realized upon settlement. The Company recognizes interest and penalties related to uncertain tax positions as tax expense.

Share-based compensation

Share-based compensation

The Company accounts for share-based compensation based on the calculated fair value of the award measured on the grant date, which is recognized, net of estimated forfeitures, as an expense over the employee's requisite service period. The Company classifies share-based compensation expense in the same financial statement line as cash compensation, including cost of gaming equipment and systems and casino operations, research and development costs, and selling, general and administrative expenses.

The excess tax benefit from stock option exercises and tax deductions in excess of compensation cost recognized are classified as a financing activity in the statement of cash flows.

Foreign currency translation

Foreign currency translation

The functional currency of the Company's foreign subsidiaries is typically their local currency. Assets and liabilities of foreign operations are translated into U.S. dollars at the rate of exchange at the end of the period, and the income and expense accounts are translated at the average rate of exchange for the period. Translation adjustments are reflected as accumulated other comprehensive income within stockholders' equity. Gains and losses on foreign currency transactions are included in the consolidated statements of operations.

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IMPAIRMENT CHARGES (Details) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2010	Jun. 30, 2010
IMPAIRMENT CHARGES
Charge to earnings recorded by the company as a result of actions concerning the legality of the charitable bingo market in Alabama	$ 11,379,000	$ 11,379,000
Impairment charges, full allowance for notes and accounts receivable related to the charitable bingo market in Alabama		5,500,000
Impairment of long-lived assets related to the charitable bingo market in Alabama		$ 5,900,000

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GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Jun. 30, 2011

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

6.     GOODWILL AND INTANGIBLE ASSETS

Intangible assets consist of the following:

		June 30, 2011							June 30, 2010
	Useful Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(dollars in 000s)
Computer software	3 - 9	$	36,725		(31,841	)	$	4,884	$	35,652	$	(28,395	)	$	7,257
License rights	3 - 13		4,344		(2,751	)		1,593		3,624		(2,048	)		1,576
Trademarks	5 - 9		2,203		(2,203	)		—		2,203		(2,023	)		180
Core technology	5 - 14		22,763		(14,107	)		8,656		22,763		(10,346	)		12,417
Contracts	10		15,303		(7,372	)		7,931		10,836		(6,421	)		4,415
Other intangibles	3 - 5		5,337		(1,036	)		4,301		1,702		(999	)		703
Total finite-lived intangible assets		$	86,675	$	(59,310	)	$	27,365	$	76,780	$	(50,232	)	$	26,548
Trademark	indefinite		7,500		—			7,500		7,500		—			7,500
Total		$	94,175	$	(59,310	)	$	34,865	$	84,280	$	(50,232	)	$	34,048

In September 2009, the Company recorded an intangible asset of approximately $7.5 million related to one-time consideration given for a perpetual, world-wide license for the use of the Bally trademark in connection with the Company's business. Consideration for this intangible asset included approximately $5.0 million related to the delivery of gaming devices and $2.5 million in forgiveness of certain customer receivable balances. Previously, a royalty fee was paid and expensed based upon the number of units produced and sold using the trademark.

Total amortization expense related to finite-lived intangible assets totaled $9.3 million, $10.3 million and $9.8 million for the years ended June 30, 2011, 2010 and 2009, respectively, which included computer software amortization expense of $3.3 million, $4.4 million and $4.1 million, respectively.

Future amortization of finite-lived intangible assets is scheduled as follows:

Year Ended June 30,	(in 000s)
2012	$	10,326
2013		8,681
2014		4,180
2015		1,464
2016		1,297
Thereafter		1,417
Total	$	27,365

All goodwill is associated with continuing operations. The changes in the carrying amount of goodwill for the years ended June 30, 2011 and 2010 are as follows:

	(in 000s)
Balance as of June 30, 2009	$	161,960
Foreign currency translation adjustment		(807	)
Balance as of June 30, 2010		161,153
Foreign currency translation adjustment		957
Balance as of June 30, 2011	$	162,110

No impairment charges for goodwill and intangible assets were necessary for the years ended June 30, 2011, 2010 and 2009.

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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Jun. 30, 2011

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of fair value of derivative liabilities

		Fair Value Measurements Using Input Type
		Level 1		Level 2		Level 3
		(in 000s)
As of June 30, 2011:
Asset:
	Foreign currency derivative financial instrument	$	—	$	452	$	—
	Interest rate derivative financial instruments	$	—	$	1,231	$	—
Liability:
	Foreign currency derivative financial instrument	$	—	$	586	$	—
	Interest rate derivative financial instruments	$	—	$	5,133	$	—
As of June 30, 2010:
Liability:
	Interest rate derivative financial instruments	$	—	$	2,698	$	—

Schedule of impact of the cash flow hedge and non-designated foreign currency derivatives on the consolidated financial statements

	Amount of Loss Recognized in OCI on Derivative (Effective Portion)							Amount of Loss Reclassified from Accumulated OCI into Income (Effective Portion)
Derivative in Cash Flow Hedging Relationship	Year Ended June 30, 2011			Year Ended June 30, 2010			Location of Loss Reclassified from Accumulated OCI into Income (Effective Portion)	Year Ended June 30, 2011			Year Ended June 30, 2010
	(in 000s)
Interest rate swap agreement	$	(3,661	)	$	(5,978	)	Interest expense	$	(2,458	)	$	(3,024	)

	Amount of Loss Recognized in Other Income (Expense)
Non-Designated Derivative	Year Ended June 30, 2011			Year Ended June 30, 2010		Year Ended June 30, 2009
Foreign Currency Forward Contract	$	(135	)	$	—	$	—

Schedule of accounts and notes receivable

		Accounts and Notes Receivable as of June 30, 2011
		Ending Balance		Ending Balance Individually Evaluated for Impairment		Ending Balance Collectively Evaluated for Impairment
		(in 000s)
Contract term less than one year:
Trade and other receivables, current		$	162,202	$	2,064	$	160,138
Contract term greater than one year:
Trade receivables, current			72,237		3,973		68,264
Trade receivables, noncurrent			15,111		213		14,898
			87,348		4,186		83,162
Lease receivables, current			10,245		10,245		—
Lease receivables, noncurrent			13,490		13,490		—
			23,735		23,735		—
Notes receivable, current			1,621		1,621		—
Notes receivable, noncurrent			18,565		18,565		—
			20,186		20,186		—
	Total current		246,305		17,903		228,402
	Total noncurrent		47,166		32,268		14,898
	Total	$	293,471	$	50,171	$	243,300

Schedule of the allowance for doubtful accounts on accounts and notes receivable

		Allowance for Doubtful Accounts
		Beginning Balance as of December 31, 2010			Charge- offs		Recoveries		Provision			Ending Balance as of June 30, 2011			Ending Balance Individually Evaluated for Impairment			Ending Balance Collectively Evaluated for Impairment
		(in 000s)
Contract term less than one year:
Trade and other receivables, current		$	(5,857	)	$	2,324	$	191	$	(2,533	)	$	(5,875	)	$	(2,064	)	$	(3,811	)
Contract term greater than one year:
Trade receivables, current			(3,329	)		1,615		53		(3,523	)		(5,184	)		(3,973	)		(1,211	)
Trade receivables, noncurrent			(498	)		204		—		(213	)		(507	)		(213	)		(294	)
			(3,827	)		1,819		53		(3,736	)		(5,691	)		(4,186	)		(1,505	)
Lease receivables, current			—			—		—		—			—			—			—
Lease receivables, noncurrent			—			—		—		—			—			—			—
			—			—		—		—			—			—			—
Notes receivable, current			—			—		—		—			—			—			—
Notes receivable, noncurrent			(5,169	)		5,169		—		—			—			—			—
			(5,169	)		5,169		—		—			—			—			—
	Total current		(9,186	)		3,939		244		(6,056	)		(11,059	)		(6,037	)		(5,022	)
	Total noncurrent		(5,667	)		5,373		—		(213	)		(507	)		(213	)		(294	)
	Total	$	(14,853	)	$	9,312	$	244	$	(6,269	)	$	(11,566	)	$	(6,250	)	$	(5,316	)

Schedule of recorded investment in receivables on nonaccrual status

		Total
		(in 000s)
Trade receivables		$	4,186
Lease receivables			—
Notes receivables			—
	Total	$	4,186

Schedule of aging of past due accounts receivables

		1 to 90 Days Past Due		91 to 180 Days Past Due		181 + Days Past Due		Total Past Due		Current		Total Receivable		Recorded Investment 90 Days and Accruing
		(in 000s)
Trade receivables		$	7,655	$	4,790	$	6,205	$	18,650	$	68,698	$	87,348	$	—
Lease receivables			—		—		—		—		23,735		23,735		—
Notes receivable			—		—		—		—		20,186		20,186		—
	Total	$	7,655	$	4,790	$	6,205	$	18,650	$	112,619	$	131,269	$	—

Schedule of inventory

		June 30,
		2011		2010
		(in 000s)
Raw materials		$	53,926	$	34,221
Work-in-process			1,630		1,101
Finished goods			13,078		7,484
	Total	$	68,634	$	42,806

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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2011	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Accounts and notes receivable, allowance for doubtful accounts and credit quality of financing receivables
Credit term, low end of range (in days)		30
Credit term, high end of range (in days)		120
Extended credit term, maximum (in years)		3
Contract term for sale of gaming equipment (in years)		1
Revenue from lease arrangements as a percentage of revenue for the Company (as a percent)		2.00%
Development financing notes receivable, repayment terms, low end of range (in years)		3
Development financing notes receivable, repayment terms, high end of range (in years)		10
Number of portfolio segments		1
Number of classes of receivables		4
Accounts and Notes Receivable
Ending Balance	$ 293,471,000	$ 293,471,000
Ending balance individually evaluated for impairment	50,171,000	50,171,000
Ending Balance Collectively Evaluated for Impairment	243,300,000	243,300,000
Allowance for Doubtful Accounts
Balance at the beginning of the period	(14,853,000)
Charge-offs	9,312,000
Recoveries	244,000
Provision	(6,269,000)
Balance at the end of the period	(11,566,000)	(11,566,000)
Ending Balance Individually Evaluated for Impairment	(6,250,000)	(6,250,000)
Ending Balance Collectively Evaluated for Impairment	(5,316,000)	(5,316,000)
Investment in receivables on nonaccrual status
Trade receivables credit term, low end of range (in days)		30
Trade receivables credit term, high end of range (in days)		120
Impaired financing receivables
Number of impaired loans			1
Recorded investment written off			5,200,000
Related allowance written off			5,200,000
Inventories
Raw materials	53,926,000	53,926,000	34,221,000
Work-in-process	1,630,000	1,630,000	1,101,000
Finished goods	13,078,000	13,078,000	7,484,000
Total	68,634,000	68,634,000	42,806,000
Inventory write-downs		3,623,000	2,025,000	4,536,000
Hurricane damage insurance recoveries
Proceeds from insurance settlement for business interruption		3,000,000
Deferred revenue and deferred cost of revenue
Maximum term of expected realization of deferred revenue and deferred cost, classified as current liabilities and current assets (in years)		1
Restricted long-term investments
Restricted long-term investments	12,485,000	12,485,000	13,075,000
Historic collection period for determination of allowances for doubtful accounts receivable (in months)		12
Trade and other receivables | Contract term less than one year | Current
Accounts and Notes Receivable
Ending Balance	162,202,000	162,202,000
Ending balance individually evaluated for impairment	2,064,000	2,064,000
Ending Balance Collectively Evaluated for Impairment	160,138,000	160,138,000
Allowance for Doubtful Accounts
Balance at the beginning of the period	(5,857,000)
Charge-offs	2,324,000
Recoveries	191,000
Provision	(2,533,000)
Balance at the end of the period	(5,875,000)	(5,875,000)
Ending Balance Individually Evaluated for Impairment	(2,064,000)	(2,064,000)
Ending Balance Collectively Evaluated for Impairment	(3,811,000)	(3,811,000)
Trade receivables | Contract term greater than one year
Accounts and Notes Receivable
Ending Balance	87,348,000	87,348,000
Ending balance individually evaluated for impairment	4,186,000	4,186,000
Ending Balance Collectively Evaluated for Impairment	83,162,000	83,162,000
Allowance for Doubtful Accounts
Balance at the beginning of the period	(3,827,000)
Charge-offs	1,819,000
Recoveries	53,000
Provision	(3,736,000)
Balance at the end of the period	(5,691,000)	(5,691,000)
Ending Balance Individually Evaluated for Impairment	(4,186,000)	(4,186,000)
Ending Balance Collectively Evaluated for Impairment	(1,505,000)	(1,505,000)
Investment in receivables on nonaccrual status
Recorded investment	4,186,000	4,186,000
Summarizes the aging of past due receivables
1 to 90 Days Past Due	7,655,000	7,655,000
91 to 180 Days Past Due	4,790,000	4,790,000
181 + Days Past Due	6,205,000	6,205,000
Total Past Due	18,650,000	18,650,000
Current	68,698,000	68,698,000
Total Receivable	87,348,000	87,348,000
Trade receivables | Contract term greater than one year | Current
Accounts and Notes Receivable
Ending Balance	72,237,000	72,237,000
Ending balance individually evaluated for impairment	3,973,000	3,973,000
Ending Balance Collectively Evaluated for Impairment	68,264,000	68,264,000
Allowance for Doubtful Accounts
Balance at the beginning of the period	(3,329,000)
Charge-offs	1,615,000
Recoveries	53,000
Provision	(3,523,000)
Balance at the end of the period	(5,184,000)	(5,184,000)
Ending Balance Individually Evaluated for Impairment	(3,973,000)	(3,973,000)
Ending Balance Collectively Evaluated for Impairment	(1,211,000)	(1,211,000)
Trade receivables | Contract term greater than one year | Noncurrent
Accounts and Notes Receivable
Ending Balance	15,111,000	15,111,000
Ending balance individually evaluated for impairment	213,000	213,000
Ending Balance Collectively Evaluated for Impairment	14,898,000	14,898,000
Allowance for Doubtful Accounts
Balance at the beginning of the period	(498,000)
Charge-offs	204,000
Provision	(213,000)
Balance at the end of the period	(507,000)	(507,000)
Ending Balance Individually Evaluated for Impairment	(213,000)	(213,000)
Ending Balance Collectively Evaluated for Impairment	(294,000)	(294,000)
Notes receivable | Contract term greater than one year
Accounts and Notes Receivable
Ending Balance	20,186,000	20,186,000
Ending balance individually evaluated for impairment	20,186,000	20,186,000
Allowance for Doubtful Accounts
Balance at the beginning of the period	(5,169,000)
Charge-offs	5,169,000
Summarizes the aging of past due receivables
Current	20,186,000	20,186,000
Total Receivable	20,186,000	20,186,000
Notes receivable | Contract term greater than one year | Current
Accounts and Notes Receivable
Ending Balance	1,621,000	1,621,000
Ending balance individually evaluated for impairment	1,621,000	1,621,000
Notes receivable | Contract term greater than one year | Noncurrent
Accounts and Notes Receivable
Ending Balance	18,565,000	18,565,000
Ending balance individually evaluated for impairment	18,565,000	18,565,000
Allowance for Doubtful Accounts
Balance at the beginning of the period	(5,169,000)
Charge-offs	5,169,000
Lease receivables | Contract term greater than one year
Accounts and Notes Receivable
Ending Balance	23,735,000	23,735,000
Ending balance individually evaluated for impairment	23,735,000	23,735,000
Summarizes the aging of past due receivables
Current	23,735,000	23,735,000
Total Receivable	23,735,000	23,735,000
Lease receivables | Contract term greater than one year | Current
Accounts and Notes Receivable
Ending Balance	10,245,000	10,245,000
Ending balance individually evaluated for impairment	10,245,000	10,245,000
Lease receivables | Contract term greater than one year | Noncurrent
Accounts and Notes Receivable
Ending Balance	13,490,000	13,490,000
Ending balance individually evaluated for impairment	13,490,000	13,490,000
Contract term greater than one year
Investment in receivables on nonaccrual status
Recorded investment	4,186,000	4,186,000
Summarizes the aging of past due receivables
1 to 90 Days Past Due	7,655,000	7,655,000
91 to 180 Days Past Due	4,790,000	4,790,000
181 + Days Past Due	6,205,000	6,205,000
Total Past Due	18,650,000	18,650,000
Current	112,619,000	112,619,000
Total Receivable	131,269,000	131,269,000
Current
Accounts and Notes Receivable
Ending Balance	246,305,000	246,305,000
Ending balance individually evaluated for impairment	17,903,000	17,903,000
Ending Balance Collectively Evaluated for Impairment	228,402,000	228,402,000
Allowance for Doubtful Accounts
Balance at the beginning of the period	(9,186,000)
Charge-offs	3,939,000
Recoveries	244,000
Provision	(6,056,000)
Balance at the end of the period	(11,059,000)	(11,059,000)
Ending Balance Individually Evaluated for Impairment	(6,037,000)	(6,037,000)
Ending Balance Collectively Evaluated for Impairment	(5,022,000)	(5,022,000)
Noncurrent
Accounts and Notes Receivable
Ending Balance	47,166,000	47,166,000
Ending balance individually evaluated for impairment	32,268,000	32,268,000
Ending Balance Collectively Evaluated for Impairment	14,898,000	14,898,000
Allowance for Doubtful Accounts
Balance at the beginning of the period	(5,667,000)
Charge-offs	5,373,000
Provision	(213,000)
Balance at the end of the period	(507,000)	(507,000)
Ending Balance Individually Evaluated for Impairment	(213,000)	(213,000)
Ending Balance Collectively Evaluated for Impairment	$ (294,000)	$ (294,000)

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INCOME TAXES (Tables)

12 Months Ended

Jun. 30, 2011

INCOME TAXES

Schedule of consolidated income from continuing operations before taxes and noncontrolling interest for domestic and foreign operations

	Year Ended June 30,
	2011		2010		2009
	(in 000s)
United States	$	131,668	$	160,265	$	169,756
Foreign		11,725		10,553		15,204
Total	$	143,393	$	170,818	$	184,960

Schedule of components of the Company's income tax expense from continuing operations

		Year Ended June 30,
		2011			2010			2009
		(in 000s)
Current:
	Federal	$	12,614		$	59,626		$	26,956
	State		5,585			5,928			4,820
	Foreign		3,245			5,057			3,711
			21,444			70,611			35,487
Deferred:
	Federal		23,984			(9,261	)		26,458
	State		(919	)		(796	)		2,770
	Foreign		673			167			66
			23,738			(9,890	)		29,294
Income tax expense		$	45,182		$	60,721		$	64,781

Schedule of the difference between the U.S. statutory federal income tax rate and the Company's effective income tax rate

	Year Ended June 30,
	2011			2010			2009
U.S. federal statutory income tax rate		35.0	%		35.0	%		35.0	%
Change in income tax contingencies		(2.5	)		(0.9	)		1.2
State income taxes, net of federal benefit		2.0			2.0			3.5
Foreign earnings subject to U.S. tax		2.9			1.2			2.2
Change in valuation allowance		(0.2	)		(0.3	)		(0.2	)
Tax credits		(4.7	)		(1.7	)		(6.7	)
Domestic production activities deduction		(1.5	)		(0.4	)		(1.9	)
Other, net		0.5			0.6			1.9
		31.5	%		35.5	%		35.0	%

Schedule of major components of the deferred tax assets and liabilities from continuing operations

		June 30,
		2011			2010
		(in 000s)
Deferred tax assets:
	Share-based compensation	$	11,405		$	13,621
	Deferred revenue, net of deferred costs		9,326			10,124
	Accruals not currently deductible for tax purposes		13,243			13,516
	Property and equipment		—			7,663
	Inventory		4,640			3,985
	Net operating loss carryforwards		3,466			3,800
	Intangible assets		4,029			1,563
	Allowance for doubtful accounts		4,607			4,428
	Foreign tax credit carryforwards		2,154			1,902
	Other tax credits		2,086			1,448
	Other		1,838			4,625
Total gross deferred tax assets			56,794			66,675
Less: Valuation allowance			(1,186	)		(1,526	)
Deferred tax assets		$	55,608		$	65,149
Deferred tax liabilities:
	Property and equipment	$	12,734		$	—
	Other		2,293			100
Total gross deferred tax liabilities		$	15,027		$	100
Net deferred tax assets		$	40,581		$	65,049

Schedule of changes in unrecognized tax benefits

	June 30,
	2011			2010
	(in 000s)
Balance, beginning of year	$	11,637		$	19,049
Additions based on tax provisions related to current year		1,035			463
Additions for tax positions of prior years		2,812			330
Reductions for tax positions of prior years		(6,687	)		(2,485	)
Settlements		—			(5,395	)
Lapse of statute of limitations		(541	)		(213	)
Foreign currency translation adjustment		108			(112	)
Balance, end of year	$	8,364		$	11,637

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SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS

12 Months Ended

Jun. 30, 2011

SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS

SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
Years ended June 30, 2011, 2010 and 2009

	Balance at Beginning of Year		Additions			Net Write-offs/ (Recoveries)		Balance at End of Year
	(in 000s)
Allowance for doubtful accounts (current and long-term):
Year Ended June 30, 2011(1)	$	15,143	$	7,963		$	11,540	$	11,566
Year Ended June 30, 2010(1)	$	8,897	$	8,382		$	2,136	$	15,143
Year Ended June 30, 2009	$	12,027	$	(57	)	$	3,073	$	8,897

(1)

Net Write-offs in fiscal year 2011 and additions in fiscal year 2010 include $5.5 million related to the Alabama charitable bingo market (see Note 4, Impairment Charges).

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RELATED PARTY TRANSACTIONS

12 Months Ended

Jun. 30, 2011

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

11.   RELATED PARTY TRANSACTIONS

In connection with the acquisition of SDG, the consideration paid included subordinated debt issued to the former principals of SDG. Certain of the former principals are now employees of the Company. At the Company's discretion, the principal and accrued interest thereon could have been paid in cash, or converted into shares of the Company's common stock using the average stock price for the 20 business days prior to the delivery of such shares. As of June 30, 2009, the subordinated debt totaled $2.8 million, all of which was included in current maturities. The subordinated debt was paid in full in December 2009.

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EARNINGS PER SHARE

12 Months Ended

Jun. 30, 2011

EARNINGS PER SHARE

EARNINGS PER SHARE

2.     EARNINGS PER SHARE

Basic earnings per share are computed by dividing earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share reflect the additional dilution from all potentially dilutive securities.

The following computation of basic and diluted earnings per share applicable to the Company's common stock is as follows:

			Year Ended June 30,
			2011			2010		2009
			(in 000s, except per share amounts)
Amounts attributable to Bally Technologies, Inc.:
Income from continuing operations, net of tax			$	98,666		$	109,223	$	119,439
Income from discontinued operations, net of tax				—			6,175		6,870
Gain (loss) on sale of discontinued operations, net of tax				(403	)		22,079		—
Net income attributable to Bally Technologies, Inc.			$	98,263		$	137,477	$	126,309
	After tax interest expense on convertible debt			—			14		160
Diluted earnings attributable to Bally Technologies, Inc.			$	98,263		$	137,491	$	126,469
Weighted average common shares outstanding				51,960			54,576		54,449
	Dilutive effect of:
		Stock options, Restricted Stock Units ("RSU") and restricted stock		2,459			3,063		2,423
		Warrants		1			14		7
		Convertible debt(1)		—			22		179
	Weighted average diluted shares outstanding			54,420			57,675		57,058
Basic earnings per share attributable to Bally Technologies, Inc.:
Income from continuing operations			$	1.90		$	2.00	$	2.19
Income from discontinued operations				—			0.11		0.13
Gain (loss) on sale of discontinued operations				(0.01	)		0.41		—
Basic earnings per share			$	1.89		$	2.52	$	2.32
Diluted earnings per share attributable to Bally Technologies, Inc.:
Income from continuing operations			$	1.82		$	1.89	$	2.10
Income from discontinued operations				—			0.11		0.12
Gain (loss) on sale of discontinued operations				(0.01	)		0.38		—
Diluted earnings per share			$	1.81		$	2.38	$	2.22

(1)

The Company had certain related party debt outstanding which was convertible into common stock at the Company's discretion. The related party debt was paid in full in December 2009.

Certain securities were excluded from the diluted per share calculation because their inclusion would be anti-dilutive. Such securities consist of the following:

	Year Ended June 30,
	2011		2010		2009
	(in 000s)
Stock options, RSU and restricted stock		688		308		1,975

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LEASES (Tables)

12 Months Ended

Jun. 30, 2011

LEASES

Schedule of operating rental expense

	Year Ended June 30,
	2011			2010			2009
	(in 000s)
Equipment and office space leases	$	9,060		$	8,325		$	6,969
Sublease rental income		(357	)		(251	)		(201	)
	$	8,703		$	8,074		$	6,768

Schedule of future minimum rental payments required under noncancelable operating leases

Year Ended June 30,	Operating
2012	$	8,584
2013		6,410
2014		4,481
2015		2,541
2016		2,290
Thereafter		1,490
Total minimum payments	$	25,796

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ACCRUED AND OTHER LIABILITIES

12 Months Ended

Jun. 30, 2011

ACCRUED AND OTHER LIABILITIES

ACCRUED AND OTHER LIABILITIES

8.     ACCRUED AND OTHER LIABILITIES

Accrued liabilities consist of the following:

		June 30,
		2011		2010
		(in 000s)
Payroll and related costs		$	27,014	$	24,148
Royalties			3,772		3,045
Professional and consulting fees			2,748		2,857
Regulatory approval costs			2,182		1,604
Sales, use and gaming taxes			3,337		2,164
Interest rate derivative financial instrument liabilities			5,133		2,698
Foreign currency derivative financial instrument liability			586		—
Other			13,523		9,146
	Total accrued and other liabilities	$	58,295	$	45,662

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STOCKHOLDERS' EQUITY, OPTIONS, WARRANTS AND RIGHTS

12 Months Ended

Jun. 30, 2011

STOCKHOLDERS' EQUITY, OPTIONS, WARRANTS AND RIGHTS

STOCKHOLDERS' EQUITY, OPTIONS, WARRANTS AND RIGHTS

13.   STOCKHOLDERS' EQUITY, OPTIONS, WARRANTS AND RIGHTS

Warrants

The Company previously issued 100,000 stock purchase warrants in connection with a prior acquisition. The strike price of the warrant was $24.69 with a term of seven years. During the years ended June 30, 2011 and 2010, 125 and 95,375 stock purchase warrants were exercised and converted into 125 and 40,080 shares of the Company's common stock, respectively. The majority of the exercises were cashless and net shares were issued for the difference between the strike price of the warrant and the market value of the Company's common stock upon exercise.

Share Repurchase Plan

The Company's Board of Directors have approved a variety of share repurchase plans under which, subject to price and market conditions, purchases of shares can be made from time to time in the open market or in privately negotiated transactions using available cash.

On April 4, 2010, the Company's Board of Directors approved a new share repurchase plan to purchase up to $150 million of common stock which replaced the previous plan. On April 6, 2011, the Company's Board of Directors increased the share-repurchase plan amount to $550 million minus the amount repurchased in the tender offer. On May 12, 2011, the Company concluded a modified Dutch auction tender offer purchasing 9.9 million shares at $40.18 per share for $398.3 million.

As of June 30, 2011, $151.7 million remained available under the plan for repurchase in future periods.

For the years ended June 30, 2011, 2010 and 2009, the Company made the following purchases under its share purchase plans:

		Year Ended June 30,
		Shares		Average Price per share		Amount (in 000s)
For the year ended June 30, 2009			1,557,216	$	24.58	$	38,275
For the year ended June 30, 2010			2,297,278	$	39.71		91,221
For the year ended June 30, 2011			11,957,208	$	39.65		474,054
	Total		15,811,702	$	38.17	$	603,550

Special Stock

The Company's Articles of Incorporation authorize the issuance of up to 10,000,000 shares of special stock ("Special Stock"). The Special Stock may be issued from time to time in one or more series, each having such designations, preferences and relative, participating, optional or other special rights, qualifications, limitations or restrictions as shall be stated and expressed in the resolution providing for the issuance of Special Stock or any series thereof adopted by the Board of Directors. Special Stock consists of non-voting stock where no holder of the Special Stock shall be entitled to vote at any meeting of stockholders or otherwise, except as may be specifically provided by law or as approved by the Board of Directors in certain limited circumstances at the time of the stock issuance.

To date, there have been four series of Special Stock authorized for issuance: the Initial Series, the Series B, the Series E and the Series F. In June 1996, the Company issued shares of Series E Special Stock to certain holders of the Company's 7¹/2% Convertible Subordinated Debentures (which were retired in 1996) who elected to receive such stock in lieu of receiving common stock. The holders of shares of Series E Special Stock have no voting rights except as required by law. A total of 115 shares of Series E Special Stock remain outstanding. No other shares of Special Stock remain outstanding.

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LONG-TERM DEBT

12 Months Ended

Jun. 30, 2011

LONG-TERM DEBT

LONG-TERM DEBT

9.     LONG-TERM DEBT

Long-term debt consists of the following:

		June 30,
		2011			2010
		(in 000s)
Revolving credit facility		$	219,000		$	—
Term loan facility			296,250			173,750
Other, generally unsecured			153			43
	Long-term debt		515,403			173,793
Less current maturities			(15,153	)		(42,543	)
	Long-term debt, net of current maturities	$	500,250		$	131,250

As of June 30, 2011, there was approximately $181.0 million of undrawn availability under the revolving credit facility. Availability under the revolving credit facility is reduced to the extent of outstanding letters of credit.

On April 15, 2011, the Company entered into an amended and restated credit agreement, that provides for a $700 million senior secured credit facility comprised of a $300 million, five-year term loan and a $400 million, five-year revolving credit facility, including a $50 million sublimit for the issuance of standby letters of credit, a $10 million sublimit for swingline loans and a $150 million sublimit for multicurrency borrowings approved under the credit facility.

The interest rate on the credit facility is subject to a leverage-based pricing grid. If the leverage ratio, as defined under the credit facility, is greater than 2.5, the interest rate will be LIBOR plus a margin of 2.00%; if the leverage ratio is between 2.0 and 2.5, the interest rate will be LIBOR plus a margin of 1.75%; if the leverage ratio is between 1.5 and 2.0, the interest rate will be LIBOR plus a margin of 1.50%; if the leverage ratio is between 1.0 and 1.5, the interest rate will be LIBOR plus a margin of 1.25%; and if the leverage ratio is below 1.0, the interest rate will be LIBOR plus a margin of 1.00%.

Effective December 2008, the Company entered into a floating-to-fixed interest rate swap agreement with an original notional value of $218.8 million and a maturity date of September 26, 2012 to fix floating LIBOR based debt to fixed rate debt at an interest rate of 1.89%. Effective June 2011, the Company entered into a second floating-to-fixed rate swap agreement with an original notional value of $165.0 million and a maturity date of May 13, 2016 to fix a portion of the floating LIBOR based debt under the new term loan to fixed rate debt at an interest rate of 2.09%. At June 30, 2011, the combined swap agreements had a notional value of $296.3 million.

As of June 30, 2011, the interest rate on the revolving credit facility was 2.29% and the interest rate on the term loan was 3.82%, after giving effect to the floating-to-fixed interest rate swaps.

Under the credit facility, the term loan requires quarterly principal reductions in an amount equal to 1.25% of the effective date term loan amount, or $3,750,000, through March 2013; an amount equal to 1.875% of the effective date term loan amount, or $5,625,000, through March 2014; an amount equal to 2.50% of the effective date term loan amount, or $7,500,000, from June 2014 until the term loan's maturity in May 2016 upon when the remaining outstanding principal balance of $187,500,000 is due.

The credit facility is collateralized by substantially all of the Company's domestic property and is guaranteed by each of the Company's domestic subsidiaries, excluding any noncontrolling interests, and is secured by a pledge agreement.

The fair value of long-term debt is estimated by discounting expected cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings and remaining maturities. As of June 30, 2011 and 2010, the fair value of long-term debt approximated the carrying value.

The credit facility contains a number of covenants that, among other things, restrict the Company's ability and certain of its subsidiaries to dispose of assets, incur additional indebtedness or issue preferred stock, pay dividends or make other distributions, enter into certain acquisitions, repurchase equity interests or subordinated indebtedness, issue or sell equity interests of our subsidiaries, engage in mergers or acquisitions or certain transactions with subsidiaries and affiliates, and that otherwise restrict corporate activities.

The financial covenants under the credit facility consist of a leverage ratio and an interest coverage ratio. The leverage ratio is computed as total debt outstanding at the end of the quarter divided by the trailing twelve months Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), excluding certain cash and non-cash charges. The interest coverage ratio is computed as EBITDA for the trailing twelve months divided by the trailing twelve months of interest charges.

A breach of any of the covenants or the inability to comply with the required financial ratios could result in a default under the credit facility. In the event of any such default, the lenders could elect to declare all borrowings outstanding under the credit facility, together with any accrued interest and other fees, to be due and payable. If the Company were unable to repay the indebtedness upon its acceleration, the lenders could proceed against the underlying collateral. The Company was in compliance with all of the credit facility covenants as of June 30, 2011.

Interest Rate Swap Agreements

The Company has documented and designated these interest rate swaps as cash flow hedges. Based on the assessment of effectiveness using statistical regression, the Company determined that the interest rate swaps are effective. Effectiveness testing of the hedge relationships and measurement to quantify ineffectiveness is performed each fiscal quarter using the hypothetical derivative method. As the interest rate swaps qualify as cash flow hedges, the Company adjusts the cash flow hedges on a quarterly basis to their fair value with a corresponding offset to accumulated Other Comprehensive Income ("OCI"). The interest rate swaps have been and are expected to remain highly effective for the life of the hedges. Effective amounts are reclassified to interest expense as the related hedged expense is incurred. Any ineffectiveness is reclassified from accumulated other comprehensive income to other income (expense). As of June 30, 2011, the Company had no ineffectiveness on its cash flow hedges. Amounts related to the swaps expected to be reclassified from other comprehensive income to interest expense in the next twelve months total $4.9 million.

Additional information on the Company's interest rate swaps are as follows:

Interest Rate Swaps	Balance Sheet Location	Fair Value (in 000s)		Location of Offsetting Balance
Cash flow hedges—$296.3 million LIBOR based debt	Accrued and other liabilities	$	5,133
	Other assets, net		1,231
		$	3,902	Accumulated other comprehensive income (before income taxes)

Principal Repayments

The following annual principal maturities of the Company's term loan facility for each of the fiscal years ending subsequent to June 30, 2011, are as follows:

Year Ended June 30,	(in 000s)
2012	$	15,000
2013		16,875
2014		24,375
2015		30,000
2016		210,000
Total	$	296,250

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OTHER CURRENT ASSETS (Tables)

12 Months Ended

Jun. 30, 2011

OTHER CURRENT ASSETS

Schedule of other current assets

		June 30,
		2011		2010
		(in 000s)
Games on trial		$	3,609	$	2,744
Refundable deposits			1,224		413
Other			151		193
	Total other current assets	$	4,984	$	3,350

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OTHER CURRENT ASSETS

12 Months Ended

Jun. 30, 2011

OTHER CURRENT ASSETS

OTHER CURRENT ASSETS

7.     OTHER CURRENT ASSETS

Other current assets consist of the following:

		June 30,
		2011		2010
		(in 000s)
Games on trial		$	3,609	$	2,744
Refundable deposits			1,224		413
Other			151		193
	Total other current assets	$	4,984	$	3,350

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LONG-TERM DEBT (Details) (USD $)	12 Months Ended							1 Months Ended	12 Months Ended					1 Months Ended		12 Months Ended						1 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011 Revolving credit facility	Jun. 30, 2011 Term loan facility	Jun. 30, 2010 Term loan facility	Jun. 30, 2011 Other, generally unsecured	Jun. 30, 2010 Other, generally unsecured	Apr. 30, 2011 New Credit Facility	Jun. 30, 2011 New Credit Facility Leverage ratio greater than 2.5	Jun. 30, 2011 New Credit Facility Leverage ratio between 2.0 and 2.5	Jun. 30, 2011 New Credit Facility Leverage ratio between 1.5 and 2.0	Jun. 30, 2011 New Credit Facility Leverage ratio between 1.0 and 1.5	Jun. 30, 2011 New Credit Facility Leverage ratio below 1.0	Apr. 30, 2011 New Credit Facility, term loan	Apr. 15, 2011 New Credit Facility, term loan	Jun. 30, 2011 New Credit Facility, term loan Quarterly principal reduction through March 2013	Jun. 30, 2011 New Credit Facility, term loan Quarterly principal reduction from June 2013 through March 2014	Jun. 30, 2011 New Credit Facility, term loan Quarterly principal reduction from June 2014 through May 2016	Jun. 30, 2011 New Credit Facility, term loan Principal reduction May 2016	Jun. 30, 2011 New Credit Facility, revolving credit	Apr. 15, 2011 New Credit Facility, revolving credit	Dec. 31, 2008 Interest rate swap agreement maturing on September 26, 2012	Jun. 30, 2011 Interest rate swap agreement maturing on May 13, 2016
Components of long-term debt
Long-term debt	$ 515,403,000	$ 173,793,000	$ 219,000,000	$ 296,250,000	$ 173,750,000	$ 153,000	$ 43,000
Less current maturities	(15,153,000)	(42,543,000)
Long-term debt, net of current maturities	500,250,000	131,250,000
Overall capacity of senior secured credit facility								700,000,000						300,000,000
Maximum borrowing capacity																					400,000,000
Total undrawn revolver capacity																				181,000,000
Term of facility (in years)															5						5
Sublimit under the revolving credit facility related to standby letters of credit																					50,000,000
Sublimit under the revolving credit facility related to swingline loans																					10,000,000
Sublimit under the revolving credit facility related to multicurrency borrowings																					150,000,000
Variable rate basis								LIBOR	LIBOR	LIBOR	LIBOR	LIBOR	LIBOR
Debt, margin on LIBOR rate									2.00%	1.75%	1.50%	1.25%	1.00%
Leverage ratio									2.5				1.0
Leverage ratio, low end of range										2.0	1.5	1.0
Leverage ratio, high end of range										2.5	2.0	1.5
Variable interest rate description before hedging of debt	LIBOR																					LIBOR	LIBOR
Notional amount of interest rate swap	296,300,000																					218,800,000	165,000,000
Effective interest rate for hedged variable rate debt (as a percent)																						1.89%	2.09%
Effective interest rate after giving effect to the floating-to-fixed interest rate swaps (as a percent)			2.29%	3.82%
Principal reduction amount																$ 3,750,000	$ 5,625,000	$ 7,500,000	$ 187,500,000
Quarterly principal reductions, percentage of original principal amount (as a percent)																1.25%	1.875%	2.50%

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CONSOLIDATED SUPPLEMENTAL CASH FLOW INFORMATION (USD $) In Thousands	12 Months Ended
	Jun. 30, 2011		Jun. 30, 2010		Jun. 30, 2009
The following supplemental information is related to the consolidated statements of cash flows:
Cash paid for interest	$ 11,985		$ 12,982		$ 23,824
Cash paid for income taxes	46,132		42,306		64,957
Non-cash investing and financing transactions:
Pay-off of debt from refinancing					275,000
Transfer of inventory to leased gaming equipment	87,307	[1]	51,952	[1]	43,938	[1]
Reclassify property, plant and equipment to inventory	15,519	[1]	8,931	[1]	12,869	[1]
Acquisition of Bally trademark			$ 7,500

[1] As a result of the inability to separately identify the cash flows associated with the construction of leased gaming equipment, the Company has included all additions to leased gaming equipment as an increase in inventory under cash used in operating activities in the consolidated statement of cash flows. In addition, cash generated from the sale of used gaming equipment classified as leased gaming equipment is also included in cash provided by operating activities in the consolidated statement of cash flows. The Company has one process to procure raw materials for the assembly of both inventory and leased gaming equipment. The materials requisition planning process considers the number of devices the Company expects to build for sale and for use in its gaming operations division during a particular period, but it does not separately earmark purchases for leased gaming equipment. Without such an earmarking process, the Company is unable to determine whether the parts used to construct leased gaming equipment during a particular period came from inventory on hand at the beginning of the period or was constructed from inventory procured during the period of deployment, thus requiring the expenditure of cash.

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DISCONTINUED OPERATIONS

12 Months Ended

Jun. 30, 2011

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

3.     DISCONTINUED OPERATIONS

The Company owned and operated the Rainbow Casino, a dockside riverboat casino in Vicksburg, Mississippi, which was sold on June 8, 2010. Under the terms of the agreement, the Company was paid approximately $80.0 million in an all-cash transaction. The following table summarizes the gain on sale of discontinued operations:

		Year Ended June 30,
		2010
		(in 000s)
Sale proceeds		$	80,000
Distributions to noncontrolling interest			(688	)
Assets held for sale			(45,733	)
Liabilities related to assets held for sale			1,161
Adjustments to proceeds for fees and expenses			(471	)
Gain on sale of discontinued operations before income taxes			34,269
	Income tax expense		(12,190	)
Gain on sale of discontinued operations		$	22,079

Per the terms of the sale agreement, the Company had certain post-closing adjustments during fiscal year 2011, which reduced its gain on the sale of the Rainbow Casino in fiscal year 2010 by approximately $0.4 million, net of income taxes.

The following table summarizes income from discontinued operations:

		Year Ended June 30,
		2010			2009
		(in 000s)
Revenues:
	Casino operations	$	34,336		$	39,669
Costs and expenses:
	Direct cost of casino operations		14,081			16,750
	Selling, general and administrative		6,821			7,864
	Depreciation and amortization		2,873			3,337
			23,775			27,951
Operating income			10,561			11,718
Other income (expense):
	Interest income		7			26
	Other, net		(25	)		13
Income from discontinued operations before income taxes			10,543			11,757
	Income tax expense		(3,362	)		(3,700	)
Income from discontinued operations			7,181			8,057
	Less income attributable to noncontrolling interests		1,006			1,187
Income from discontinued operations attributable to Bally Technologies, Inc.		$	6,175		$	6,870

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SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables)

12 Months Ended

Jun. 30, 2011

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Schedule of unaudited quarterly financial information

		Fiscal Year 2011 Quarterly Results
		September 30,			December 31,			March 31,			June 30,
		(in 000s, except per share data)
Statement of Operations Data:
Revenues		$	170,808		$	182,726		$	190,941		$	213,680
Cost of revenues			59,179			65,722			68,181			80,574
Selling, general and administrative			51,614			55,185			57,562			60,672
Research and development costs			21,384			21,360			22,088			23,254
Income from continuing operations before income taxes			33,937			33,616			37,429			38,411
Income tax expense			(12,285	)		(6,347	)		(13,651	)		(12,899	)
Income from continuing operations			21,652			27,269			23,778			25,512
Gain (loss) on sale of discontinued operations, net of tax			(403	)		—			—			—
Net income			21,249			27,269			23,778			25,512
Less net income (loss) attributable to noncontrolling interests			(540	)		17			12			56
Net income attributable to Bally Technologies, Inc.		$	21,789		$	27,252		$	23,766		$	25,456
Basic earnings per share attributable to Bally Technologies, Inc.:
	Income from continuing operations	$	0.42		$	0.51		$	0.45		$	0.53
	Gain (loss) on sale of discontinued operations		(0.01	)		—			—			—
Basic earnings per share		$	0.41		$	0.51		$	0.45		$	0.53
Diluted earnings per share attributable to Bally Technologies, Inc.:
	Income from continuing operations	$	0.40		$	0.49		$	0.43		$	0.51
	Gain (loss) on sale of discontinued operations		(0.01	)		—			—			—
Diluted earnings per share		$	0.39		$	0.49		$	0.43		$	0.51

		Fiscal Year 2010 Quarterly Results
		September 30,			December 31,			March 31,			June 30,
		(in 000s, except per share data)
Statement of Operations Data:
Revenues		$	187,330		$	204,973		$	190,640		$	195,248
Cost of revenues			69,463			74,701			66,455			69,186
Selling, general and administrative			45,196			53,721			52,545			51,733
Research and development costs			19,471			19,571			20,279			20,980
Impairment charges(1)			—			—			11,379			—
Income from continuing operations before income taxes			45,863			48,629			31,992			44,334
Income tax expense			(16,255	)		(16,456	)		(11,262	)		(16,748	)
Income from continuing operations			29,608			32,173			20,730			27,586
Income from discontinued operations, net of tax			1,749			1,430			2,363			1,639
Gain (loss) on sale of discontinued operations, net of tax			—			—			—			22,079
Net income			31,357			33,603			23,093			51,304
Less net income attributable to noncontrolling interests			733			350			534			263
Net income attributable to Bally Technologies, Inc.		$	30,624		$	33,253		$	22,559		$	51,041
Basic earnings per share attributable to Bally Technologies, Inc.:
	Income from continuing operations	$	0.53		$	0.59		$	0.37		$	0.50
	Income from discontinued operations		0.03			0.02			0.04			0.03
	Gain (loss) on sale of discontinued operations		—			—			—			0.40
Basic earnings per share		$	0.56		$	0.61		$	0.41		$	0.93
Diluted earnings per share attributable to Bally Technologies, Inc.:
	Income from continuing operations	$	0.50		$	0.56		$	0.36		$	0.48
	Income from discontinued operations		0.03			0.02			0.03			0.03
	Gain (loss) on sale of discontinued operations		—			—			—			0.38
Diluted earnings per share		$	0.53		$	0.58		$	0.39		$	0.89

(1)

Impairment charges of $11.4 million were recognized in the third quarter related to the Alabama charitable bingo market (see Note 4, Impairment Charges).

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GOODWILL AND INTANGIBLE ASSETS (Tables)

12 Months Ended

Jun. 30, 2011

GOODWILL AND INTANGIBLE ASSETS

Schedule of intangible assets

		June 30, 2011							June 30, 2010
	Useful Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(dollars in 000s)
Computer software	3 - 9	$	36,725		(31,841	)	$	4,884	$	35,652	$	(28,395	)	$	7,257
License rights	3 - 13		4,344		(2,751	)		1,593		3,624		(2,048	)		1,576
Trademarks	5 - 9		2,203		(2,203	)		—		2,203		(2,023	)		180
Core technology	5 - 14		22,763		(14,107	)		8,656		22,763		(10,346	)		12,417
Contracts	10		15,303		(7,372	)		7,931		10,836		(6,421	)		4,415
Other intangibles	3 - 5		5,337		(1,036	)		4,301		1,702		(999	)		703
Total finite-lived intangible assets		$	86,675	$	(59,310	)	$	27,365	$	76,780	$	(50,232	)	$	26,548
Trademark	indefinite		7,500		—			7,500		7,500		—			7,500
Total		$	94,175	$	(59,310	)	$	34,865	$	84,280	$	(50,232	)	$	34,048

Schedule of future amortization of finite lived intangible assets

Year Ended June 30,	(in 000s)
2012	$	10,326
2013		8,681
2014		4,180
2015		1,464
2016		1,297
Thereafter		1,417
Total	$	27,365

Schedule of changes in the carrying amount of goodwill

	(in 000s)
Balance as of June 30, 2009	$	161,960
Foreign currency translation adjustment		(807	)
Balance as of June 30, 2010		161,153
Foreign currency translation adjustment		957
Balance as of June 30, 2011	$	162,110

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SHARE-BASED COMPENSATION (Details 3) (USD $)	12 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Share-based Compensation
Share-based compensation expense before tax	$ 12,907,000	$ 13,793,000	$ 16,259,000
Income tax benefit	(4,517,000)	(4,828,000)	(5,691,000)
Net share-based compensation expense	8,390,000	8,965,000	10,568,000
Share-based compensation expense from discontinued operations		137,000	146,000
Selling, general and administrative
Share-based Compensation
Share-based compensation expense before tax	9,624,000	10,382,000	13,377,000
Research and development
Share-based Compensation
Share-based compensation expense before tax	3,104,000	3,231,000	2,736,000
Cost of gaming equipment and systems and operations
Share-based Compensation
Share-based compensation expense before tax	179,000	180,000	146,000
Restricted Stock
Share-based Compensation
Net share-based compensation expense	$ 7,000,000	$ 6,400,000	$ 4,600,000

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STOCKHOLDERS' EQUITY, OPTIONS, WARRANTS AND RIGHTS (Details)	12 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Warrants
Number of warrants previously issued	100,000
Exercise price of warrants	24.69
Exercisable period of warrants	7
Warrants exercised (in shares)	125	95,375
Shares issued upon exercise of warrants (in shares)	125	40,080

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ACCRUED AND OTHER LIABILITIES (Details) (USD $) In Thousands	Jun. 30, 2011	Jun. 30, 2010
ACCRUED AND OTHER LIABILITIES
Payroll and related costs	$ 27,014	$ 24,148
Royalties	3,772	3,045
Professional and consulting fees	2,748	2,857
Regulatory approval costs	2,182	1,604
Sales, use and gaming taxes	3,337	2,164
Interest rate derivative financial instrument liabilities	5,133	2,698
Foreign currency derivative financial instrument liability	586
Other	13,523	9,146
Total accrued and other liabilities	$ 58,295	$ 45,662

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COMMITMENTS AND CONTINGENCIES (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended			1 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009	Apr. 30, 2009 Patent infringement lawsuit filed by International Game Technology ("IGT") against the Company	Oct. 31, 2008 Patent infringement lawsuit filed by International Game Technology ("IGT") against the Company	Apr. 30, 2006 Patent infringement lawsuit filed by International Game Technology ("IGT") against the Company	Oct. 31, 2010 WMS Gaming Inc.
COMMITMENTS AND CONTINGENCIES.
Royalty expense	$ 11.5	$ 8.3	$ 15.6
Litigation
Number of patents of plaintiff declared invalid by the court					2
Number of patents against which lawsuit is filed						9	2
Number of additional patents against which lawsuit is filed							3
Number of claims made in lawsuits						200
Number of patents against which lawsuit is not dismissed						3
Number of claims not dismissed						8
Number of products undergoing technical changes by the Company				2

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IMPAIRMENT CHARGES

12 Months Ended

Jun. 30, 2011

IMPAIRMENT CHARGES

IMPAIRMENT CHARGES

4.     IMPAIRMENT CHARGES

As a result of actions concerning the legality of the charitable bingo market in Alabama, the Company recorded a charge of $11.4 million during fiscal year 2010, which included full allowances for notes and accounts receivable of $5.5 million and an impairment of $5.9 million in long-lived assets.

Recoverability of the long-lived assets and notes and accounts receivable were measured by a comparison of the carrying amount of the related asset to future net cash flows expected to be generated by the related asset. The impairment charges were measured by the amount by which the carrying amount of the assets exceeded the estimated fair value of the assets.

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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	12 Months Ended
	Jun. 30, 2011 USD ($)	Jun. 30, 2010 USD ($)	Jun. 30, 2011 EUR (€)	Jun. 30, 2011 Recurring basis Level 2 USD ($)	Jun. 30, 2010 Recurring basis Level 2 USD ($)
Fair value of financial instruments
Maximum maturity period for foreign currency forward contracts (in months)	12
Total amount outstanding under foreign currency forward contracts	$ 35,900,000
Notional amount of foreign currency forward contracts			25,000,000
Fair value of derivative assets and liabilities
Asset: Foreign currency derivative financial instrument				452,000
Asset: Interest rate derivative financial instruments				1,231,000
Liability: Foreign currency derivative financial instrument				586,000
Liability: Interest rate derivative financial instruments	3,902,000			5,133,000	2,698,000
Accounting for Derivative Instruments and Hedging Activity
Interest rate swap agreement, Amount of Loss Recognized in OCI on Derivative (Effective Portion)	(3,661,000)	(5,978,000)
Interest rate swap agreement, Amount of Loss Reclassified from Accumulated OCI into Income (Effective Portion)	(2,458,000)	(3,024,000)
Foreign Currency Forward Contract, Amount of Loss Recognized in Other Income (Expense)	(135,000)
Cash and cash equivalents
Maximum term of original maturity to classify instruments as cash and cash equivalents (in months)	3
Restricted cash
Jackpot funds	$ 8,400,000	$ 8,300,000

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EARNINGS PER SHARE (Tables)

12 Months Ended

Jun. 30, 2011

EARNINGS PER SHARE

Schedule of basic and diluted earnings per share

			Year Ended June 30,
			2011			2010		2009
			(in 000s, except per share amounts)
Amounts attributable to Bally Technologies, Inc.:
Income from continuing operations, net of tax			$	98,666		$	109,223	$	119,439
Income from discontinued operations, net of tax				—			6,175		6,870
Gain (loss) on sale of discontinued operations, net of tax				(403	)		22,079		—
Net income attributable to Bally Technologies, Inc.			$	98,263		$	137,477	$	126,309
	After tax interest expense on convertible debt			—			14		160
Diluted earnings attributable to Bally Technologies, Inc.			$	98,263		$	137,491	$	126,469
Weighted average common shares outstanding				51,960			54,576		54,449
	Dilutive effect of:
		Stock options, Restricted Stock Units ("RSU") and restricted stock		2,459			3,063		2,423
		Warrants		1			14		7
		Convertible debt(1)		—			22		179
	Weighted average diluted shares outstanding			54,420			57,675		57,058
Basic earnings per share attributable to Bally Technologies, Inc.:
Income from continuing operations			$	1.90		$	2.00	$	2.19
Income from discontinued operations				—			0.11		0.13
Gain (loss) on sale of discontinued operations				(0.01	)		0.41		—
Basic earnings per share			$	1.89		$	2.52	$	2.32
Diluted earnings per share attributable to Bally Technologies, Inc.:
Income from continuing operations			$	1.82		$	1.89	$	2.10
Income from discontinued operations				—			0.11		0.12
Gain (loss) on sale of discontinued operations				(0.01	)		0.38		—
Diluted earnings per share			$	1.81		$	2.38	$	2.22

(1)

The Company had certain related party debt outstanding which was convertible into common stock at the Company's discretion. The related party debt was paid in full in December 2009.

Schedule of anti-dilutive securities excluded from computation of earnings per share

	Year Ended June 30,
	2011		2010		2009
	(in 000s)
Stock options, RSU and restricted stock		688		308		1,975

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SEGMENT AND GEOGRAPHICAL INFORMATION (Details 2) (USD $) In Thousands	3 Months Ended								12 Months Ended
	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Revenues, operating income and identifiable assets by geographic region
Revenues	$ 213,680	$ 190,941	$ 182,726	$ 170,808	$ 195,248	$ 190,640	$ 204,973	$ 187,330	$ 758,155	$ 778,191	$ 843,760
Operating income									151,535	184,110	203,018
Assets	927,394				913,176				927,394	913,176	880,882
United States and Canada
Revenues, operating income and identifiable assets by geographic region
Revenues									619,219	621,205	701,817
Operating income									135,096	144,060	170,727
Assets	692,778				743,426				692,778	743,426	736,634
International
Revenues, operating income and identifiable assets by geographic region
Revenues									138,936	156,986	141,943
Operating income									16,439	40,050	32,291
Assets	234,616				169,750				234,616	169,750	144,248
Rainbow Casino discontinued operations
Revenues, operating income and identifiable assets by geographic region
Revenues										34,300	39,700
Operating income										$ 10,600	$ 11,700

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STOCKHOLDERS' EQUITY, OPTIONS, WARRANTS AND RIGHTS (Details 3)	Jun. 30, 2011	Jun. 30, 2010
Special Stock
Special stock, authorized (in shares)	10,000,000	10,000,000
Special Stock, number of series	4
Convertible subordinated debentures, interest rate (as a percent)	7.50%
Special stock, shares outstanding	115	115

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ACCRUED AND OTHER LIABILITIES (Tables)

12 Months Ended

Jun. 30, 2011

ACCRUED AND OTHER LIABILITIES

Schedule of accrued and other liabilities

		June 30,
		2011		2010
		(in 000s)
Payroll and related costs		$	27,014	$	24,148
Royalties			3,772		3,045
Professional and consulting fees			2,748		2,857
Regulatory approval costs			2,182		1,604
Sales, use and gaming taxes			3,337		2,164
Interest rate derivative financial instrument liabilities			5,133		2,698
Foreign currency derivative financial instrument liability			586		—
Other			13,523		9,146
	Total accrued and other liabilities	$	58,295	$	45,662

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SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS (Tables)

12 Months Ended

Jun. 30, 2011

SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS

Schedule of allowance for doubtful accounts (current and long-term)

Years ended June 30, 2011, 2010 and 2009

	Balance at Beginning of Year		Additions			Net Write-offs/ (Recoveries)		Balance at End of Year
	(in 000s)
Allowance for doubtful accounts (current and long-term):
Year Ended June 30, 2011(1)	$	15,143	$	7,963		$	11,540	$	11,566
Year Ended June 30, 2010(1)	$	8,897	$	8,382		$	2,136	$	15,143
Year Ended June 30, 2009	$	12,027	$	(57	)	$	3,073	$	8,897

(1)

Net Write-offs in fiscal year 2011 and additions in fiscal year 2010 include $5.5 million related to the Alabama charitable bingo market (see Note 4, Impairment Charges).

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PROPERTY, PLANT AND EQUIPMENT AND LEASED GAMING EQUIPMENT (Tables)

12 Months Ended

Jun. 30, 2011

PROPERTY, PLANT AND EQUIPMENT AND LEASED GAMING EQUIPMENT

Schedule of property, plant and equipment and leased gaming equipment

		June 30,
		2011			2010
		(in 000s)
Land and land improvements		$	1,975		$	1,975
Buildings and leasehold improvements			25,125			23,483
Gaming equipment			25,734			26,508
Furniture, fixtures and equipment			32,002			27,842
Less accumulated depreciation			(51,570	)		(47,714	)
	Property, plant and equipment, net	$	33,266		$	32,094
Leased gaming equipment		$	272,828		$	236,137
Less accumulated depreciation			(176,137	)		(153,780	)
	Leased gaming equipment, net	$	96,691		$	82,357

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SHARE-BASED COMPENSATION

12 Months Ended

Jun. 30, 2011

SHARE-BASED COMPENSATION.

SHARE-BASED COMPENSATION

12.   SHARE-BASED COMPENSATION

Employee Stock Purchase Plan

The 2008 ESPP provides that eligible employees are able to contribute up to 10% of their eligible earnings towards the quarterly purchase of the Company's common stock. The employee's purchase price is equal to 85% of the fair market value. During the years ended June 30, 2011, 2010 and 2009, employees purchased 67,730, 53,716 and 88,774 shares of common stock for approximately $2.1 million, $1.9 million and $1.7 million, respectively.

Share-Based Award Plans

The Company's 2010 Long-Term Incentive Plan, which was an amendment and restatement of the Company's 2001 Long-Term Incentive Plan, as amended, (the "2010 Plan") provides for the issuance of up to 15,050,000 shares of common stock to Company employees, directors and designated paid consultants. At the Company's 2010 Annual Meeting, the 2010 Plan was amended to increase the number of shares issuable pursuant to awards of restricted stock, restricted stock units ("RSUs") or incentive bonuses granted after the 2010 Annual Meeting shall count against the overall share limit as 1.75 shares for every share granted. Prior to the 2010 Annual Meeting, the number of shares issuable pursuant to awards of restricted stock or RSUs was capped at 1,400,000 shares. Generally, options are granted at the fair value of the Company's common stock at the date of grant and are exercisable over five to ten years.

The Company's 1996 Long-Term Incentive Plan (the "1996 Plan") provided for the issuance of up to 3,428,000 shares of common stock to Company employees, directors and designated paid consultants. Generally, options were granted at the fair value of the Company's common stock at the date of grant and are exercisable over five to ten years. No shares of common stock remain available under the 1996 Plan for the grant of new awards.

The Company issues new shares for shares delivered under the 1996 Plan and the 2010 Plan (collectively, the "Plans").

Stock option activity as of and for the year ended June 30, 2011 is summarized below:

					Weighted Average
		Shares			Exercise Price		Remaining Contractual Term		Aggregate Intrinsic Value
		(in 000s)			(per share)		(years)		(in 000s)
Balance outstanding as of June 30, 2010			5,061		$	21.14			$	61,186
	Granted		368			36.13
	Exercised		(1,638	)		16.23
	Forfeited or expired		(109	)		33.76
Balance outstanding as of June 30, 2011			3,682			24.45		3.86	$	60,558
Exercisable as of June 30, 2011			2,782			21.09		3.35	$	54,817

Restricted stock and RSU activity as of and for the year ended June 30, 2011 is summarized below:

		Restricted Stock			Weighted Average Grant Date Fair Value		RSUs			Weighted Average Grant Date Fair Value
		(in 000s)			(per share)		(in 000s)			(per share)
Balance outstanding as of June 30, 2010			329		$	35.66		642		$	18.27
	Granted		206			38.77		97			42.01
	Released		(130	)		34.73		(139	)		31.98
	Forfeited or expired		(68	)		33.16		—			—
Balance outstanding as of June 30, 2011			337		$	38.42		600		$	18.92
Vested as of June 30, 2011								534		$	16.04

The following is additional information about stock options, restricted stock and RSUs exercised, granted and vested during the periods:

		Year Ended June 30,
		2011		2010		2009
		(in 000s, except per share amounts)
Weighted average grant-date fair value per share:
	Stock options granted	$	16.86	$	19.56	$	10.62
	Stock options vested	$	11.47	$	10.71	$	9.23
	Restricted stock and RSUs vested	$	33.31	$	29.99	$	20.16
Total grant-date fair value of stock options vested		$	6,458	$	7,123	$	13,186
Total grant-date fair value of restricted stock and RSUs vested		$	8,962	$	4,384	$	3,758
Exercises under all share-based payment arrangements:
	Total intrinsic value	$	37,915	$	59,583	$	7,297
	Cash received	$	26,314	$	30,074	$	9,628
	Tax benefit realized	$	8,718	$	16,730	$	688

Shares Reserved

The following shares are reserved for stock options and RSUs issued and available for issue under the Plans and the 2008 ESPP:

		(in 000s)
Stock options and RSUs issued and currently outstanding			4,282
Shares available for future issuance			3,230
	Total		7,512

Share-Based Compensation

The following table presents share-based compensation expense and related effect of the income tax benefit included in the Company's consolidated statements of operations:

			Year Ended June 30,
			2011			2010			2009
			(in 000s)
Selling, general and administrative			$	9,624		$	10,382		$	13,377
Research and development				3,104			3,231			2,736
Cost of gaming equipment and systems and operations				179			180			146
Share-based compensation expense before tax			$	12,907		$	13,793		$	16,259
	Income tax benefit			(4,517	)		(4,828	)		(5,691	)
		Net share-based compensation expense	$	8,390		$	8,965		$	10,568

Share-based compensation expense from discontinued operations before income tax was $137,000 and $146,000 for the years ended June 30, 2010 and 2009, respectively.

Included in share-based compensation expense in the consolidated statements of operations for the years ended June 30, 2011, 2010 and 2009 is restricted stock amortization of $7.0 million, $6.4 million and $4.6 million, respectively.

During the year ended June 30, 2009, the Company modified certain fully vested stock options, previously issued to certain members of the Company's Board of Directors, extending the contractual term for 2.15 years. The modification resulted in the recognition of additional share-based compensation expense of approximately $400,000, which was equal to the net increase in the fair value of the modified stock option.

Additionally, during the year ended June 30, 2009, the Company's Board of Directors approved the accelerated vesting of all unvested stock options previously issued to the Company's former Chief Technology Officer. This accelerated vesting affected options for approximately 360,000 shares of the Company's common stock and resulted in the acceleration of $1.4 million in share-based compensation.

As of June 30, 2011, there was $11.2 million of total unrecognized compensation expense related to the unvested portion of stock options which will be recognized over the subsequent 1.89 years. In addition, as of June 30, 2011, there was $12.0 million of total unrecognized compensation expense related to the unvested portion of restricted stock and RSUs which will be recognized over the subsequent 1.76 years.

The Company estimates the fair value of stock options using the Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the option, the expected option term, the expected volatility of the Company's common stock over the option's expected term, the risk-free interest rate over the option's expected term and the Company's expected annual dividend yield. The Company believes that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of the Company's stock options granted. Estimates of fair value are not intended to predict actual future events, or the value ultimately realized by the recipients of equity awards.

The fair value of each option granted during the periods referenced below was estimated on the grant date using the Black-Scholes valuation model with the following assumptions:

	Year Ended June 30,
	2011			2010			2009
Weighted Average:
Expected option term (in years)		4.61			4.66			4.53
Expected volatility		54.91	%		56.04	%		51.07	%
Risk-free interest rate		1.76	%		2.23	%		2.63	%
Expected annual dividend yield		0	%		0	%		0	%

For the years ended June 30, 2010 and 2009, the expected option term was determined using the simplified method for share based payments as the Company did not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. During fiscal year 2011, the Company ceased using the simplified method and began using its historical exercise activity to estimated expected term. Expected volatility is based on historical market factors related to the Company's common stock. Risk-free interest rate is based on U.S. Treasury rates appropriate for the expected term.

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SHARE-BASED COMPENSATION (Details) (USD $)	12 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Employee Stock Purchase Plan
Share-Based Compensation
Maximum percentage of eligible earnings that can be contributed by the eligible employee (as a percent)	10.00%
Purchase price expressed as percentage of fair market value of common stock (as a percent)	85.00%
Shares purchased by the employees (in shares)	67,730	53,716	88,774
Approximate value of shares purchased by the employees	$ 2,100,000	$ 1,900,000	$ 1,700,000
2010 Long-Term Incentive Plan
Share-Based Compensation
Number of shares authorized for issuance (in shares)	15,050,000
2010 Long-Term Incentive Plan | Stock options
Share-Based Compensation
Exercisable period, low end of range (in years)	five years
Exercisable period, high end of range (in years)	ten years
2010 Long-Term Incentive Plan | Restricted stock, RSUs and incentive bonuses
Share-Based Compensation
Factor used for granting of restricted stock, RSUs and incentive bonuses against the overall share limit	1.75
1996 Long-Term Incentive Plan
Share-Based Compensation
Number of shares authorized for issuance (in shares)	3,428,000
1996 Long-Term Incentive Plan | Stock options
Share-Based Compensation
Exercisable period, low end of range (in years)	five years
Exercisable period, high end of range (in years)	ten years
2001 Long-Term Incentive Plan
Share-Based Compensation
Number of shares authorized for issuance (in shares)	1,400,000
Exercisable period, low end of range (in years)	five years
Exercisable period, high end of range (in years)	ten years
Stock options
Stock options activity
Balance at the beginning of the period (in shares)	5,061,000
Granted (in shares)	368,000
Exercised (in shares)	(1,638,000)
Forfeited or expired (in shares)	(109,000)
Balance at the beginning of the period (in shares)	3,682,000
Exercisable at the end of the period (in shares)	2,782,000
Weighted Average Exercise Price
Balance at the beginning of the period (in dollars per share)	$ 21.14
Granted (in dollars per share)	$ 36.13
Exercised (in dollars per share)	$ 16.23
Forfeited or expired (in dollars per share)	$ 33.76
Balance at the end of the period (in dollars per share)	$ 24.45
Exercisable at the end of the period (in dollars per share)	$ 21.09
Weighted Average Remaining Contractual Term
Options outstanding at the end of the period	3.86
Options exercisable at the end of the period	3.35
Aggregate Intrinsic Value
Balance at the beginning of the period	61,186,000
Balance at the end of the period	60,558,000
Exercisable at the end of the period	$ 54,817,000
Restricted stock and RSUs
Weighted Average Grant Date Fair Value
Released (in dollars per share)	$ 33.31	$ 29.99	$ 20.16
Restricted Stock
Restricted stock and RSU activity
Balance at the beginning of the period (in shares)	329,000
Granted (in shares)	206,000
Released (in shares)	(130,000)
Forfeited or expired (in shares)	(68,000)
Balance at the end of the period (in shares)	337,000
Weighted Average Grant Date Fair Value
Balance at the beginning of the period (in dollars per share)	$ 35.66
Granted (in dollars per share)	$ 38.77
Released (in dollars per share)	$ 34.73
Forfeited or expired (in dollars per share)	$ 33.16
Balance at the end of the period (in dollars per share)	$ 38.42
Restricted stock units
Restricted stock and RSU activity
Balance at the beginning of the period (in shares)	642,000
Granted (in shares)	97,000
Released (in shares)	(139,000)
Balance at the end of the period (in shares)	600,000
Vested at the end of the period (in shares)	534,000
Weighted Average Grant Date Fair Value
Balance at the beginning of the period (in dollars per share)	$ 18.27
Granted (in dollars per share)	$ 42.01
Released (in dollars per share)	$ 31.98
Balance at the end of the period (in dollars per share)	$ 18.92
Vested at the end of the period (in dollars per share)	$ 16.04

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STOCKHOLDERS' EQUITY, OPTIONS, WARRANTS AND RIGHTS (Details 2) (USD $)	1 Months Ended			12 Months Ended
	May 31, 2011	Apr. 30, 2011	Apr. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Share Repurchase Plan
Amount of common stock authorized to be repurchased by board of directors (in shares)		$ 550,000,000	$ 150,000,000
Shares repurchased during the period under share purchase plan (in shares)	9,900,000			11,957,208	2,297,278	1,557,216
Repurchase price of common stock (in dollars per share)	$ 40.18
Aggregate cost of repurchase under share purchase plan	398,300,000			474,054,000	91,221,000	38,275,000
Remaining authorized amount available to repurchase plan				151,700,000
Average repurchase price per share (in dollars per share)				$ 39.65	$ 39.71	$ 24.58
Total stock purchased (in shares)				15,811,702
Average repurchase price (in dollars per share)				$ 38.17
Total cost of repurchase				$ 603,550,000

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PROPERTY, PLANT AND EQUIPMENT AND LEASED GAMING EQUIPMENT

12 Months Ended

Jun. 30, 2011

PROPERTY, PLANT AND EQUIPMENT AND LEASED GAMING EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT AND LEASED GAMING EQUIPMENT

5.     PROPERTY, PLANT AND EQUIPMENT AND LEASED GAMING EQUIPMENT

Property, plant and equipment and leased gaming equipment consist of the following:

		June 30,
		2011			2010
		(in 000s)
Land and land improvements		$	1,975		$	1,975
Buildings and leasehold improvements			25,125			23,483
Gaming equipment			25,734			26,508
Furniture, fixtures and equipment			32,002			27,842
Less accumulated depreciation			(51,570	)		(47,714	)
	Property, plant and equipment, net	$	33,266		$	32,094
Leased gaming equipment		$	272,828		$	236,137
Less accumulated depreciation			(176,137	)		(153,780	)
	Leased gaming equipment, net	$	96,691		$	82,357

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Jun. 30, 2011

COMMITMENTS AND CONTINGENCIES.

COMMITMENTS AND CONTINGENCIES

15.   COMMITMENTS AND CONTINGENCIES

Commitments

The Company is obligated under several agreements to pay certain royalties on the sale or rental of gaming devices. Total royalty expense for the Company for the years ended June 30, 2011, 2010 and 2009 was $11.5 million, $8.3 million and $15.6 million, respectively, and is included in the cost of gaming equipment and systems in the accompanying consolidated statements of operations. In addition, the Company has obtained the rights to certain game themes and intellectual property that call for payment of royalties based on either fixed amounts or variable amounts based on game performance.

Litigation

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, or other sources are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. The Company has not recorded any loss accruals for these contingencies unless otherwise noted below.

On October 16, 2010, WMS Gaming Inc. ("WMS") filed a patent infringement lawsuit against the Company in the United States District Court for the District of Northern Illinois. The complaint asserts that several of the Company's products using iReel displays, including Cash Spin, Dragon Dynasty, Twin Tigers, and Sky Spirits, infringe two WMS patents, and seeks injunctive relief and unspecified damages. WMS later amended its complaint to assert three additional patents related to the use of a video screen in conjunction with a gaming machine using mechanical reels. The amended complaint names the following additional games: Plum Wild, Crazy Winners, Hot N' Wild Ruby Rush, Hot N' Wild Blazing Stars, Hot N' Wild Sapphire Sky, and Quick Hit Triple Blazing 7s Wild Jackpot (5R). As part of its response, the Company has asserted counterclaims against WMS's Lord of the Rings and Star Trek games, for violation of the Company's patents. The Company is seeking damages and other relief against WMS, including claims that the WMS patents are invalid, unenforceable, and not infringed. It is anticipated trial will be set for early 2012.

In April 2006, IGT filed a patent infringement lawsuit against the Company in the United States District Court for the District of Delaware. The complaint asserted that the Company's Bally Power Bonusing products infringe patents held by IGT, and sought injunctive relief and damages in unspecified amounts. Of the nine patents and 200 claims originally filed in the case by IGT, all but three patents and eight claims were dismissed. On April 28, 2009, the District Court issued an order finding that the Company's Power Promotions, Power Bank, and SDS/CMP Power Winners products do not infringe IGT's patents. The court also found that the Company's ACSC Power Winners and ACSC Power Reward products infringe some patent claims asserted by IGT, but not others. Appeals by both parties are pending. In the meantime, the Company has undertaken technical changes to ensure non-infringement for the two products partially in question. The Company does not believe that potential infringement damages, if any, would be material to its financial position as the revenues from these two products to date have not been material.

On December 7, 2004, International Game Technology ("IGT") filed a patent infringement lawsuit against the Company in the United States District Court for the District of Nevada. The complaint asserted that the Company's wheel-based games, such as Monte, Carlo Lucky Wheel™ and Cash For Life™, its games with a reel in the top box, such as Bonus Frenzy™, and its iVIEW products infringed on patents held by IGT, and sought injunctive relief and damages in unspecified amounts. As part of the defense, the Company asserted counterclaims seeking damages and other relief against IGT, including claims that IGT's patents were invalid, unenforceable and not infringed, as well as several claims that IGT engaged in anti-competitive conduct in violation of state and federal antitrust laws. In October 2008, the court granted the Company's motions for summary judgment, ruling that IGT's two "wheel" patents and a touch-screen player-tracking patent were invalid; that even if the patents were valid, the Company's wheel-based games at issue would not infringe; and that certain of its iVIEW products do not infringe the two asserted player-tracking patents. The summary judgment determinations were upheld by the Federal Circuit Court of Appeals. Upon remand, the District Court granted summary judgment in favor of IGT on the remaining portion of the case regarding IGT's alleged antitrust violations and in favor of Bally on IGT's remaining claim that Bally infringed an IGT player tracking patent. An appeal of the summary judgment on Bally's antitrust claims against IGT is currently pending.

The Company is also a party to various lawsuits relating to routine matters incidental to its business. Management does not believe that the outcome of such litigation, including the matters discussed above, in the aggregate, will have a material effect on its consolidated financial position, results of operations or cash flows.

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SEGMENT AND GEOGRAPHICAL INFORMATION (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
SEGMENT AND GEOGRAPHICAL INFORMATION
Number of revenue sources									3
Revenue and gross margin by segment
Revenues	$ 213,680	$ 190,941	$ 182,726	$ 170,808	$ 195,248	$ 190,640	$ 204,973	$ 187,330	$ 758,155	$ 778,191	$ 843,760
Gross margin									484,499	498,386	511,967
Gaming Equipment.
Revenue and gross margin by segment
Revenues									246,514	273,718	357,037
Gross margin									112,096	138,000	166,826
Gaming Operations
Revenue and gross margin by segment
Revenues									318,621	286,950	274,965
Gross margin									229,801	203,844	194,882
Systems
Revenue and gross margin by segment
Revenues									193,020	217,523	211,758
Gross margin									142,602	156,542	150,259
Rainbow Casino discontinued operations
Revenue and gross margin by segment
Revenues										34,300	39,700
Gross margin										$ 20,300	$ 22,900

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INCOME TAXES (Details) (USD $)	1 Months Ended		3 Months Ended								12 Months Ended
	Oct. 31, 2010	Jan. 31, 2009	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Consolidated income from continuing operations before taxes and noncontrolling interest
United States											$ 131,668,000	$ 160,265,000	$ 169,756,000
Foreign											11,725,000	10,553,000	15,204,000
Income from continuing operations before income taxes			38,411,000	37,429,000	33,616,000	33,937,000	44,334,000	31,992,000	48,629,000	45,863,000	143,393,000	170,818,000	184,960,000
Current income tax expense from Continuing operations
Federal											12,614,000	59,626,000	26,956,000
State											5,585,000	5,928,000	4,820,000
Foreign											3,245,000	5,057,000	3,711,000
Total											21,444,000	70,611,000	35,487,000
Deferred income tax expense from Continuing operations
Federal											23,984,000	(9,261,000)	26,458,000
State											(919,000)	(796,000)	2,770,000
Foreign											673,000	167,000	66,000
Total											23,738,000	(9,890,000)	29,294,000
Income tax expense			12,899,000	13,651,000	6,347,000	12,285,000	16,748,000	11,262,000	16,456,000	16,255,000	45,182,000	60,721,000	64,781,000
Reconciliation of the Company's effective income tax rate
U.S. federal statutory income tax rate (as a percent)											35.00%	35.00%	35.00%
Change in income tax contingencies (as a percent)											(2.50%)	(0.90%)	1.20%
State income taxes, net of federal benefit (as a percent)											2.00%	2.00%	3.50%
Foreign earnings subject to U.S. tax (as a percent)											2.90%	1.20%	2.20%
Change in valuation allowance (as a percent)											(0.20%)	(0.30%)	(0.20%)
Tax credits (as a percent)											(4.70%)	(1.70%)	(6.70%)
Domestic production activities deduction (as a percent)											(1.50%)	(0.40%)	(1.90%)
Other, net (as a percent)											0.50%	0.60%	1.90%
Effective income tax rate (as a percent)											31.50%	35.50%	35.00%
Deferred tax assets:
Share-based compensation			11,405,000				13,621,000				11,405,000	13,621,000
Deferred revenue, net of deferred costs			9,326,000				10,124,000				9,326,000	10,124,000
Accruals not currently deductible for tax purposes			13,243,000				13,516,000				13,243,000	13,516,000
Property and equipment							7,663,000					7,663,000
Inventory			4,640,000				3,985,000				4,640,000	3,985,000
Net operating loss carryforwards			3,466,000				3,800,000				3,466,000	3,800,000
Intangible assets			4,029,000				1,563,000				4,029,000	1,563,000
Allowance for doubtful accounts			4,607,000				4,428,000				4,607,000	4,428,000
Foreign tax credit carryforwards			2,154,000				1,902,000				2,154,000	1,902,000
Other tax credits			2,086,000				1,448,000				2,086,000	1,448,000
Other			1,838,000				4,625,000				1,838,000	4,625,000
Total gross deferred tax assets			56,794,000				66,675,000				56,794,000	66,675,000
Less: Valuation allowance			(1,186,000)				(1,526,000)				(1,186,000)	(1,526,000)
Deferred tax assets			55,608,000				65,149,000				55,608,000	65,149,000
Deferred tax liabilities:
Property and equipment			12,734,000								12,734,000
Other			2,293,000				100,000				2,293,000	100,000
Total gross deferred tax liabilities			15,027,000				100,000				15,027,000	100,000
Net deferred tax assets			40,581,000				65,049,000				40,581,000	65,049,000
Deferred tax liabilities, current			439,000				362,000				439,000	362,000
Deferred tax liabilities, noncurrent			418,000				542,000				418,000	542,000
Undistributed earnings from foreign subsidiaries			9,700,000				15,400,000				9,700,000	15,400,000
Net operating loss carryforwards for U.S. federal income tax purposes			5,600,000								5,600,000
Increase to stockholder's equity for certain tax benefits realized from employee share-based compensation											8,700,000	16,700,000
Portion of unrecognized tax benefits, if recognized, would impact entity's effective tax rate			8,200,000				10,200,000				8,200,000	10,200,000
Accrued interest and penalties related to unrecognized tax benefit			1,300,000				3,700,000				1,300,000	3,700,000
Decrease in accrued interest and penalties during the period related to unrecognized tax benefits											2,500,000	1,900,000
Changes to the balance of unrecognized tax benefits
Balance, beginning of year						11,637,000				19,049,000	11,637,000	19,049,000
Additions based on tax provisions related to current year											1,035,000	463,000
Additions for tax positions of prior years											2,812,000	330,000
Reductions for tax positions of prior years											(6,687,000)	(2,485,000)
Settlements												(5,395,000)
Lapse of statute of limitations											(541,000)	(213,000)
Foreign currency translation adjustment											108,000	(112,000)
Balance, end of year			8,364,000				11,637,000				8,364,000	11,637,000	19,049,000
Tax paid / (refund received) relating to federal income tax returns examination for the year 2003 through 2005	(2,300,000)	3,400,000
Interest paid / (refund received) relating to federal income tax returns examination for the year 2003 through 2005	(600,000)	1,200,000
Decrease in unrecognized tax benefits, is reasonably possible, estimated range, maximum			$ 300,000								$ 300,000

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SEGMENT AND GEOGRAPHICAL INFORMATION (Tables)

12 Months Ended

Jun. 30, 2011

SEGMENT AND GEOGRAPHICAL INFORMATION

Schedule of revenues and gross margin by segment

				Year Ended June 30,
				2011		2010		2009
				(in 000s)
Revenues:
		Gaming Equipment and Systems
			Gaming Equipment	$	246,514	$	273,718	$	357,037
			Gaming Operations		318,621		286,950		274,965
			Systems		193,020		217,523		211,758
	Total revenues			$	758,155	$	778,191	$	843,760
Gross Margin(1):
		Gaming Equipment and Systems
			Gaming Equipment	$	112,096	$	138,000	$	166,826
			Gaming Operations		229,801		203,844		194,882
			Systems		142,602		156,542		150,259
	Total gross margin			$	484,499	$	498,386	$	511,967

(1)

Gross Margin from Gaming Equipment and Systems excludes amortization related to certain intangibles including core technology and license rights, which are included in depreciation and amortization.

Schedule of revenues, operating income and identifiable assets by geographic region

		Year Ended June 30,
		2011		2010		2009
		(in 000s)
Revenues:
	United States and Canada	$	619,219	$	621,205	$	701,817
	International		138,936		156,986		141,943
Total revenues		$	758,155	$	778,191	$	843,760
Operating income:
	United States and Canada	$	135,096	$	144,060	$	170,727
	International		16,439		40,050		32,291
Total operating income		$	151,535	$	184,110	$	203,018
Identifiable assets:
	United States and Canada	$	692,778	$	743,426	$	736,634
	International		234,616		169,750		144,248
Total identifiable assets		$	927,394	$	913,176	$	880,882

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Document and Entity Information (USD $)	12 Months Ended
	Jun. 30, 2011	Aug. 22, 2011	Dec. 31, 2010
Document and Entity Information
Entity Registrant Name	BALLY TECHNOLOGIES, INC.
Entity Central Index Key	0000002491
Document Type	10-K
Document Period End Date	Jun. 30, 2011
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 2,227,000,000
Entity Common Stock, Shares Outstanding		44,353,000
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY

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DISCONTINUED OPERATIONS (Tables)

12 Months Ended

Jun. 30, 2011

DISCONTINUED OPERATIONS

Schedule of gain on sale of discontinued operations

		Year Ended June 30,
		2010
		(in 000s)
Sale proceeds		$	80,000
Distributions to noncontrolling interest			(688	)
Assets held for sale			(45,733	)
Liabilities related to assets held for sale			1,161
Adjustments to proceeds for fees and expenses			(471	)
Gain on sale of discontinued operations before income taxes			34,269
	Income tax expense		(12,190	)
Gain on sale of discontinued operations		$	22,079

Schedule of income from discontinued operations

		Year Ended June 30,
		2010			2009
		(in 000s)
Revenues:
	Casino operations	$	34,336		$	39,669
Costs and expenses:
	Direct cost of casino operations		14,081			16,750
	Selling, general and administrative		6,821			7,864
	Depreciation and amortization		2,873			3,337
			23,775			27,951
Operating income			10,561			11,718
Other income (expense):
	Interest income		7			26
	Other, net		(25	)		13
Income from discontinued operations before income taxes			10,543			11,757
	Income tax expense		(3,362	)		(3,700	)
Income from discontinued operations			7,181			8,057
	Less income attributable to noncontrolling interests		1,006			1,187
Income from discontinued operations attributable to Bally Technologies, Inc.		$	6,175		$	6,870

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands	12 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Cash flows from operating activities:
Net income	$ 97,808	$ 139,357	$ 128,236
Adjustments to reconcile net income to net cash provided by operating activities:
Income from discontinued operations, net of tax		(7,181)	(8,057)
(Gain) loss on sale of discontinued operations, net of tax	403	(22,079)
Impairment charges		11,379
Depreciation and amortization	74,980	73,900	68,772
Share-based compensation	12,907	13,793	16,259
Amortization of deferred debt issuance costs	3,404	2,984	2,108
Income tax (benefit) expense	18,811	(19,927)	28,602
Provision for doubtful accounts	7,963	2,927	(42)
Loss on extinguishment of debt	4,119		786
Inventory write-downs	3,623	2,025	4,536
Excess tax benefit of stock option exercises	(8,214)	(15,355)	(270)
Other	(1,320)	(1,089)	1,945
Change in operating assets and liabilities:
Accounts and notes receivable	(46,647)	(49,816)	41,180
Inventories	(101,797)	(36,553)	5,638
Prepaid and refundable income tax and income tax payable	(24,849)	48,026	(31,098)
Other current assets	(557)	3,890	5,628
Accounts payable	14,615	3,763	(26,826)
Accrued liabilities, customer deposits and jackpot liabilities	3,393	(3,437)	(38,748)
Deferred revenue and deferred cost of revenue	(1,886)	(17,482)	(45,341)
Net cash provided by operating activities	56,756	129,125	153,308
Cash flows from investing activities:
Capital expenditures	(13,202)	(11,611)	(27,555)
Restricted cash and investments	474	(205)	4,110
Development financing provided to customers	(9,940)	(15,750)
Additions to other long-term assets	(6,552)	(4,758)	(5,521)
Net cash used in investing activities	(29,220)	(32,324)	(28,966)
Cash flows from financing activities:
Proceeds from borrowing	300,000
Proceeds from revolving credit facility	250,884		25,000
Payments on revolving credit facility	(31,884)		(75,000)
Capitalized debt issuance costs	(7,118)	(2,906)	(10,728)
Pay-off of debt from refinancing	(142,500)		(14,553)
Reduction of long-term debt and capital leases	(35,049)	(35,337)	(27,961)
Distributions to noncontrolling interests	(239)	(675)	105
Purchase of treasury stock	(477,215)	(92,326)	(39,686)
Excess tax benefit of stock option exercises	8,214	15,355	270
Proceeds from exercise of stock options and employee stock purchases	28,441	31,968	11,303
Net cash used in financing activities	(106,466)	(83,921)	(131,250)
Effect of exchange rate changes on cash	669	(396)	(71)
Net cash provided by (used in) operating activities of discontinued operations	(403)	(9,483)	8,868
Net cash provided by (used in) investing activities of discontinued operations		78,757	(6,756)
Net cash used in financing activities of discontinued operations		(1,267)	(1,371)
Decrease in cash and cash equivalents of discontinued operations		8,712	2,133
Total cash flows from operating activities of discontinued operations	(403)	76,719	2,874
Cash and cash equivalents:
Increase (decrease) for year	(78,664)	89,203	(4,105)
Balance, beginning of year	145,089	55,886	59,991
Balance, end of year	$ 66,425	$ 145,089	$ 55,886

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SEGMENT AND GEOGRAPHICAL INFORMATION

12 Months Ended

Jun. 30, 2011

SEGMENT AND GEOGRAPHICAL INFORMATION

SEGMENT AND GEOGRAPHICAL INFORMATION

16.   SEGMENT AND GEOGRAPHICAL INFORMATION

The Company's revenue consists of three sources: Gaming Equipment, which includes the sale of gaming devices and related equipment, parts and conversion kits; Gaming Operations, which includes the operation of wide-area progressive, video lottery and centrally determined systems and the rental of gaming devices and content; and Systems, which includes the sale and support of computerized monitoring systems and related recurring hardware and software maintenance revenue.

The following is a summary of revenues and gross margin:

				Year Ended June 30,
				2011		2010		2009
				(in 000s)
Revenues:
		Gaming Equipment and Systems
			Gaming Equipment	$	246,514	$	273,718	$	357,037
			Gaming Operations		318,621		286,950		274,965
			Systems		193,020		217,523		211,758
	Total revenues			$	758,155	$	778,191	$	843,760
Gross Margin(1):
		Gaming Equipment and Systems
			Gaming Equipment	$	112,096	$	138,000	$	166,826
			Gaming Operations		229,801		203,844		194,882
			Systems		142,602		156,542		150,259
	Total gross margin			$	484,499	$	498,386	$	511,967

(1)

Gross Margin from Gaming Equipment and Systems excludes amortization related to certain intangibles including core technology and license rights, which are included in depreciation and amortization.

Revenues from discontinued operations related to the Rainbow Casino were $34.3 million and $39.7 million for the years ended June 30, 2010 and 2009, respectively. Gross margin from discontinued operations was $20.3 million and $22.9 million for the years ended June 30, 2010 and 2009, respectively.

The Company has operations based primarily in the United States as well as significant sales and distribution offices based in Europe, and other foreign locations, including South America. The table below presents information as to the Company's revenues, operating income and identifiable assets by geographic region which is determined by country of destination:

		Year Ended June 30,
		2011		2010		2009
		(in 000s)
Revenues:
	United States and Canada	$	619,219	$	621,205	$	701,817
	International		138,936		156,986		141,943
Total revenues		$	758,155	$	778,191	$	843,760
Operating income:
	United States and Canada	$	135,096	$	144,060	$	170,727
	International		16,439		40,050		32,291
Total operating income		$	151,535	$	184,110	$	203,018
Identifiable assets:
	United States and Canada	$	692,778	$	743,426	$	736,634
	International		234,616		169,750		144,248
Total identifiable assets		$	927,394	$	913,176	$	880,882

Operating income from discontinued operations was $10.6 million and $11.7 million for the years ended June 30, 2010 and 2009, respectively.

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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) (USD $)	12 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Depreciation and amortization expense
Depreciation and amortization expense from continuing operations	$ 74,980,000	$ 73,900,000	$ 68,772,000
Portion of depreciation and amortization expenses included in cost of gaming operations	55,100,000	54,500,000	49,800,000
Depreciation expense from leased gaming equipment under capital lease			2,100,000
Depreciation and amortization from discontinued operations		2,900,000	3,300,000
Impairment of long-lived assets and goodwill
Impairment charge related to long-lived assets		5,900,000
Revenue recognition
Time-based licenses term (in months)	12
Period for fee recognition on hardware maintenance and product support arrangements (in months)	12
Period for software maintenance and product support arrangements (in months)	12
Advertising costs
Advertising costs incurred	9,600,000	9,100,000	6,800,000
Warranty expense
Parts and labor warranty period on gaming devices (in days)	90
Warranty expense	2,500,000	2,300,000	3,300,000
Income taxes
Percentage of likelihood of realization of recognized tax benefit (as a percent)	50.00%
Recently adopted accounting pronouncements
Number of levels of US GAAP	2
Reclassification of noncontrolling interests from minority interest to equity			$ 2,400,000
Number of continuous statements	1
Number of separate consecutive statements	2
Buildings and improvements
Estimated useful life of long-lived assets
Estimated useful life, low end of range (in years)	10
Estimated useful life, high end of range (in years)	40
Furniture, fixtures and equipment
Estimated useful life of long-lived assets
Estimated useful life, low end of range (in years)	3
Estimated useful life, high end of range (in years)	7
Leasehold improvements
Estimated useful life of long-lived assets
Estimated useful life, high end of range (in years)	10
Leased gaming equipment
Estimated useful life of long-lived assets
Estimated useful life, low end of range (in years)	2
Estimated useful life, high end of range (in years)	3.5

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SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

12 Months Ended

Jun. 30, 2011

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

18.   SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables set forth unaudited quarterly financial information for the years ended June 30, 2011 and 2010.

		Fiscal Year 2011 Quarterly Results
		September 30,			December 31,			March 31,			June 30,
		(in 000s, except per share data)
Statement of Operations Data:
Revenues		$	170,808		$	182,726		$	190,941		$	213,680
Cost of revenues			59,179			65,722			68,181			80,574
Selling, general and administrative			51,614			55,185			57,562			60,672
Research and development costs			21,384			21,360			22,088			23,254
Income from continuing operations before income taxes			33,937			33,616			37,429			38,411
Income tax expense			(12,285	)		(6,347	)		(13,651	)		(12,899	)
Income from continuing operations			21,652			27,269			23,778			25,512
Gain (loss) on sale of discontinued operations, net of tax			(403	)		—			—			—
Net income			21,249			27,269			23,778			25,512
Less net income (loss) attributable to noncontrolling interests			(540	)		17			12			56
Net income attributable to Bally Technologies, Inc.		$	21,789		$	27,252		$	23,766		$	25,456
Basic earnings per share attributable to Bally Technologies, Inc.:
	Income from continuing operations	$	0.42		$	0.51		$	0.45		$	0.53
	Gain (loss) on sale of discontinued operations		(0.01	)		—			—			—
Basic earnings per share		$	0.41		$	0.51		$	0.45		$	0.53
Diluted earnings per share attributable to Bally Technologies, Inc.:
	Income from continuing operations	$	0.40		$	0.49		$	0.43		$	0.51
	Gain (loss) on sale of discontinued operations		(0.01	)		—			—			—
Diluted earnings per share		$	0.39		$	0.49		$	0.43		$	0.51

		Fiscal Year 2010 Quarterly Results
		September 30,			December 31,			March 31,			June 30,
		(in 000s, except per share data)
Statement of Operations Data:
Revenues		$	187,330		$	204,973		$	190,640		$	195,248
Cost of revenues			69,463			74,701			66,455			69,186
Selling, general and administrative			45,196			53,721			52,545			51,733
Research and development costs			19,471			19,571			20,279			20,980
Impairment charges(1)			—			—			11,379			—
Income from continuing operations before income taxes			45,863			48,629			31,992			44,334
Income tax expense			(16,255	)		(16,456	)		(11,262	)		(16,748	)
Income from continuing operations			29,608			32,173			20,730			27,586
Income from discontinued operations, net of tax			1,749			1,430			2,363			1,639
Gain (loss) on sale of discontinued operations, net of tax			—			—			—			22,079
Net income			31,357			33,603			23,093			51,304
Less net income attributable to noncontrolling interests			733			350			534			263
Net income attributable to Bally Technologies, Inc.		$	30,624		$	33,253		$	22,559		$	51,041
Basic earnings per share attributable to Bally Technologies, Inc.:
	Income from continuing operations	$	0.53		$	0.59		$	0.37		$	0.50
	Income from discontinued operations		0.03			0.02			0.04			0.03
	Gain (loss) on sale of discontinued operations		—			—			—			0.40
Basic earnings per share		$	0.56		$	0.61		$	0.41		$	0.93
Diluted earnings per share attributable to Bally Technologies, Inc.:
	Income from continuing operations	$	0.50		$	0.56		$	0.36		$	0.48
	Income from discontinued operations		0.03			0.02			0.03			0.03
	Gain (loss) on sale of discontinued operations		—			—			—			0.38
Diluted earnings per share		$	0.53		$	0.58		$	0.39		$	0.89

(1)

Impairment charges of $11.4 million were recognized in the third quarter related to the Alabama charitable bingo market (see Note 4, Impairment Charges).

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SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) (USD $) In Thousands, except Per Share data	3 Months Ended								12 Months Ended
	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Statement of Operations Data:
Revenues	$ 213,680	$ 190,941	$ 182,726	$ 170,808	$ 195,248	$ 190,640	$ 204,973	$ 187,330	$ 758,155	$ 778,191	$ 843,760
Cost of revenues	80,574	68,181	65,722	59,179	69,186	66,455	74,701	69,463
Selling, general and administrative	60,672	57,562	55,185	51,614	51,733	52,545	53,721	45,196	225,033	203,195	212,735
Research and development costs	23,254	22,088	21,360	21,384	20,980	20,279	19,571	19,471	88,086	80,301	77,277
Impairment charges						11,379				11,379
Income from continuing operations before income taxes	38,411	37,429	33,616	33,937	44,334	31,992	48,629	45,863	143,393	170,818	184,960
Income tax expense	(12,899)	(13,651)	(6,347)	(12,285)	(16,748)	(11,262)	(16,456)	(16,255)	(45,182)	(60,721)	(64,781)
Income from continuing operations	25,512	23,778	27,269	21,652	27,586	20,730	32,173	29,608	98,211	110,097	120,179
Income from discontinued operations, net of tax					1,639	2,363	1,430	1,749		7,181	8,057
Gain (loss) on sale of discontinued operations, net of tax				(403)	22,079				(403)	22,079
Net income	25,512	23,778	27,269	21,249	51,304	23,093	33,603	31,357	97,808	139,357	128,236
Less net income (loss) attributable to noncontrolling interests	56	12	17	(540)	263	534	350	733	(455)	1,880	1,927
Net income attributable to Bally Technologies, Inc.	$ 25,456	$ 23,766	$ 27,252	$ 21,789	$ 51,041	$ 22,559	$ 33,253	$ 30,624	$ 98,263	$ 137,477	$ 126,309
Basic earnings per share attributable to Bally Technologies, Inc.:
Income from continuing operations (in dollars per share)	$ 0.53	$ 0.45	$ 0.51	$ 0.42	$ 0.50	$ 0.37	$ 0.59	$ 0.53	$ 1.90	$ 2.00	$ 2.19
Income from discontinued operations (in dollars per share)					$ 0.03	$ 0.04	$ 0.02	$ 0.03		$ 0.11	$ 0.13
Gain (loss) on sale of discontinued operations (in dollars per share)				$ (0.01)	$ 0.40				$ (0.01)	$ 0.41
Basic earnings per share (in dollars per share)	$ 0.53	$ 0.45	$ 0.51	$ 0.41	$ 0.93	$ 0.41	$ 0.61	$ 0.56	$ 1.89	$ 2.52	$ 2.32
Diluted earnings per share attributable to Bally Technologies, Inc.:
Income from continuing operations (in dollars per share)	$ 0.51	$ 0.43	$ 0.49	$ 0.40	$ 0.48	$ 0.36	$ 0.56	$ 0.50	$ 1.82	$ 1.89	$ 2.10
Income from discontinued operations (in dollars per share)					$ 0.03	$ 0.03	$ 0.02	$ 0.03		$ 0.11	$ 0.12
Gain (loss) on sale of discontinued operations (in dollars per share)				$ (0.01)	$ 0.38				$ (0.01)	$ 0.38
Diluted earnings per share (in dollars per share)	$ 0.51	$ 0.43	$ 0.49	$ 0.39	$ 0.89	$ 0.39	$ 0.58	$ 0.53	$ 1.81	$ 2.38	$ 2.22

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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Jun. 30, 2011

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.     DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Bally Technologies, Inc. ("Bally" or the "Company"), a Nevada corporation, is a diversified, worldwide gaming company that innovates, designs, manufactures, operates and distributes advanced technology-based gaming devices, systems and server-based solutions. As a global gaming-systems provider, the Company offers technology solutions which provide gaming operators with a wide range of marketing, data management and analysis, accounting, player tracking, security and other software applications and tools to more effectively manage their operations. The Company's primary hardware technologies include spinning-reel and video gaming devices, specialty gaming devices and wide-area progressive systems for traditional land-based, riverboat and Native American casinos, video lottery and central determination markets and specialized system-based hardware products. In addition to selling its gaming devices, the Company also offers its customers a wide range of rental options.

Principles of presentation and consolidation

The accompanying consolidated financial statements include the accounts of Bally Technologies, Inc., and its wholly owned and partially owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"), include all adjustments necessary to fairly present the Company's consolidated financial position, results of operations and cash flows for each period presented. References to specific U.S. GAAP within this report cite topics within the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC").

All intercompany accounts and transactions have been eliminated in consolidation.

Discontinued Operations

The Company was the general partner of Rainbow Casino Vicksburg Partnership ("RCVP"), which operated the Rainbow Casino, a dockside riverboat casino in Vicksburg, Mississippi. On April 5, 2010, the Company entered into a definitive purchase agreement to sell the Rainbow Casino which closed on June 8, 2010. The Company's Casino Operations have been classified as discontinued operations in the accompanying financial statements. See Note 3 to consolidated financial statements, Discontinued Operations.

Use of estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair value of financial instruments

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amounts reflected in the accompanying consolidated balance sheets for cash equivalents, accounts and notes receivable, investment securities to fund jackpot liabilities, accounts payable, jackpot liabilities and long-term debt approximate their respective fair values.

All financial assets and liabilities are recognized or disclosed at fair value using a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value:

• •

  Level 1:    quoted prices in active markets for identical assets or liabilities;

  •

  Level 2:    inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

  •

  Level 3:    unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company transacts business in various foreign currencies and has international sales and expenses denominated in foreign currencies, subjecting the Company to foreign currency risk. The Company may enter into foreign currency forward contracts, generally with maturities of twelve months or less, to hedge recognized foreign currency assets and liabilities to reduce the risk that earnings and cash flows will be adversely affected by changes in foreign currency exchange rates. The gains or losses resulting from changes in the fair value of these forward contracts, which are not designated as accounting hedges, are reported in other income (expense) in the consolidated statements of operations, and generally offset the gains and losses associated with the underlying foreign-currency-denominated balances, which are also reported in other income (expense). As of June 30, 2011, total outstanding contracts were $35.9 million, or the notional equivalent of €25 million Euro.

The Company may use interest rate derivatives to manage the interest expense generated by variable rate debt and foreign currency derivatives to manage foreign exchange risk. The Company's derivative financial instruments are measured at fair value on a recurring basis, and the balances as of June 30, 2011 and 2010 (which is included in other assets, net and accrued and other liabilities in the consolidated balance sheets) were as follows:

		Fair Value Measurements Using Input Type
		Level 1		Level 2		Level 3
		(in 000s)
As of June 30, 2011:
Asset:
	Foreign currency derivative financial instrument	$	—	$	452	$	—
	Interest rate derivative financial instruments	$	—	$	1,231	$	—
Liability:
	Foreign currency derivative financial instrument	$	—	$	586	$	—
	Interest rate derivative financial instruments	$	—	$	5,133	$	—
As of June 30, 2010:
Liability:
	Interest rate derivative financial instruments	$	—	$	2,698	$	—

The valuation techniques used to measure the fair value of the derivative financial instruments above in which the counterparties have high credit ratings, were derived from pricing models, such as discounted cash flow techniques, with all significant inputs derived from or corroborated by observable market data. The Company's discounted cash flow techniques use observable market inputs, such as LIBOR-based yield curves and foreign currency forward rates. See Note 9 to consolidated financial statements, Long-Term Debt.

Accounting for Derivative Instruments and Hedging Activity

The Company assesses, both at the inception of each designated hedge and on an on-going basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of the hedged items. Such highly effective derivatives are granted hedge accounting treatment. The interest rate derivative instruments meet these requirements and are accounted for as a cash flow hedges.

The impact of the cash flow hedge and non-designated foreign currency derivatives on the consolidated financial statements is depicted below:

	Amount of Loss Recognized in OCI on Derivative (Effective Portion)							Amount of Loss Reclassified from Accumulated OCI into Income (Effective Portion)
Derivative in Cash Flow Hedging Relationship	Year Ended June 30, 2011			Year Ended June 30, 2010			Location of Loss Reclassified from Accumulated OCI into Income (Effective Portion)	Year Ended June 30, 2011			Year Ended June 30, 2010
	(in 000s)
Interest rate swap agreement	$	(3,661	)	$	(5,978	)	Interest expense	$	(2,458	)	$	(3,024	)

	Amount of Loss Recognized in Other Income (Expense)
Non-Designated Derivative	Year Ended June 30, 2011			Year Ended June 30, 2010		Year Ended June 30, 2009
Foreign Currency Forward Contract	$	(135	)	$	—	$	—

Cash and cash equivalents

Cash and cash equivalents consist of highly liquid debt instruments purchased with an original maturity of three months or less at the date of purchase and are carried at cost, which approximates fair value.

Restricted cash

The Company maintains jackpot funds totaling approximately $8.4 million and $8.3 million at June 30, 2011 and 2010, respectively, to ensure availability of funds to pay wide-area progressive jackpot awards.

Accounts and notes receivable, allowance for doubtful accounts and credit quality of financing receivables

Accounts and notes receivable are stated at face value less an allowance for doubtful accounts. The Company generally grants customers credit terms for periods of 30 to 120 days, but may also grant extended payment terms to some customers for periods up to three years, with interest at market rates.

Trade receivables with contract terms greater than one year relate to the sale of gaming equipment and, to a lesser extent, systems transactions that include software as a major component of the sale, and are generally collateralized by the related equipment sold, although the value of such equipment, if repossessed, may be less than the receivable balance outstanding. Sales-type leasing arrangements relate to gaming equipment and include options to purchase the equipment at the end of the lease term at established prices. These customers typically have a long-standing credit history with the Company. Revenue from these lease arrangements is not considered significant as it is less than 2% of revenue for the Company.

The Company has also provided development financing to certain customers in the form of notes receivable with repayment terms of three to ten years. These notes may also include accelerated payment terms based upon a percentage of net-win from gaming devices sold or leased to these customers.

The Company has one portfolio segment, the casino industry customer, and four classes of receivables including its trade receivables with a contract term less than one year, trade receivables with a contract term greater than one year, sales-type leasing arrangements, or lease receivables, and notes receivable, which are primarily for developmental financing loans. As of June 30, 2011, the Company's accounts and notes receivable were as follows:

		Accounts and Notes Receivable as of June 30, 2011
		Ending Balance		Ending Balance Individually Evaluated for Impairment		Ending Balance Collectively Evaluated for Impairment
		(in 000s)
Contract term less than one year:
Trade and other receivables, current		$	162,202	$	2,064	$	160,138
Contract term greater than one year:
Trade receivables, current			72,237		3,973		68,264
Trade receivables, noncurrent			15,111		213		14,898
			87,348		4,186		83,162
Lease receivables, current			10,245		10,245		—
Lease receivables, noncurrent			13,490		13,490		—
			23,735		23,735		—
Notes receivable, current			1,621		1,621		—
Notes receivable, noncurrent			18,565		18,565		—
			20,186		20,186		—
	Total current		246,305		17,903		228,402
	Total noncurrent		47,166		32,268		14,898
	Total	$	293,471	$	50,171	$	243,300

The activity related to the allowance for doubtful accounts since December 31, 2010, the date of adoption for new disclosure requirements related to the credit quality of financing receivables and the related allowance for credit losses, to June 30, 2011, is summarized below:

		Allowance for Doubtful Accounts
		Beginning Balance as of December 31, 2010			Charge- offs		Recoveries		Provision			Ending Balance as of June 30, 2011			Ending Balance Individually Evaluated for Impairment			Ending Balance Collectively Evaluated for Impairment
		(in 000s)
Contract term less than one year:
Trade and other receivables, current		$	(5,857	)	$	2,324	$	191	$	(2,533	)	$	(5,875	)	$	(2,064	)	$	(3,811	)
Contract term greater than one year:
Trade receivables, current			(3,329	)		1,615		53		(3,523	)		(5,184	)		(3,973	)		(1,211	)
Trade receivables, noncurrent			(498	)		204		—		(213	)		(507	)		(213	)		(294	)
			(3,827	)		1,819		53		(3,736	)		(5,691	)		(4,186	)		(1,505	)
Lease receivables, current			—			—		—		—			—			—			—
Lease receivables, noncurrent			—			—		—		—			—			—			—
			—			—		—		—			—			—			—
Notes receivable, current			—			—		—		—			—			—			—
Notes receivable, noncurrent			(5,169	)		5,169		—		—			—			—			—
			(5,169	)		5,169		—		—			—			—			—
	Total current		(9,186	)		3,939		244		(6,056	)		(11,059	)		(6,037	)		(5,022	)
	Total noncurrent		(5,667	)		5,373		—		(213	)		(507	)		(213	)		(294	)
	Total	$	(14,853	)	$	9,312	$	244	$	(6,269	)	$	(11,566	)	$	(6,250	)	$	(5,316	)

The Company accrues interest, if applicable, on its receivables per the terms of the agreement. Interest is not accrued on delinquent accounts that the Company has determined and specifically identified as not collectible. The Company's recorded investment in receivables on nonaccrual status as of June 30, 2011, excluding trade accounts receivable with a contract term less than one year, is as follows:

		Total
		(in 000s)
Trade receivables		$	4,186
Lease receivables			—
Notes receivables			—
	Total	$	4,186

The Company evaluates the credit quality of its accounts and notes receivable and establishes an allowance for doubtful accounts based on a combination of factors including, but not limited to, customer collection experience, economic conditions, and the customer's financial condition. In addition to specific account identification, the Company utilizes historic collection experience for the most recent twelve month period, where applicable, to establish an allowance for doubtful accounts receivable. Receivables are written off only after the Company has exhausted all collection efforts.

Gaming is a highly regulated industry requiring customers to obtain a gaming operator's license and verify with the applicable regulatory agency that they have the financial resources to operate a gaming establishment. Many of the Company's customers, including new casinos that have opened in recent years, are owned by existing multi-property customers that have established a favorable payment history with the Company. Customer accounts typically include a mix of trade receivables balances with terms for periods of 30 to 120 days and financing receivables resulting from extended payment terms.

The Company monitors the credit quality of its accounts and notes receivable by reviewing an aging of customer invoices. Invoices are considered past due if a scheduled payment is not received within contractually agreed upon terms. The Company also reviews a variety of other relevant qualitative information such as collection experience, economic conditions and specific customer financial conditions to evaluate credit risk in recording the allowance for doubtful accounts.

The following summarizes the aging of past due receivables, excluding trade accounts receivable with a contract term less than one year, as of June 30, 2011:

		1 to 90 Days Past Due		91 to 180 Days Past Due		181 + Days Past Due		Total Past Due		Current		Total Receivable		Recorded Investment 90 Days and Accruing
		(in 000s)
Trade receivables		$	7,655	$	4,790	$	6,205	$	18,650	$	68,698	$	87,348	$	—
Lease receivables			—		—		—		—		23,735		23,735		—
Notes receivable			—		—		—		—		20,186		20,186		—
	Total	$	7,655	$	4,790	$	6,205	$	18,650	$	112,619	$	131,269	$	—

The aging of customer invoices is based on their contractually agreed upon payment terms, which in certain rare circumstances have been modified from the original financing terms. The modifications of original financing terms have not been material to our total trade, lease and note receivable balances.

The Company's notes receivable are reviewed quarterly, at a minimum, for impairment. The customer's solvency, collection experience, legal and regulatory environment and other financial information may indicate that the loan is impaired. As of June 30, 2011, the Company had no impaired loans remaining in its accounts and notes receivable balances. As of June 30, 2010, the Company had one impaired loan to a customer in Alabama and the recorded investment and related allowance of $5.2 million were written off during fiscal year 2011. In fiscal year 2010, the legality of the charitable bingo market in Alabama was questioned and several operators in the region closed and the Company recognized an impairment charge on the notes receivable. No further interest is accrued once a loan is impaired.

The fair value of accounts and notes receivable, net, is estimated by discounting expected future cash flows using current interest rates at which similar loans would be made to borrowers, with similar credit ratings and remaining maturities. As of June 30, 2011 and 2010, respectively, the fair value of the accounts and notes receivable, net, approximate the carrying value.

Inventories

Inventories are stated at the lower of cost, determined on a first in, first out basis, or market. Cost elements included in work-in-process and finished goods include raw materials, direct labor and manufacturing overhead. Inventories consist of the following:

		June 30,
		2011		2010
		(in 000s)
Raw materials		$	53,926	$	34,221
Work-in-process			1,630		1,101
Finished goods			13,078		7,484
	Total	$	68,634	$	42,806

The Company regularly reviews inventory quantities and updates estimates for the net realizable value of inventories. This process includes examining the carrying values of new and used gaming devices, parts and ancillary equipment in comparison to the current fair market values for such equipment (less costs to sell or dispose). Some of the factors involved in this analysis include the overall levels of inventories, current and projected sales levels and markets for such products, the costs required to sell the products, including refurbishment costs and importation costs for international shipments, and the overall projected demand for products once the next generation of products are scheduled for release.

The Company recorded inventory write-downs totaling approximately $3.6 million, $2.0 million and $4.5 million during the years ended June 30, 2011, 2010 and 2009, respectively. These charges are included in the cost of gaming equipment and systems in the consolidated statements of operations.

Hurricane damage insurance recoveries

During fiscal year 2009, the Company negotiated an insurance settlement related to the 2005 U.S. Gulf Coast hurricane damages which destroyed or temporarily shut down certain gaming operations in the Gulf Coast region. The Company received a final payment of $3.0 million for business interruption, which was included in selling, general and administrative expenses.

Deferred revenue and deferred cost of revenue

Deferred revenue arises from the timing differences between the shipment or installation of gaming equipment and systems products and the satisfaction of all revenue recognition criteria consistent with the Company's revenue recognition policy. Deferred cost of revenue consists of the direct costs associated with the manufacture of gaming equipment and systems products for which revenue has been deferred. Deferred revenue and deferred cost of revenue that are expected to be realized within one year are classified as current liabilities and current assets, respectively.

Restricted long-term investments

The Company purchases U.S. Treasury Strip Securities for the benefit of jackpot winners who elect to receive annual or weekly installment payments. These securities are held to maturity and recorded at cost plus interest accretion to date. Such securities are included in restricted long-term investments in the consolidated balance sheets, and totaled $12.5 million and $13.1 million as of June 30, 2011 and 2010, respectively.

Property, plant and equipment and leased gaming equipment

Property, plant and equipment is stated at cost and depreciated over the estimated useful lives or lease term, if less, using the straight line method as follows: buildings and improvements, ten to forty years; furniture, fixtures and equipment, three to seven years; and leasehold improvements, the shorter of lease term or ten years. Leased gaming equipment is stated at cost and depreciated over the estimated useful lives ranging from two to three and one-half years. Depreciation and asset charges related to leased gaming equipment are recorded to cost of gaming operations in the consolidated statements of operations.

Significant replacements and improvements are capitalized while other maintenance and repairs are expensed. The cost and accumulated depreciation of assets retired or otherwise disposed of are eliminated from the accounts and any resulting gain or loss is credited or charged to income.

Depreciation and amortization expense

For the years ended June 30, 2011, 2010 and 2009, depreciation and amortization expense from continuing operations totaled $75.0 million, $73.9 million and $68.8 million, respectively. Of these amounts, $55.1 million, $54.5 million and $49.8 million of depreciation and amortization expense were included in cost of gaming operations in the consolidated statements of operations. Depreciation expense from leased gaming equipment under capital leases totaled $2.1 million for the year ended June 30, 2009.

For the years ended June 30, 2010 and 2009, depreciation and amortization expense from discontinued operations totaled $2.9 million and $3.3 million, respectively.

Impairment of long-lived assets and goodwill

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets are measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset, undiscounted and without interest. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

The Company reviews goodwill for impairment annually at the beginning of its fourth fiscal quarter, or whenever events or circumstances indicate the carrying value may not be recoverable or warrant a revision to the estimated remaining useful life. The Company performs the impairment analysis of goodwill at a reporting unit level by comparing the fair value of a reporting unit with its carrying value, including goodwill. If the fair value is less than the carrying value, the impairment to be recognized is measured as the amount by which the carrying amount of the goodwill exceeds the fair value of the reporting unit goodwill.

During the year ended June 30, 2010, impairment charges of $5.9 million related to long-lived assets were recorded (see Note 4 to the consolidated financial statements, Impairment Charges). During the years ended June 30, 2011 and 2009, no impairment charges related to long-lived assets were recorded.

During the years ended June 30, 2011, 2010 and 2009, no impairment charges related to goodwill were recorded.

Jackpot liabilities

The Company recognizes jackpot expense, included in cost of gaming operations in the consolidated statements of operations, and a liability for jackpots incurred but not yet won in each jurisdiction based on the discounted net present value of the progressive meter liability. Jackpots are payable either in weekly or annual installments, or immediately in the case of instant win progressive jackpots. Winners may elect to receive a single payment for the present value of a jackpot discounted at applicable interest rates in lieu of annual installments. Interest rates used in the single payment calculation vary by jurisdiction and are impacted by market forces and other economic conditions.

Revenue recognition

The Company's revenue recognition policy is to record revenue when all of the following criteria have been satisfied:

• •

  Persuasive evidence of an arrangement exists;

  •

  The price or fee to the customer is fixed or determinable;

  •

  Collectability is reasonably assured;

  •

  Delivery has occurred; and

  •

  No significant contractual obligations remain.

Revenues are reported net of incentive rebates, discounts, sales taxes, and other taxes of a similar nature. For products sold under arrangements with extended payment terms the probability of collection is evaluated based on a review of the customer's credit worthiness and a review of historic collection experience on contracts with extended payment terms. As a result of such review, the Company recognizes revenue on extended payment term arrangements as the Company has determined that collectability is reasonably assured and the fees are fixed and determinable.

Games placed with customers on a trial basis are not recognized as revenue until the trial period ends, the customer accepts the games and all other relevant criteria have been met. Amounts billed to customers prior to completing the earnings process are deferred until the revenue recognition criteria are met.

Effective July 1, 2009, the Company adopted new accounting guidance related to revenue recognition for multiple deliverable arrangements and certain revenue arrangements that include software elements. The Company elected to adopt this guidance prior to the required effective date using the prospective method. Accordingly, this guidance was applied to all new or materially modified revenue arrangements entered into since the start of the Company's fiscal year of adoption, which was July 1, 2009.

Prior to the adoption of the new revenue recognition guidance, gaming equipment and systems revenue was recognized in accordance with software revenue recognition guidance. The new guidance amended the scope of software revenue recognition to exclude all tangible products containing both software and nonsoftware components that function together to deliver the product's essential functionality. As a result of applying the new guidance, certain products that were previously accounted for under the scope of software revenue recognition guidance are no longer accounted for as software.

Gaming Operations Revenue.    Gaming operations revenue consists of the operation of linked progressive systems and the rental of gaming devices, game content and the related systems placed with customers. Fees under these arrangements are earned and recognized based on a share of money wagered, a share of the net winnings, or on a fixed daily rate. The daily fee entitles the customer to full use of the gaming device and includes maintenance, licensing of the game content software and connection to a linked progressive system, where applicable. In certain markets, the Company also charges a daily system connection fee for the customer to connect to a central determination system and/or back-office system. The Company does not consider these arrangements to have multiple revenue-generating activities as the services offered are a comprehensive solution in exchange for a daily fee and all of the products and services are delivered contemporaneously. Gaming operations revenue is recognized under general revenue recognition guidance as the deliverables provide the customer with rights to use tangible gaming devices and software that is essential to the functionality of the gaming device.

Gaming Equipment Revenue.    Gaming Equipment revenue is generated from the sale of gaming devices and licensing rights to game content software that is installed in the gaming device, parts, and other ancillary equipment. Arrangements may also include sales of game content conversion kits which enable customers to replace game content without purchasing a new gaming device. Gaming equipment arrangements do not include maintenance and product support fees beyond a standard warranty period. The recognition of revenue from the sale of gaming devices occurs as title and risk of loss have passed to the customer and all other criteria have been satisfied.

As the combination of game content software and the tangible gaming device function together to deliver the product's essential functionality, revenue from the sale of gaming devices is recognized under general revenue recognition guidance. Prior to July 1, 2009, gaming devices were recognized under software revenue recognition guidance. Game content conversion kits are considered software deliverables and are recognized in accordance with software revenue recognition guidance.

Systems Revenue.    Systems revenue arrangements generally include a combination of systems software licenses, systems-based hardware products, maintenance and product support fees and professional services. The primary function of systems software licensed by the Company is to aid customers to more effectively run their business with marketing, data management and analysis, accounting, player tracking and security features.

Revenue for systems software and maintenance and product support fees is recognized under software revenue recognition guidance. Although the systems software and certain systems-based hardware function together, the primary functionality of the systems software is derived from the software and the systems software is not essential to the functionality of the systems-based hardware.

The Company licenses systems software on a perpetual basis or under time-based licenses. Revenue from perpetual license software is recognized at the inception of the license term if all revenue recognition criteria have been met. Revenue from maintenance and product support fees sold with perpetual licenses is recognized over the term of the support period. The Company's time-based licenses are generally for twelve month terms and are bundled with software maintenance and product support fees. All revenue from such arrangements is recognized over the term of the license.

Systems-based hardware includes embedded software that is essential to the functionality of the hardware. Accordingly, revenue related to all systems-based hardware sales and related maintenance and product support fees are recognized under general revenue recognition guidance. Prior to July 1, 2009, systems-based hardware was recognized under software revenue recognition guidance. Revenue from the sale of systems-based hardware is generally recognized upon delivery when title and risk of loss have passed to the customer and all other revenue recognition criteria are met. However, in the case of arrangements involving a systems installation, revenue on the systems-based hardware is generally not recognized until the system has been installed and the customer has accepted the system. Hardware maintenance and product support fees are recognized during the term of the support period which is generally 12 months.

Software maintenance and product support provides customers with rights to unspecified software product upgrades, maintenance and patches released during the term of the support period. The Company's software maintenance and product support arrangements are generally for 12 month periods. Software maintenance and product support is recognized on a straight-line basis over the term of the support period.

Multiple Element Arrangements.    The Company enters into revenue arrangements that may consist of multiple deliverables of its products and services. Customers may enter into arrangements with the Company for the implementation of systems software and the sale of gaming devices. Arrangements for the implementation of systems software will generally include a combination of systems software licenses, systems-based hardware products, maintenance and product support fees, and professional services. Certain gaming equipment arrangements may also include the sale of gaming devices and game conversion kits. Revenue arrangements with multiple deliverables are allocated to separate units of accounting if the deliverables meet both of the following criteria:

• •

  The delivered items have value to the customer on a stand-alone basis. The items have value on a standalone basis if they are sold separately by any vendor or the customer could resell the delivered items on a standalone basis; and

  •

  If the arrangement includes a general right of return relative to the delivered items, delivery or performance of the undelivered items is considered probable and substantially in the control of the Company.

At the inception of a multiple element arrangement, fees under the arrangement are allocated to the nonsoftware deliverables, and to the software deliverables as a group based on their relative selling price. Software deliverables are further subject to separation and allocation based on software revenue recognition guidance as described in the following paragraph. When applying the relative selling price method, a hierarchy is used for estimating the selling price based first on vendor-specific objective evidence ("VSOE"), then third-party evidence ("TPE") and finally management's estimate of the selling price ("ESP"). Revenue for each unit of accounting is recognized when the relevant recognition criteria for each respective element has been met.

In allocating arrangement fees under the relative selling price hierarchy, the Company uses VSOE for all products which have been sold on a stand-alone basis. As TPE is generally not available, the Company uses ESP for products that are not sold on a stand-alone basis and for recently introduced products that are sold on a stand-alone basis but for which a history of stand-alone sales has not yet been developed. Following these guidelines, the Company uses either VSOE or ESP for gaming devices, system-based hardware products, maintenance and product support fees associated with perpetual licenses and professional services; and ESP for perpetual and time-based software licenses and maintenance and product support fees associated with time-based licenses.

The Company uses the residual method to recognize revenue allocated to software deliverables. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is allocated to the delivered element and is recognized as revenue. In arrangements in which the Company does not have VSOE of fair value of all undelivered software elements, revenue is deferred until delivery occurs or VSOE of fair value has been established for any remaining undelivered software elements. In the event the only undelivered software element is maintenance and product support for which VSOE of fair value does not exist, the revenue is recognized ratably over the maintenance and product support period.

The establishment of VSOE requires judgment as to whether there is a sufficient quantity of items sold on a stand-alone basis and whether the prices demonstrate an appropriate level of concentration to conclude that VSOE exists. In determining ESP, management considers a variety of information including historic pricing and discounting practices, competitive market activity, internal costs, and the pricing and discounting practices of products sold in bundled arrangements.

Advertising costs

The Company expenses advertising costs as incurred, which totaled $9.6 million, $9.1 million and $6.8 million from continuing operations for the years ended June 30, 2011, 2010 and 2009, respectively.

Warranty expense

Gaming devices are typically sold with a 90-day parts and labor warranty. Warranty expense is calculated using historical experience, and totaled $2.5 million, $2.3 million and $3.3 million for the years ended June 30, 2011, 2010 and 2009, respectively.

Research and development

Research and development expenses related to product development are expensed until technological feasibility has been established. The Company has determined that technological feasibility is not established for its products until completion of the regulatory approval process. As this process is completed shortly before the products are made available to customers, any development costs incurred after the establishment of technological feasibility are typically not significant and expensed as incurred.

Income taxes

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Taxes on income of the Company's foreign subsidiaries are provided at the tax rates applicable to the tax jurisdictions in which they are located.

The Company recognizes tax benefits from an uncertain position only if it is more likely than not that the position will be sustained upon examination by taxing authorities based on the technical merits of the issue. The amount recognized is the largest benefit that the Company believes has greater than a 50% likelihood of being realized upon settlement. The Company recognizes interest and penalties related to uncertain tax positions as tax expense.

Share-based compensation

The Company accounts for share-based compensation based on the calculated fair value of the award measured on the grant date, which is recognized, net of estimated forfeitures, as an expense over the employee's requisite service period. The Company classifies share-based compensation expense in the same financial statement line as cash compensation, including cost of gaming equipment and systems and casino operations, research and development costs, and selling, general and administrative expenses.

The excess tax benefit from stock option exercises and tax deductions in excess of compensation cost recognized are classified as a financing activity in the statement of cash flows.

Foreign currency translation

The functional currency of the Company's foreign subsidiaries is typically their local currency. Assets and liabilities of foreign operations are translated into U.S. dollars at the rate of exchange at the end of the period, and the income and expense accounts are translated at the average rate of exchange for the period. Translation adjustments are reflected as accumulated other comprehensive income within stockholders' equity. Gains and losses on foreign currency transactions are included in the consolidated statements of operations.

Recently adopted accounting pronouncements

On July 1, 2009, the Company adopted the new FASB ASC which establishes two levels of U.S. GAAP: authoritative and nonauthoritative. The ASC is now the single source of authoritative nongovernmental U.S. GAAP. All other literature is considered non-authoritative. The Company's adoption of this statement had no impact on the consolidated results of operations, financial position and cash flows, but rather changes the reference used to cite specific FASB accounting literature.

Effective July 1, 2009, the Company adopted new accounting guidance related to revenue recognition for multiple deliverable arrangements and certain revenue arrangements that include software elements. The Company elected to adopt this guidance prior to the required effective date using the prospective method. Accordingly, this guidance was applied to all new or materially modified revenue arrangements entered into after the start of the Company's fiscal year of adoption.

On July 1, 2009, the Company adopted new accounting guidance related to business combinations which clarifies the accounting for certain separately identifiable intangible assets which an acquirer does not intend to actively use. This guidance requires an acquirer in a business combination to account for a defensive intangible asset as a separate unit of accounting which should be amortized to expense over the period the asset diminishes in value. Future effects will be dependent upon acquisitions of defensive intangible assets, if any, at that time. In addition, there is new guidance for determining the useful life of a recognized intangible asset. This guidance is applied prospectively to intangible assets acquired after the effective date. However, the disclosure requirements are applied prospectively to all intangible assets recognized in financial statements. In addition, the new guidance requires that an acquiring entity recognize all of the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions, requires the expense of acquisition costs, and also includes a substantial number of new disclosure requirements. The Company's adoption of this guidance did not have a significant impact on the disclosures or the consolidated results of operations, financial position and cash flows for the year ended June 30, 2010.

On July 1, 2009, the Company adopted new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this guidance requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent's equity. The amount of net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. This guidance also clarifies that changes in a parent's ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest and requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of the noncontrolling equity investment on the deconsolidation date. The guidance also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest. The adoption of this statement did not have a material impact on the consolidated results of operations, financial position and cash flows, but did affect presentation and disclosure. As a result of the adoption, the Company reclassified noncontrolling interests in the amount of $2.4 million from minority interest to equity in the June 30, 2009 Consolidated Balance Sheets and Statements of Stockholders' Equity. Certain reclassifications to the Consolidated Statements of Operations and Consolidated Statements of Cash Flows have been made to prior period amounts to conform to the presentation of the current period. Recorded amounts for prior periods previously presented as Net income which are now presented as Net income attributable to Bally Technologies, Inc., have not changed as a result of the adoption of this guidance.

On July 1, 2009, the Company adopted new accounting guidance requiring additional disclosures about fair value of financial instruments in interim and annual financial statements. The Company's adoption of this guidance resulted in the disclosure of information about the fair value of financial instruments consistent with the disclosures in the Company's most recent annual financial statements.

On December 31, 2010, the Company adopted new accounting guidance and disclosures to address concerns about the credit quality of financing receivables and the related allowance for credit losses. The guidance is intended to provide additional information to assist financial statement users in assessing an entity's credit risk exposures and evaluating the adequacy of its allowance for credit losses. The new disclosures included information at disaggregated levels, including the nature of the credit risk and how it is analyzed in arriving at the allowance for credit losses, a roll-forward schedule of and reasons for changes in the allowance, credit quality indicators, aging of past due accounts, the nature and extent of modifications, and significant purchases or sales, if applicable.

Recently issued accounting pronouncements not yet adopted

In April 2010, the FASB issued new accounting guidance related to accruals for casino jackpot liabilities. Specifically, the guidance clarifies that an entity should not accrue jackpot liabilities, or portions thereof, before a jackpot is won if the entity can avoid paying the jackpot. Jackpots should be accrued and charged to revenue when an entity has the obligation to pay the jackpot. The guidance applies to both base and progressive jackpots. The new guidance is effective for fiscal years beginning on or after December 15, 2010. The new guidance will be applied by recording a cumulative-effect adjustment to opening retained earnings in the period of adoption. The Company will adopt the guidance in fiscal year 2012 and there will not be a significant impact on its consolidated results of operations, financial position and cash flows. The effect of adoption will be recorded as a cumulative-effect adjustment to the retained earnings balance as of July 1, 2011.

In April 2011, the FASB issued new accounting guidance related to troubled debt restructuring. The guidance clarifies which loan modifications constitute troubled debt restructurings to assist creditors in determining whether a modification of the terms of a receivable meets the criteria to be considered a troubled debt restructuring, both for purposes of recording an impairment loss and for disclosures of troubled debt restructurings. The new guidance is effective for interim and annual periods beginning on or after June 15, 2011. The Company will adopt the guidance in fiscal year 2012 and there will not be a significant impact on its consolidated results of operations, financial position and cash flows. Its future impact would only be in its disclosures of troubled debt restructurings, if applicable.

In December 2010, the FASB issued new accounting guidance related to goodwill impairment testing. The new guidance amends the criteria for performing Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts and requires performing Step 2 if qualitative factors indicate that it is more likely than not that a goodwill impairment exists. The new guidance is effective for annual periods beginning after December 31, 2011. The Company expects to adopt the guidance in fiscal year 2013 and does not believe it will have a significant impact on its consolidated results of operations, financial position and cash flows.

In May 2011, the FASB issued new accounting guidance related to fair value measurements. The new guidance changes the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements to ensure consistency between U.S. GAAP and IFRS. The guidance also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. The new guidance is to be applied prospectively and is effective for interim and annual periods beginning on or after December 15, 2011. The Company expects to adopt the guidance in the second quarter of fiscal year 2012 and does not believe it will have a significant impact on its consolidated financial statement footnote disclosures.

In June 2011, the FASB issued new accounting guidance to make the presentation of items within other comprehensive income ("OCI") more prominent. The new standard will require companies to present items of net income, items of OCI and total comprehensive income in one continuous statement or two separate consecutive statements, and companies will no longer be allowed to present items of OCI in the statement of stockholders' equity. Reclassification adjustments between OCI and net income will be presented separately on the face of the financial statements. The new guidance is to be applied retrospectively and is effective for interim or annual periods beginning after December 15, 2011. The Company expects to adopt the guidance in the second quarter of fiscal year 2012. The adoption of this standard will significantly change the presentation of the Company's consolidated financial statements.

The Company believes there is no additional new accounting guidance adopted but not yet effective that is relevant to the readers of our financial statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on its financial reporting.

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LEASES

12 Months Ended

Jun. 30, 2011

LEASES

LEASES

10.   LEASES

The Company leases certain office space, equipment, autos, warehouse and repair facilities and other property locations under noncancelable operating leases which are generally included in selling, general and administrative expenses. Operating rental expense is as follows:

	Year Ended June 30,
	2011			2010			2009
	(in 000s)
Equipment and office space leases	$	9,060		$	8,325		$	6,969
Sublease rental income		(357	)		(251	)		(201	)
	$	8,703		$	8,074		$	6,768

A schedule of future minimum rental payments required under noncancelable operating leases for each of the five fiscal years ending after June 30, 2011, is as follows:

Year Ended June 30,	Operating
2012	$	8,584
2013		6,410
2014		4,481
2015		2,541
2016		2,290
Thereafter		1,490
Total minimum payments	$	25,796

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RELATED PARTY TRANSACTIONS (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2009
RELATED PARTY TRANSACTIONS
Period for determination of average stock, price (in days)	20
Subordinated debt, carrying amount	$ 2.8

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SHARE-BASED COMPENSATION (Details 4) (USD $)	12 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Stock options
Modification of certain fully vested stock options
Increase in contractual term (in years)			2.15
Increase in share-based compensation expense			$ 400,000
Accelerated vesting of unvested stock options approved by the Board of Directors
Number of shares affected by award acceleration (in shares)			360,000
Accelerated recognition of share-based compensation expense			1,400,000
Unrecognized compensation cost	11,200,000
Unrecognized compensation cost, period for recognition (in years)	1.89
Weighted Average:
Expected option term (in years)	4.61	4.66	4.53
Expected volatility (as a percent)	54.91%	56.04%	51.07%
Risk-free interest rate (as a percent)	1.76%	2.23%	2.63%
Annual dividend yield (as a percent)	0.00%	0.00%	0.00%
Restricted stock and RSUs
Accelerated vesting of unvested stock options approved by the Board of Directors
Unrecognized compensation cost	$ 12,000,000
Unrecognized compensation cost, period for recognition (in years)	1.76

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SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS (Details) (USD $)	12 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Allowance for doubtful accounts (current and long-term):
Balance at the beginning of the year	$ 15,143,000	$ 8,897,000	$ 12,027,000
Additions	7,963,000	8,382,000	(57,000)
Net Write-offs/(Recoveries)	11,540,000	2,136,000	3,073,000
Balance at the end of the year	11,566,000	15,143,000	8,897,000
Net write-offs and additions related to the Alabama charitable bingo market		$ 5,500,000

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LONG-TERM DEBT (Tables)

12 Months Ended

Jun. 30, 2011

LONG-TERM DEBT

Schedule of long-term debt

		June 30,
		2011			2010
		(in 000s)
Revolving credit facility		$	219,000		$	—
Term loan facility			296,250			173,750
Other, generally unsecured			153			43
	Long-term debt		515,403			173,793
Less current maturities			(15,153	)		(42,543	)
	Long-term debt, net of current maturities	$	500,250		$	131,250

Schedule of additional information on the entity's interest rate swap

Interest Rate Swaps	Balance Sheet Location	Fair Value (in 000s)		Location of Offsetting Balance
Cash flow hedges—$296.3 million LIBOR based debt	Accrued and other liabilities	$	5,133
	Other assets, net		1,231
		$	3,902	Accumulated other comprehensive income (before income taxes)

Schedule of annual principal maturities of long-term debt

Year Ended June 30,	(in 000s)
2012	$	15,000
2013		16,875
2014		24,375
2015		30,000
2016		210,000
Total	$	296,250

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INCOME TAXES

12 Months Ended

Jun. 30, 2011

INCOME TAXES

INCOME TAXES

14.   INCOME TAXES

Consolidated income from continuing operations before taxes and noncontrolling interest for domestic and foreign operations is as follows:

	Year Ended June 30,
	2011		2010		2009
	(in 000s)
United States	$	131,668	$	160,265	$	169,756
Foreign		11,725		10,553		15,204
Total	$	143,393	$	170,818	$	184,960

The components of the Company's income tax expense from continuing operations are as follows:

		Year Ended June 30,
		2011			2010			2009
		(in 000s)
Current:
	Federal	$	12,614		$	59,626		$	26,956
	State		5,585			5,928			4,820
	Foreign		3,245			5,057			3,711
			21,444			70,611			35,487
Deferred:
	Federal		23,984			(9,261	)		26,458
	State		(919	)		(796	)		2,770
	Foreign		673			167			66
			23,738			(9,890	)		29,294
Income tax expense		$	45,182		$	60,721		$	64,781

The difference between the U.S. statutory federal income tax rate and the Company's effective income tax rate is as follows:

	Year Ended June 30,
	2011			2010			2009
U.S. federal statutory income tax rate		35.0	%		35.0	%		35.0	%
Change in income tax contingencies		(2.5	)		(0.9	)		1.2
State income taxes, net of federal benefit		2.0			2.0			3.5
Foreign earnings subject to U.S. tax		2.9			1.2			2.2
Change in valuation allowance		(0.2	)		(0.3	)		(0.2	)
Tax credits		(4.7	)		(1.7	)		(6.7	)
Domestic production activities deduction		(1.5	)		(0.4	)		(1.9	)
Other, net		0.5			0.6			1.9
		31.5	%		35.5	%		35.0	%

The major components of the deferred tax assets and liabilities from continuing operations are as follows:

		June 30,
		2011			2010
		(in 000s)
Deferred tax assets:
	Share-based compensation	$	11,405		$	13,621
	Deferred revenue, net of deferred costs		9,326			10,124
	Accruals not currently deductible for tax purposes		13,243			13,516
	Property and equipment		—			7,663
	Inventory		4,640			3,985
	Net operating loss carryforwards		3,466			3,800
	Intangible assets		4,029			1,563
	Allowance for doubtful accounts		4,607			4,428
	Foreign tax credit carryforwards		2,154			1,902
	Other tax credits		2,086			1,448
	Other		1,838			4,625
Total gross deferred tax assets			56,794			66,675
Less: Valuation allowance			(1,186	)		(1,526	)
Deferred tax assets		$	55,608		$	65,149
Deferred tax liabilities:
	Property and equipment	$	12,734		$	—
	Other		2,293			100
Total gross deferred tax liabilities		$	15,027		$	100
Net deferred tax assets		$	40,581		$	65,049

Current deferred income tax liabilities of $439,000 and $362,000 of as of June 30, 2011 and 2010, respectively, are included in accrued and other liabilities and noncurrent deferred income tax liabilities of $418,000 and $542,000 as of June 30, 2011 and 2010, respectively, are included in other liabilities in the accompanying Consolidated Balance Sheets.

The Company has not provided income taxes on approximately $9.7 million and $15.4 million of undistributed earnings as of June 30, 2011 and 2010, respectively, from certain foreign subsidiaries. The Company plans to permanently invest the earnings in the foreign subsidiaries and therefore has not recorded a deferred tax liability associated with the undistributed earnings.

At June 30, 2011, the Company had net operating loss carryforwards for U.S. federal income tax purposes of approximately $5.6 million. The entire amount of the net operating loss carryforwards are subject to limitations under Section 382 of the Internal Revenue Code. Section 382 limits the amount of carryforwards available per year for use against future taxable income. Based on the Company's recent history of taxable income and projections of taxable income in the future, the Company expects to utilize all of its federal net operating loss carryforwards. The Company also has net operating losses in several foreign jurisdictions, mainly the United Kingdom and Australia. Due to a history of net operating losses in the United Kingdom, management has determined that it is more likely than not that these losses will not be realized and therefore has established a full valuation allowance. The Company forecasts future taxable income sufficient to utilize all net operating losses in Australia, therefore, no valuation allowance has been established for these losses.

The Company's subsidiary in India operated under a tax holiday which expired in March 2011.

The Company recorded $8.7 million and $16.7 million as an increase to stockholder's equity for certain tax benefits from employee share-based compensation for the years ended June 30, 2011 and 2010, respectively.

The Company had $8.4 million and $11.6 million of liabilities for unrecognized tax benefits as of June 30, 2011 and 2010, respectively. Of these amounts, $8.2 million and $10.2 million, respectively, if recognized, would impact our effective tax rate. The Company recognizes interest and penalties related to unrecognized tax benefits as tax expense. As of June 30, 2011 and 2010, the Company had accrued interest and penalties of $1.3 million and $3.7 million, respectively. The Company decreased the accrual of interest and penalties by $2.5 million and $1.9 million during the years ended June 30, 2011 and 2010, respectively.

Changes to the balance of unrecognized tax benefits are as follows:

	June 30,
	2011			2010
	(in 000s)
Balance, beginning of year	$	11,637		$	19,049
Additions based on tax provisions related to current year		1,035			463
Additions for tax positions of prior years		2,812			330
Reductions for tax positions of prior years		(6,687	)		(2,485	)
Settlements		—			(5,395	)
Lapse of statute of limitations		(541	)		(213	)
Foreign currency translation adjustment		108			(112	)
Balance, end of year	$	8,364		$	11,637

The Internal Revenue Service ("IRS") commenced examination of the Company's United States federal income tax returns for 2003 through 2005 in the fourth quarter of 2006. Throughout the examination, the IRS proposed, and management agreed to certain adjustments related to the open tax years that were recorded in the income tax provision. In January 2009, the IRS completed its field examination of the open tax years and issued a Revenue Agent's Report. Also in January 2009, the Company paid $3.4 million in tax and $1.2 million in interest to the IRS to settle certain agreed adjustments. The Company filed a formal protest regarding certain unagreed adjustments and the case was assigned to the IRS Las Vegas Appeals Office in July 2009. In June 2010, the Company agreed to settle all remaining issues with the IRS. Formal closure of the case occurred in October 2010 and the Company has received a refund from the IRS of $2.3 million, including $0.6 million in interest.

In the second quarter of fiscal year 2011, the Company was notified by the IRS that they will be examining the United States federal income tax returns for 2007 through 2009. The IRS commenced the examination in the third quarter of 2011. During the fourth quarter of 2011, the IRS notified the Company that the 2006 United States federal income tax return will be included in the examination.

The Company files numerous consolidated and separate income tax returns in the United States and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to United States federal income tax examinations for years before 2006 and is no longer subject to state and local, or foreign income tax examinations for years before 2003.

It is reasonably possible that the Company's amount of unrecognized tax benefits may decrease within the next twelve months by a range up to $0.3 million.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data	Jun. 30, 2011	Jun. 30, 2010
CONSOLIDATED BALANCE SHEETS
Accounts and notes receivable, allowances for doubtful accounts (in dollars)	$ 11,059	$ 9,974
Long-term accounts and notes receivables, allowances for doubtful accounts (in dollars)	$ 507	$ 5,169
Special stock, shares authorized	10,000,000	10,000,000
Special stock, Series E, liquidation value (in dollars per share)	$ 100	$ 100
Special stock, shares issued	115	115
Special stock, shares outstanding	115	115
Common stock, par value (in dollars per share)	$ 0.10	$ 0.10
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	61,541,000	59,495,000
Common stock, shares outstanding	44,397,000	54,392,000
Treasury stock, shares	17,144,000	5,103,000

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SHARE-BASED COMPENSATION (Tables)

12 Months Ended

Jun. 30, 2011

SHARE-BASED COMPENSATION.

Schedule of stock option activity

					Weighted Average
		Shares			Exercise Price		Remaining Contractual Term		Aggregate Intrinsic Value
		(in 000s)			(per share)		(years)		(in 000s)
Balance outstanding as of June 30, 2010			5,061		$	21.14			$	61,186
	Granted		368			36.13
	Exercised		(1,638	)		16.23
	Forfeited or expired		(109	)		33.76
Balance outstanding as of June 30, 2011			3,682			24.45		3.86	$	60,558
Exercisable as of June 30, 2011			2,782			21.09		3.35	$	54,817

Schedule of restricted stock and RSU activity

		Restricted Stock			Weighted Average Grant Date Fair Value		RSUs			Weighted Average Grant Date Fair Value
		(in 000s)			(per share)		(in 000s)			(per share)
Balance outstanding as of June 30, 2010			329		$	35.66		642		$	18.27
	Granted		206			38.77		97			42.01
	Released		(130	)		34.73		(139	)		31.98
	Forfeited or expired		(68	)		33.16		—			—
Balance outstanding as of June 30, 2011			337		$	38.42		600		$	18.92
Vested as of June 30, 2011								534		$	16.04

Schedule of additional information about stock options, restricted stock and RSUs exercised, granted and vested during the periods

		Year Ended June 30,
		2011		2010		2009
		(in 000s, except per share amounts)
Weighted average grant-date fair value per share:
	Stock options granted	$	16.86	$	19.56	$	10.62
	Stock options vested	$	11.47	$	10.71	$	9.23
	Restricted stock and RSUs vested	$	33.31	$	29.99	$	20.16
Total grant-date fair value of stock options vested		$	6,458	$	7,123	$	13,186
Total grant-date fair value of restricted stock and RSUs vested		$	8,962	$	4,384	$	3,758
Exercises under all share-based payment arrangements:
	Total intrinsic value	$	37,915	$	59,583	$	7,297
	Cash received	$	26,314	$	30,074	$	9,628
	Tax benefit realized	$	8,718	$	16,730	$	688

Schedule of shares which are reserved for stock options issued and available for issue under the Plans and the 2008 ESPP

		(in 000s)
Stock options and RSUs issued and currently outstanding			4,282
Shares available for future issuance			3,230
	Total		7,512

Schedule of share-based compensation expense and related effect of the income tax benefit

			Year Ended June 30,
			2011			2010			2009
			(in 000s)
Selling, general and administrative			$	9,624		$	10,382		$	13,377
Research and development				3,104			3,231			2,736
Cost of gaming equipment and systems and operations				179			180			146
Share-based compensation expense before tax			$	12,907		$	13,793		$	16,259
	Income tax benefit			(4,517	)		(4,828	)		(5,691	)
		Net share-based compensation expense	$	8,390		$	8,965		$	10,568

Summary of assumptions to determine the fair value of each option granted

	Year Ended June 30,
	2011			2010			2009
Weighted Average:
Expected option term (in years)		4.61			4.66			4.53
Expected volatility		54.91	%		56.04	%		51.07	%
Risk-free interest rate		1.76	%		2.23	%		2.63	%
Expected annual dividend yield		0	%		0	%		0	%

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GOODWILL AND INTANGIBLE ASSETS (Details) (USD $)	1 Months Ended	12 Months Ended
	Sep. 30, 2009	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Intangible assets
Gross Carrying Amount of finite-lived intangible assets		$ 86,675,000	$ 76,780,000
Accumulated Amortization of finite-lived intangible assets		(59,310,000)	(50,232,000)
Net Carrying Amount of finite-lived intangible assets		27,365,000	26,548,000
Gross Carrying Amount of total intangible assets		94,175,000	84,280,000
Accumulated Amortization on total intangible assets		(59,310,000)	(50,232,000)
Net Carrying Amount of total intangible assets		34,865,000	34,048,000
Carrying amount of gaming devices given as a part of consideration for indefinite-lived trademark	5,000,000
Carrying amount of customer receivable balances forgiven as a part of consideration for indefinite-lived intangible asset	2,500,000
Amortization expense of finite-lived intangible assets		9,300,000	10,300,000	9,800,000
Future amortization of finite lived intangible assets
2012		10,326,000
2013		8,681,000
2014		4,180,000
2015		1,464,000
2016		1,297,000
Thereafter		1,417,000
Total		27,365,000
Changes in the carrying amount of goodwill
Balance at the beginning of the period		161,153,000	161,960,000
Foreign currency translation adjustment		957,000	(807,000)
Balance at the end of the period		162,110,000	161,153,000	161,960,000
Computer software
Intangible assets
Useful Life, minimum (in years)		3
Useful Life, maximum (in years)		9
Gross Carrying Amount of finite-lived intangible assets		36,725,000	35,652,000
Accumulated Amortization of finite-lived intangible assets		(31,841,000)	(28,395,000)
Net Carrying Amount of finite-lived intangible assets		4,884,000	7,257,000
Amortization expense of finite-lived intangible assets		3,300,000	4,400,000	4,100,000
License rights
Intangible assets
Useful Life, minimum (in years)		3
Useful Life, maximum (in years)		13
Gross Carrying Amount of finite-lived intangible assets		4,344,000	3,624,000
Accumulated Amortization of finite-lived intangible assets		(2,751,000)	(2,048,000)
Net Carrying Amount of finite-lived intangible assets		1,593,000	1,576,000
Trademarks
Intangible assets
Useful Life, minimum (in years)		5
Useful Life, maximum (in years)		9
Gross Carrying Amount of finite-lived intangible assets		2,203,000	2,203,000
Accumulated Amortization of finite-lived intangible assets		(2,203,000)	(2,023,000)
Net Carrying Amount of finite-lived intangible assets			180,000
Indefinite-lived intangible assets, carrying amount	7,500,000	7,500,000	7,500,000
Core technology
Intangible assets
Useful Life, minimum (in years)		5
Useful Life, maximum (in years)		14
Gross Carrying Amount of finite-lived intangible assets		22,763,000	22,763,000
Accumulated Amortization of finite-lived intangible assets		(14,107,000)	(10,346,000)
Net Carrying Amount of finite-lived intangible assets		8,656,000	12,417,000
Contracts
Intangible assets
Useful Life (in years)		10
Gross Carrying Amount of finite-lived intangible assets		15,303,000	10,836,000
Accumulated Amortization of finite-lived intangible assets		(7,372,000)	(6,421,000)
Net Carrying Amount of finite-lived intangible assets		7,931,000	4,415,000
Other intangibles
Intangible assets
Useful Life, minimum (in years)		3
Useful Life, maximum (in years)		5
Gross Carrying Amount of finite-lived intangible assets		5,337,000	1,702,000
Accumulated Amortization of finite-lived intangible assets		(1,036,000)	(999,000)
Net Carrying Amount of finite-lived intangible assets		$ 4,301,000	$ 703,000

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SHARE-BASED COMPENSATION (Details 2) (USD $) In Thousands, except Per Share data	12 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Exercises under all share-based payment arrangements
Total intrinsic value of exercises under all share-based payments arrangements	$ 37,915	$ 59,583	$ 7,297
Cash received from exercises under all share-based payments arrangements	26,314	30,074	9,628
Tax benefit realized from exercises under all share-based payments arrangements	8,718	16,730	688
Shares reserved for stock options and RSUs issued and available for issue under the Plans and the 2008 ESPP:
Stock options and RSUs issued and currently outstanding (in shares)	4,282
Shares available for future issuance (in shares)	3,230
Total (in shares)	7,512
Stock options
Weighted average grant-date fair value per share:
Stock options granted (in dollars per share)	$ 16.86	$ 19.56	$ 10.62
Stock options vested (in dollars per share)	$ 11.47	$ 10.71	$ 9.23
Total grant-date fair value of stock options vested	6,458	7,123	13,186
Restricted stock and RSUs
Weighted average grant-date fair value per share:
Restricted stock and units vested (in dollars per share)	$ 33.31	$ 29.99	$ 20.16
Total grant-date fair value of restricted stock and RSUs vested	$ 8,962	$ 4,384	$ 3,758

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401(k) PLAN (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
401(k) PLAN
Maximum percentage of compensation the plan participants may defer (as a percent)	25.00%
Percentage of employer contribution of first 6 percent of eligible compensation deferred by employee (as a percent)	50.00%
Maximum percentage eligible compensation, 50% matched (as a percent)	6.00%
Matching contributions made by the employer	$ 1.9	$ 1.9	$ 1.9
Percentage of employer contribution vested immediately for employees hired through December 31, 2000 (as a percent)	100.00%
Percentage of employer contribution vesting annually for employees hired on or after January 1, 2001 (as a percent)	20.00%
Vesting period of employer match, for employees hired on or after January 1, 2001 (in years)	5
Percentage of employer contribution vesting annually for employees effective October 1, 2005 (as a percent)	25.00%
Vesting period of employer match, effective October 1, 2005 (in years)	4

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EARNINGS PER SHARE (Details) (USD $) In Thousands, except Per Share data	3 Months Ended								12 Months Ended
	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Amounts attributable to Bally Technologies, Inc.:
Income from continuing operations, net of tax									$ 98,666	$ 109,223	$ 119,439
Income from discontinued operations, net of tax										6,175	6,870
Gain (loss) on sale of discontinued operations, net of tax				(403)	22,079				(403)	22,079
Net income attributable to Bally Technologies, Inc.	25,456	23,766	27,252	21,789	51,041	22,559	33,253	30,624	98,263	137,477	126,309
After tax interest expense on convertible debt										14	160
Diluted earnings attributable to Bally Technologies, Inc.									$ 98,263	$ 137,491	$ 126,469
Weighted average common shares outstanding (in shares)									51,960	54,576	54,449
Dilutive effect of:
Stock options, Restricted Stock Units ("RSU") and restricted stock (in shares)									2,459	3,063	2,423
Warrants (in shares)									1	14	7
Convertible debt (in shares)										22	179
Weighted average diluted shares outstanding (in shares)									54,420	57,675	57,058
Basic earnings per share attributable to Bally Technologies, Inc.:
Income from continuing operations (in dollars per share)	$ 0.53	$ 0.45	$ 0.51	$ 0.42	$ 0.50	$ 0.37	$ 0.59	$ 0.53	$ 1.90	$ 2.00	$ 2.19
Income from discontinued operations (in dollars per share)					$ 0.03	$ 0.04	$ 0.02	$ 0.03		$ 0.11	$ 0.13
Gain (loss) on sale of discontinued operations (in dollars per share)				$ (0.01)	$ 0.40				$ (0.01)	$ 0.41
Basic earnings per share (in dollars per share)	$ 0.53	$ 0.45	$ 0.51	$ 0.41	$ 0.93	$ 0.41	$ 0.61	$ 0.56	$ 1.89	$ 2.52	$ 2.32
Diluted earnings per share attributable to Bally Technologies, Inc.:
Income from continuing operations (in dollars per share)	$ 0.51	$ 0.43	$ 0.49	$ 0.40	$ 0.48	$ 0.36	$ 0.56	$ 0.50	$ 1.82	$ 1.89	$ 2.10
Income from discontinued operations (in dollars per share)					$ 0.03	$ 0.03	$ 0.02	$ 0.03		$ 0.11	$ 0.12
Gain (loss) on sale of discontinued operations (in dollars per share)				$ (0.01)	$ 0.38				$ (0.01)	$ 0.38
Diluted earnings per share (in dollars per share)	$ 0.51	$ 0.43	$ 0.49	$ 0.39	$ 0.89	$ 0.39	$ 0.58	$ 0.53	$ 1.81	$ 2.38	$ 2.22
Stock options, RSU and restricted stock having anti-dilutive effect in calculation of diluted earnings per share (in shares)									688	308	1,975

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DISCONTINUED OPERATIONS (Details) (USD $)	3 Months Ended					12 Months Ended
	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2009	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Summary of gain on disposal of discontinued operations
Gain on sale of discontinued operations	$ (403,000)	$ 22,079,000				$ (403,000)	$ 22,079,000
Costs and expenses:
Depreciation and amortization							2,900,000	3,300,000
Other income (expense):
Income from discontinued operations, net of tax		1,639,000	2,363,000	1,430,000	1,749,000		7,181,000	8,057,000
Income from discontinued operations attributable to Bally Technologies, Inc.							6,175,000	6,870,000
Rainbow Casino discontinued operations
Summary of gain on disposal of discontinued operations
Sale proceeds							80,000,000
Distributions to noncontrolling interest							(688,000)
Assets held for sale		(45,733,000)					(45,733,000)
Liabilities related to assets held for sale		1,161,000					1,161,000
Adjustments to proceeds for fees and expenses							(471,000)
Gain on sale of discontinued operations before income taxes							34,269,000
Income tax expense							(12,190,000)
Gain on sale of discontinued operations							22,079,000
Post-closing adjustments to reduce gain on sale of discontinued operations						400,000
Revenues:
Casino operations							34,336,000	39,669,000
Costs and expenses:
Direct cost of casino operations							14,081,000	16,750,000
Selling, general and administrative							6,821,000	7,864,000
Depreciation and amortization							2,873,000	3,337,000
Costs and expenses, total							23,775,000	27,951,000
Operating income							10,561,000	11,718,000
Other income (expense):
Interest income							7,000	26,000
Other, net							(25,000)	13,000
Income from discontinued operations before income taxes							10,543,000	11,757,000
Income tax expense							(3,362,000)	(3,700,000)
Income from discontinued operations, net of tax							7,181,000	8,057,000
Less income attributable to noncontrolling interests							1,006,000	1,187,000
Income from discontinued operations attributable to Bally Technologies, Inc.							$ 6,175,000	$ 6,870,000

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LEASES (Details) (USD $) In Thousands	12 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2009
Operating rental expense
Equipment and office space leases	$ 9,060	$ 8,325	$ 6,969
Sublease rental income	(357)	(251)	(201)
Equipment and office space leases, net	8,703	8,074	6,768
Future minimum rental payments
2012	8,584
2013	6,410
2014	4,481
2015	2,541
2016	2,290
Thereafter	1,490
Total minimum payments	$ 25,796

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STOCKHOLDERS' EQUITY, OPTIONS, WARRANTS AND RIGHTS (Tables)

12 Months Ended

Jun. 30, 2011

STOCKHOLDERS' EQUITY, OPTIONS, WARRANTS AND RIGHTS

Schedule of purchases made under repurchase plans

		Year Ended June 30,
		Shares		Average Price per share		Amount (in 000s)
For the year ended June 30, 2009			1,557,216	$	24.58	$	38,275
For the year ended June 30, 2010			2,297,278	$	39.71		91,221
For the year ended June 30, 2011			11,957,208	$	39.65		474,054
	Total		15,811,702	$	38.17	$	603,550