8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):June 19, 2006

BALLY TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Nevada	0-4281	88-0104066
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
6601 S. Bermuda Rd. Las Vegas, Nevada (Address of principal executive offices)		89119 (Zip Code)

Registrant’s telephone number, including area code:  (702) 270-7600

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01Entry into a Material Definitive Agreement.

Gavin Letter Agreement

On June 21, 2006, Bally Technologies, Inc. (the “Company”), announced that it entered into a letter agreement dated June 19, 2006, with Michael Gavin Isaacs (the “Agreement”), pursuant to which Mr. Isaacs will serve as the Company’s Chief Operating Officer and as an Executive Vice President beginning on the earlier of September 1, 2006, or such time as Mr. Isaacs is released from certain non-competition obligations with his former employer (the “Effective Date”).

Pursuant to the Agreement, Mr. Isaacs will receive an annual salary of $340,000. Mr. Isaacs will also be entitled to participate in the Company’s employee benefit programs as well as the Company’s Management Incentive Program, with a target performance bonus of $204,000 per year, but with a maximum of $347,000 per year. For the Company’s Fiscal Year ending June 30, 2007, Mr. Isaacs will receive a pro rata portion of the incentive plan bonus. The Company may pay up to 30% of the amount of any performance bonus earned in restricted shares of Company common stock that shall vest and become exercisable at the discretion of the Board of Directors up to two years after such shares are granted.

If the Company terminates Mr. Isaacs’ employment without Cause (as defined in the Agreement), or if Mr. Isaacs terminates his employment as a result of and within one year of a reduction in salary, he shall continue to receive his salary for one year immediately following such termination. Mr. Isaacs shall also be entitled to one year of salary upon cessation of his employment if (i) Mr. Isaacs’ salary is less than $490,000 at the second anniversary of the Effective Date, (ii) Mr. Isaacs terminates his employment within 30 days of such second anniversary and (iii) the Company elects to make such payments as consideration for Mr. Isaacs agreement not to compete with the Company for a period of one year from the date of termination. Any such payments subsequent to termination shall be subject to offset in respect of any income Mr. Isaacs earns from any other employment during such one year period.

Pursuant to the Agreement, and as a material inducement to accept his employment with the Company, subject to the approval of the Board of Directors, Mr. Isaac will receive an option to acquire 150,000 shares of Company common stock at a per-share exercise price equal to the market price of a share of Company common stock on the Effective Date. The options will vest in four installments of 37,500 shares, with an installment vesting on each of the first four anniversaries of the Effective Date, subject to Mr. Isaacs’ continued employment through such dates.

Pursuant to the Agreement, subject to the approval of the Board of Directors, Mr. Isaacs will also receive a grant of 50,000 restricted shares of Company common stock pursuant to the Company’s Amended and Restated 2001 Long Term Incentive Plan, as amended (the “Plan”). The shares of restricted stock will vest in three installments, with 25,000 shares vesting on the second anniversary of the Effective Date, and 12,500 shares vesting on each of the third and fourth anniversary of the Effective Date.

Mr. Isaacs will also receive a one time signing bonus payment of $10,000, as well as an annual allowance of $150,000 for a period of two years in respect of his transition to becoming a permanent United States-based employee. The Agreement provides for non-compete and non-solicitation covenants applicable following the termination of Mr. Isaacs’ employment for a period of one year, subject to certain limitations.

The foregoing summary is qualified in its entirety by reference to the complete text of the Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

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Amendment to Haddrill Employment Agreement

On June 21, 2006, the Company announced that it entered into a Third Amendment (the “Amendment”) to the Employment Agreement by and between the Company and Richard Haddrill (the “Haddrill Agreement”), the Company’s Chief Executive Officer, pursuant to which (i) the term of the Haddrill Agreement was extended from October 1, 2007, to January 1, 2009, (ii) Mr. Haddrill’s salary, beginning July 1, 2006, will increase from $980,000 to $998,000, (iii) Mr. Haddrill will receive an additional week of vacation time, and (iv) subject to the approval of the Compensation Committee of the Board of Directors (the “Committee”), Mr. Haddrill will receive a non-statutory stock option to purchase 200,000 shares of Company common stock at an exercise price per share equal to the fair market value of a share of Company common stock on the date of grant (the “Option”), as well as a number of restricted shares of Company common stock having a value equal to $1.4 million as of the date of grant (the “Restricted stock”), with each grant made pursuant to the Plan. The number of restricted shares of Company common stock will be calculated based on the average per share closing price of a share of Company common stock for the 20 business days immediately prior to the date of grant.

The Option will vest as follows:  66,667 shares will vest on February 28, 2008, 66,667 shares will vest on July 31, 2008 and the final 66,666 shares will vest on January 1, 2009, in each case subject to Mr. Haddrill’s continuous employment as the Company’s Chief Executive Officer through each such date. If Mr. Haddrill’s employment is terminated by the Company other than “for cause” or by Mr. Haddrill for “Good Reason,” each as defined in the Haddrill Agreement, and such termination occurs after October 1, 2007, the vesting of the Option shall be pro-rated through the month in which the date of termination occurs. In the event a “Change of Control,” as defined in the Haddrill Agreement, is consummated on or prior to October 1, 2007, and within one year following such Change of Control Mr. Haddrill’s employment is terminated by the Company other than for cause or by Mr. Haddrill for Good Reason, the Option shall become fully vested and exercisable immediately prior to the date of termination. If such Change of Control is consummated after October 1, 2007, the Option shall become fully vested and exercisable effective immediately prior to such Change of Control. Except as set forth above, any unvested portion of the Option at the time of termination shall terminate as of the date of termination.

The Restricted Stock will vest as follows:  28.6% of the shares will vest on July 1, 2008 and the remaining shares will vest on January 1, 2009, in each case subject to Mr. Haddrill’s continuous employment as the Company’s Chief Executive Officer through each such date. If Mr. Haddrill’s employment is terminated by the Company other than for cause or by Mr. Haddrill for Good Reason, the vesting of the Restricted Stock shall be pro-rated through the 12-month period following the month in which the date of termination occurs. In the event of a Change of Control, the Restricted Stock shall become fully vested effective immediately prior to such Change of Control. Except as set forth above, any unvested portion of the Restricted Stock at the time of termination shall terminate as of the date of termination.

The foregoing summary is qualified in its entirety by reference to the complete text of the Amendment, a copy of which is attached hereto as Exhibit 10.2 and incorporated herein by reference.

Item 5.02.Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

The information with required by this Item 5.02 with respect to Mr. Isaacs’ appointment as the Company’s Chief Operating Officer is set forth in the Company’s press release dated June 21, 2006, which is attached hereto as Exhibit 99.1, and is incorporated herein by reference.

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Item 9.01.Financial Statements and Exhibits.

(d)Exhibits

10.1	Letter Agreement dated June 19, 2006, by and between the Company and Michael Gavin Isaacs.
10.2	Form of Third Amendment to Haddrill Employment Agreement dated June 20, 2006, by and between the Company and Richard Haddrill.
99.1	Press release issued by the Company, dated June 21, 2006.

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SIGNATURES

Pursuant to the requirements 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.
By:	/s/ ROBERT C. CALLER
	Robert C. Caller
	Chief Financial Officer and Senior Vice President
Dated: June 21, 2006

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EX-10.1

Exhibit 10.1

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.

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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.

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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

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EX-10.2

Exhibit 10.2

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.

 [signatures on next page]

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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-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Investor Contact: Mark Lipparelli	Media Contact: Marcus Prater
(702) 584-7600	(702) 584-7828
mlipparelli@ballytech.com	mprater@ballytech.com

BALLY TECHNOLOGIES, INC. ANNOUNCES
APPOINTMENT OF GAVIN ISAACS
AS CHIEF OPERATING OFFICER

CEO Haddrill extension and other management changes also announced

LAS VEGAS, June 21, 2006 — Bally Technologies, Inc. (NYSE: BYI) announced today the appointment of Gavin Isaacs as Executive Vice President and Chief Operating Officer, effective September 1, 2006. Isaacs will report to CEO Richard Haddrill, who has also extended his employment agreement with Bally through December 2008.

Isaacs is concluding his responsibilities as President of Aristocrat Technologies, Inc., a Las Vegas-based subsidiary of Aristocrat Technologies Australia Pty Limited. During his tenure with Aristocrat beginning in 1999, Isaacs served in key management positions, including General Manager Global Marketing and Business Development, and Managing Director, Europe, before ascending to the position of Americas President in March 2003. During his term as Americas President, Aristocrat Americas became the largest financial contributor to the Aristocrat Group, posting record revenues, unit sales and recurring-revenues while achieving substantial margin increases.

“Bally has a great opportunity to capitalize on its current momentum and I am excited to join the team, building upon the company’s 75-year history,” Isaacs said.

“Gavin brings a level of expertise and gaming-industry success to Bally that will help us further our strategic initiatives and execute with even greater customer-centricity and efficiency,” Haddrill said. “Gavin is well-known and respected in our industry in addition to being well liked by our team.”

As an inducement to join Bally and contribute to building shareholder value, Isaacs will be awarded an option to acquire 150,000 shares of Bally’s common stock at a price per share equal to the market price of Bally’s common stock on the date he is first employed. The option vests in four annual installments of 37,500 on each of the first four anniversaries of the date of grant.

Additionally, Bally Technologies announced the following executive appointments and changes: Mark Lipparelli will assume the position of Executive Vice President of Planning and Strategy. Mickey Roemer will assume the position of Senior Vice President of North American Sales. In addition, Doug Mack has been named Vice President of Manufacturing. Doug comes to Bally from Arrow Electronics, a multi-national distributor of electronic components, where he served as Director of Manufacturing and Program Services.

In other key management changes, Robert Crowder, Vice President, will assume the added responsibilities of Project Management and Compliance, and Mike Mitchell, Vice President, will assume the added responsibilities of Product Management.

“I am pleased with the talent and energy of our team as we enter our new fiscal year and capitalize on our recent product successes,” Haddrill said.

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Page 2 - Gavin Isaacs/Management Announcement

With a history dating back to 1932, Las Vegas-based Bally Technologies designs, manufactures, operates and distributes advanced gaming devices, systems and technology solutions worldwide. Bally’s product line includes reel-spinning slot machines, video slots, wide-area progressives and Class II, lottery and central determination games and platforms. As the world’s No. 1 gaming Systems Company, Bally also offers an array of casino management, slot accounting, bonusing, cashless and table management solutions. The Company also owns and operates Rainbow Casino in Vicksburg, Miss. Additional information on the Company can be found at www.BallyTech.com.

This news release may contain “forward-looking” statements within the meaning of the Securities Act of 1933, as amended, and is subject to the safe harbor created thereby. Such information involves important risks and uncertainties that could significantly affect the results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements. Future operating results may be adversely affected as a result of a number of risks that are detailed from time to time in the company’s filings with the Securities and Exchange Commission.

—BALLY TECHNOLOGIES, INC.—