SENIOR SECURED CONVERTIBLE NOTE

Exhibit 4.2

EXECUTION VERSION

THIS NOTE AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTION 3(e). THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(e).

THE OBLIGATIONS EVIDENCED HEREBY ARE SUBJECT AND SUBORDINATED TO CERTAIN SENIOR OBLIGATIONS IN THE MANNER AND TO THE EXTENT SET FORTH IN A SUBORDINATION AND INTERCREDITOR AGREEMENT DATED AS OF AUGUST 15, 2008 EXECUTED BY INTERNATIONAL GAME TECHNOLOGY, AS AGENT FOR CERTAIN SUBORDINATED CREDITORS AND PRIVATE EQUITY MANAGEMENT GROUP FINANCIAL CORPORATION, AS ADMINISTRATIVE AGENT FOR CERTAIN SENIOR CREDITORS.

SENIOR SECURED CONVERTIBLE NOTE

FOR VALUE RECEIVED, PROGRESSIVE GAMING INTERNATIONAL CORPORATION, a Nevada corporation (the “ Issuer ”), hereby promises to pay to the order of International Game Technology, a Nevada corporation, or its registered assigns (in each case, the “ Holder ”), the principal amount of Fifteen Million United States Dollars ($15,000,000.00) when due, whether upon maturity, acceleration, redemption or otherwise.

This Senior Secured Convertible Note (this “ Note ”) is being issued pursuant to that certain Note and Warrant Purchase Agreement, dated as of August 4, 2008, by and between the Issuer, International Game Technology as Agent and as a Purchaser, and the other Purchasers named therein (as amended, modified, restated or supplemented from time to time, the “ Note Agreement ”). This Note and all convertible notes issued in exchange for this Note or in replacement of this Note, whether in whole or in part, are collectively referred to as the “ Notes .”

Section 1. Certain Defined Terms . Capitalized terms used herein and not otherwise defined will have the meanings set forth in the Note Agreement, which definitions are incorporated herein in full. For purposes of this Note, the following terms will have the following meanings:

“ Acceleration Amount ” has the meaning set forth in Section 12(b) .

“ Acquiring Entity ” has the meaning set forth in Section 7(a) .

“ Applicable Price ” has the meaning set forth in Section 5(a) .

“ Approved Stock Plan ” means any employee benefit plan that has been approved by the Board of Directors prior to the date of the Note Agreement, pursuant to which the Issuer’s securities may be issued to any consultant, employee, officer or director for services provided to the Issuer or any of its Subsidiaries.

“ Authorized Share Failure ” has the meaning set forth in Section 10(b) .

“ Change of Control Redemption Price ” has the meaning set forth in Section 7(b) .

“ Conditions to Issuer Redemption ” has the meaning set forth in Section 9(c) .

“ Conversion Amount ” means the sum of (a) the Principal to be converted or redeemed with respect to which such determination is being made, plus (b) any accrued and unpaid interest with respect to such Principal to be converted or redeemed.

“ Conversion Date ” means the date on which a Conversion Amount is to be converted to Shares, as specified in a Conversion Notice.

“ Conversion Notice ” means a notice from the Holder to the Issuer requesting conversion of Principal into Shares that is in the form of Exhibit A hereto.

“ Conversion Price ” means as of any Conversion Date or other date of determination, $0.89, subject to adjustment as provided herein.

“ Conversion Rate ” has the meaning set forth in Section 3(b) .

“ Convertible Securities ” means any stock or securities (other than Options) directly or indirectly convertible into or exchangeable or exercisable for Shares.

“ DTC ” means the Depository Trust Company Fast Automated Securities Transfer Program.

“ Event of Default ” has the meaning set forth in Section 12(a) .

“ Ex-Date ” means the first date on which Common Stock or other securities trade without the right to receive the issuance or distribution giving rise to an adjustment to the Conversion Price pursuant to Section 4 .

“ Exempted Issuances ” means (a) an aggregate amount of grants of Options and Shares pursuant to Approved Stock Plans and Future Approved Stock Plans during any calendar year not in excess of 3% of the issued and outstanding shares of Common Stock as of the first date of such year; provided that (i) the exercise price of such Options is no less than the fair market value of the Common Stock on the date of grant, and (ii) such grants of Shares are not in excess of 1% of the issued and outstanding shares of Common Stock as of the first date of such calendar year; (b) Shares issued or deemed to have been issued upon the conversion, exchange or exercise of any Option or Convertible Security outstanding prior to the date of the Note Agreement and set forth on Schedule 5.01(ii) of the Note Agreement, provided that the terms of such Option or Convertible Security are not amended on or after such date; (c) Shares issued pursuant to the Senior Lender Equity; (d) Shares issued or deemed to have been issued by the Issuer upon conversion of the Notes or exercise of the Warrants; (e) Shares issued or deemed to have been issued as consideration for mergers or consolidations or acquisitions of businesses or their tangible or intangible assets, excluding any such acquisition transactions in which cash or cash equivalents represent a majority of the assets acquired; provided that such issuances or deemed issuances pursuant to this clause (e)  will not exceed 6,225,000 Shares in the

2

aggregate (subject to adjustment for stock splits, stock dividends, stock combinations or other similar transactions after the Issuance Date); and (f) Shares issued or deemed to have been issued in connection with a dividend or distribution for which an adjustment to the Conversion Price was made pursuant to Section 4 .

“ Fair Market Value ” means the price that would be paid in an arm’s-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy (as determined by the Board of Directors in the good faith exercise of its reasonable business judgment, whose determination will be evidenced by a board resolution, a copy of which will be sent to the Holder upon request).

“ Future Approved Stock Plan ” means any employee benefit plan that has been approved by the Board of Directors and stockholders of the Issuer after the date of the Note Agreement, pursuant to which the Issuer’s securities may be issued to any consultant, employee, officer or director for services provided to the Issuer or any of its Subsidiaries.

“ Holder ” has the meaning set forth in the first paragraph of this Note and includes all transferees and assignees of this Note.

“ Interest Payment Date ” means the six-month anniversary of the Issuance Date and each six-month anniversary thereafter, such dates being February 15 and August 15 of each calendar year.

“ Issuance Date ” means the original date of issuance of this Note pursuant to the Note Agreement, which date is August 15, 2008, regardless of any exchange or replacement of this Note in whole or in part.

“ Issuer ” has the meaning set forth in the first paragraph of this Note.

“ Issuer Redemption ” has the meaning set forth in Section 9(a) .

“ Issuer Redemption Date ” has the meaning set forth in Section 9(a) .

“ Issuer Redemption Notice ” has the meaning set forth in Section 9(a) .

“ Issuer Redemption Notice Date ” has the meaning set forth in Section 9(a) .

“ Issuer Redemption Price ” has the meaning set forth in Section 9(a) .

“ Market Price ” means the average of the daily Weighted Average Price per Share for the 20 consecutive trading days immediately prior to the date of determination.

“ Maturity Date ” means August 15, 2014, the date on which the Notes are due and payable in full.

3

“ Note ” and “ Notes ” have the meaning set forth in the second paragraph of this Note.

“ Note Agreement ” has the meaning set forth in the second paragraph of this Note.

“ Options ” means any rights, warrants or options to subscribe for or purchase Shares or Convertible Securities.

“ Organic Change ” has the meaning set forth in Section 7(a) .

“ Principal ” means the outstanding principal amount of this Note as of any date of determination.

“ Pro Rata Redemption Amount ” has the meaning set forth in Section 9(a) .

“ Redemption Date ” has the meaning set forth in Section 6(b) .

“ Redemption Price ” has the meaning set forth in Section 6(a) .

“ Required Holders ” means the holders of Notes representing more than 50% of the Principal of all Notes as of any date of determination.

“ Required Reserve Amount ” has the meaning set forth in Section 10(a) .

“ Share Delivery Date ” has the meaning set forth in Section 3(c)(iii) .

“ Shares ” means shares of Common Stock.

“ Transfer Agent ” means the designated transfer agent of the Issuer for Common Stock.

“ Void Conversion Notice ” has the meaning set forth in Section 3(d) .

“ Weighted Average Price ” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market during the period beginning at 9:30 a.m. New York Time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00 p.m. New York Time (or such other time as the Principal Market publicly announces is the official close of trading) as reported by Bloomberg Financial Markets (“ Bloomberg” ) through its “Volume at Price” functions (ignoring any trade by the Issuer or its Affiliates or any trade of more than 200,000 Shares pursuant to an individual transaction (subject to adjustment for stock splits, stock dividends, stock combinations and other similar transactions involving such security after the Issuance Date)), or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m. New York Time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00 p.m. New York Time (or such other time as the Principal Market publicly announces is the official close of trading) as reported by

4

Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported by Pink OTC Markets, Inc. If the Weighted Average Price cannot be calculated for such security on such date on any of the foregoing bases, the Weighted Average Price of such security on such date will be the fair market value as mutually determined by the Issuer and the Agent. If the Issuer and the Agent are unable to agree upon the fair market value of the Common Stock, then such dispute will be resolved pursuant to Section 3(c)(iii) with the term “Weighted Average Price” being substituted for the term “Conversion Price.” All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during any period during which the Weighted Average Price is being determined.

Section 2. Principal and Interest Payments .

(a) Interest . Interest on this Note will be due and payable semi-annually in arrears on each Interest Payment Date through the date of repayment or conversion in full of this Note and on the Maturity Date. This Note will bear interest on the outstanding Principal at a per annum rate equal to seven percent (7.0%), which rate automatically will increase permanently to twelve percent (12%) per annum as provided in Section 5 . In addition to the foregoing, the interest rate on this Note may be further increased upon an Event of Default as provided in the Note Agreement or in this Note. Interest on this Note will be computed on the basis of a year with 360 days and the actual number of days elapsed.

(b) Principal . If any Principal remains outstanding, such Principal will be due and payable in full on the Maturity Date.

(c) Payments . All amounts due and payable hereunder will be made in lawful money of the United States of America by wire transfer of immediately available funds to the Agent’s Account in accordance with the provisions of the Note Agreement. Whenever any amount expressed to be due by the terms of this Note is due on any day that is not a Business Day, the same will instead be due on the next succeeding day that is a Business Day, and any extension of time will in each case be included in the computation of interest and fees, if applicable.

Section 3. Conversion of this Note . This Note may be converted into Shares by the Holder on the terms and conditions set forth in this Section 3 . The Issuer has no right to cause this Note to be converted into Shares.

(a) Holder’s Conversion Right . Subject to the provisions of Section 8 (Limitations on Conversion), at any time or times on or after the Issuance Date, the Holder will be entitled to convert all or any part of the Principal (and all accrued and unpaid interest relating thereto) into fully paid and nonassessable Shares in accordance with Section 3(c) , at the Conversion Rate. The Issuer will not issue any fraction of a Share upon any conversion. If the issuance would result in the issuance of a fraction of a Share, then the Issuer will round such fraction of a Share up or down to the nearest whole share.

5

(b) Conversion Rate . The number of Shares issuable upon conversion of any portion of this Note pursuant to Section 3(a) will be determined according to the following formula (the “ Conversion Rate ”):

Conversion Amount

Conversion Price

(c) Mechanics of Conversion . The conversion of this Note will be conducted in the following manner:

(i) Holder’s Delivery Requirements . To convert a Conversion Amount into Shares on any specified Conversion Date, the Holder will (A) transmit via facsimile (or otherwise deliver), for receipt on or prior to 4:30 p.m. Eastern Standard Time, on or before the Conversion Date, a copy of an executed Conversion Notice to the Issuer, and (B) if required by Section 3(e) , surrender to a common carrier for delivery to the Issuer as soon as practicable following the Conversion Date the original Note being converted (or provide an indemnification undertaking reasonably acceptable to the Issuer with respect to this Note in the case of its loss, theft or destruction). If a Conversion Notice is delivered after 4:30 p.m. Eastern Standard Time on any Business Day, it will be deemed received on the subsequent Business Day.

(ii) Issuer’s Response . Upon receipt by the Issuer of a Conversion Notice, the Issuer will immediately send, via facsimile or other electronic means, a confirmation of receipt of such Conversion Notice to the Holder and the Transfer Agent, which confirmation will constitute an instruction and direction to the Transfer Agent to (I) process such Conversion Notice in accordance with the terms herein and therein and (II) on or before the third Business Day following the date of receipt by the Issuer of such Conversion Notice, or such later Conversion Date as may be specified in such Conversion Notice (such day, in either case, the “ Share Delivery Date ”), (A) provided that the Transfer Agent is participating in DTC and provided that the Holder is eligible to receive Shares through DTC, credit such aggregate number of Shares to which the Holder will be entitled to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system or (B) issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of Shares to which the Holder will be entitled. If this Note is submitted for conversion, as may be required by Section 3(e) , and the Principal amount represented by this Note is greater than the Principal amount being converted, then the Issuer will, as soon as practicable and in no event later than three Business Days after receipt of this Note and at its own expense, issue and deliver to the Holder a new Note representing the Principal not converted.

(iii) Dispute Resolution . In the case of a dispute as to the determination of the Conversion Price or the arithmetic calculation of the Conversion Rate, the Issuer will instruct the Transfer Agent to issue to the Holder the Shares representing the number of Shares that is not disputed and will transmit an explanation of the disputed determinations or arithmetic calculations to the Holder via facsimile within one Business Day of receipt of the Holder’s Conversion Notice or other date of determination. If the Holder and the Issuer are unable to agree upon the determination of the Conversion Price or arithmetic calculation of the Conversion Rate within one Business Day of such disputed determination or arithmetic

6

calculation being transmitted to the Holder, then the Issuer will within two Business Days submit via facsimile or by other electronic means (A) the disputed determination of the Conversion Price to an independent, reputable investment bank selected from a list of such investment banks agreed to by the Issuer and the Agent, or (B) the disputed arithmetic calculation of the Conversion Rate to an independent, reputable accounting firm selected from a list of such accounting firms agreed to by the Issuer and the Agent. The Issuer will cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Issuer and the Holder of the results no later than three Business Days from the time it receives the disputed determinations or calculations. Such investment bank’s or accountant’s determination or calculation, as the case may be, will be binding upon all parties absent error.

(iv) Record Holder . The Person or Persons entitled to receive the Shares issuable upon a conversion of all of part of this Note will be treated for all purposes as the legal and record holder or holders of such Shares as of and on the Conversion Date.

(d) Issuer’s Failure to Timely Convert .

(i) Cash Payments . If within one Business Day after the Share Delivery Date the Issuer fails to issue and deliver a certificate to the Holder for, or credit the Holder’s balance account with DTC with, the number of Shares to which the Holder is entitled upon the Holder’s conversion of any Conversion Amount, then in addition to all other available remedies that the Holder may pursue hereunder and under the Note Agreement (including the Post-Default Rate and indemnification), the Issuer will pay to the Holder for each day after the Share Delivery Date such conversion is not timely effected a cash amount equal to 0.5% of the product of (A) the number of Shares not issued to the Holder on or prior to the Share Delivery Date and to which the Holder is entitled and (B) the Weighted Average Price of the Common Stock on the Share Delivery Date; provided that in no event will cash amounts accrue pursuant to this Section 3(d)(i) during the period, if any, in which the Conversion Price or the arithmetic calculation of the Conversion Rate is subject to a bona fide dispute that is subject to and being resolved pursuant to, and in compliance with the time periods and other provisions of, the dispute resolution provisions of Section 3(c)(iii) .

(ii) Void Conversion Notice . If for any reason the Holder has not received all of the Shares prior to the tenth Business Day after the Share Delivery Date with respect to a conversion of this Note, then the Holder, upon written notice to the Issuer (a “ Void Conversion Notice ”), may void its Conversion Notice with respect to, and retain or have returned, as the case may be, any portion of this Note that has not been converted pursuant to the Holder’s Conversion Notice; provided that the voiding of the Holder’s Conversion Notice will not affect the Issuer’s obligations to make any payments that have accrued prior to the date of such notice pursuant to Section 3(d)(i) or otherwise; provided further that, such conversion is not the subject of a bona fide dispute that is subject to and being resolved pursuant to, and in compliance with the time periods and other provisions of, the dispute resolution provisions of Section 3(c)(iii) , and provided the Shares are delivered to the Holder within one Business Day of the resolution of such bona fide dispute. Upon delivery of a Void Conversion Notice, cash amounts will stop accruing under Section 3(d)(i) on the Shares subject to such Void Conversion Notice, provided that the voiding of the Holder’s Conversion Notice will not affect the Issuer’s obligations to make any payments that have accrued prior to the date of such Void Conversion Notice pursuant to Section 3(d)(i) or otherwise.

7

(e) Book-Entry . Notwithstanding anything to the contrary set forth herein, upon conversion or redemption of this Note in accordance with the terms hereof, the Holder will not be required to physically surrender this Note to the Issuer unless all of the Principal is being converted or redeemed. The Holder and the Company will maintain records showing the Principal amount converted or redeemed and the dates of such conversions or redemptions or will use such other method, reasonably satisfactory to the Holder and the Issuer, so as not to require physical surrender of this Note upon each such conversion or redemption. Notwithstanding the foregoing, if this Note is converted or redeemed as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Issuer, whereupon the Issuer will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder may request, representing in the aggregate the remaining Principal represented by this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion or redemption of any portion of this Note, the Principal of this Note may be less than the principal amount stated on the face hereof. Each Note will bear the following legend:

ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTION 3(e). THE PRINCIPAL AMOUNT OF THIS NOTE MAY BE LESS THAN THE PRINCIPAL AMOUNT STATED ON THE FACE HEREOF PURSUANT TO SECTION 3(e).

THE OBLIGATIONS EVIDENCED HEREBY ARE SUBJECT AND SUBORDINATED TO CERTAIN SENIOR OBLIGATIONS IN THE MANNER AND TO THE EXTENT SET FORTH IN A SUBORDINATION AND INTERCREDITOR AGREEMENT DATED AS OF AUGUST 15, 2008 EXECUTED BY INTERNATIONAL GAME TECHNOLOGY, AS AGENT FOR CERTAIN SUBORDINATED CREDITORS AND PRIVATE EQUITY MANAGEMENT GROUP FINANCIAL CORPORATION, AS ADMINISTRATIVE AGENT FOR CERTAIN SENIOR CREDITORS.

(f) Taxes . The Issuer will pay any and all taxes that may be payable with respect to the issuance and delivery of Shares upon the conversion of this Note; provided, however, that the Holder will pay any taxes in connection with any transfers of this Note or the transfer of the Shares issuable upon conversion hereof.

Section 4. Adjustment to Conversion Price . The Conversion Price will be subject to adjustment from time to time as follows:

(a) Stock Dividends and Distributions . If the Issuer pays a dividend or makes a distribution on the Common Stock in shares of Common Stock, the Conversion Price in effect immediately prior to the Ex-Date for such dividend or distribution will be multiplied by a fraction:

(i) the numerator of which will be the number of shares of Common Stock outstanding immediately prior to the Ex-Date for such dividend or distribution, and

8

(ii) the denominator of which will be the sum of such number of shares included as the numerator plus the total number of shares of Common Stock constituting such dividend or other distribution.

(b) Subdivisions, Splits and Combinations of Stock . If the outstanding shares of Common Stock will be subdivided into a greater number of such shares, the Conversion Price in effect immediately prior to the effective date of such subdivision will be proportionately reduced, and conversely, in case outstanding shares of Common Stock will be combined into a smaller number of such shares, the Conversion Price in effect immediately prior to the effective date of will be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective.

(c) Debt or Asset Distributions . If the Issuer, by dividend or otherwise, distributes to all holders of Common Stock any class of capital stock or other equity interests of the Issuer (other than any dividend to which Section 4(a) applies) or indebtedness or cash or other assets of the Issuer, including securities, but excluding (I) any stock, securities or other property or assets distributed as dividends or distributions in connection with an Organic Change, and (II) any dividends or distributions paid exclusively in cash (the securities described in clause (I)  or (II) are hereinafter called the “excluded securities”), then, in each such case, the Conversion Price in effect immediately prior to the Ex-Date for such distribution will be multiplied by a fraction:

(i) the numerator of which will be the Market Price on such date less the Fair Market Value of the capital stock or other equity interests, indebtedness, cash or other rights so distributed on suc