INTERNATIONAL GAME TECHNOLOGY 2002 STOCK INCENTIVE PLAN PERFORMANCE SHARE AWARD AGREEMENT

EXHIBIT 10.3

INTERNATIONAL GAME TECHNOLOGY
2002 STOCK INCENTIVE PLAN
PERFORMANCE SHARE AWARD AGREEMENT

      THIS PERFORMANCE SHARE AWARD AGREEMENT (this “ Award Agreement ”) is dated as of September 29, 2006 (the “ Award Date ”) by and between International Game Technology, a Nevada corporation (the " Corporation ”), and Thomas J. Matthews (the “ Participant ”).

W I T N E S S E T H

      WHEREAS , pursuant to the International Game Technology 2002 Stock Incentive Plan, as amended (the “ Plan ”), the Corporation hereby grants to the Participant, effective as of the date hereof, a performance share award (the “ Award ”), upon the terms and conditions set forth herein and in the Plan.

      NOW THEREFORE , in consideration of services rendered and to be rendered by the Participant, and the mutual promises made herein and the mutual benefits to be derived therefrom, the parties agree as follows:

      1.  Defined Terms . Capitalized terms used herein and not otherwise defined herein shall have the meaning assigned to such terms in the Plan.

      2.  Grant . Subject to the terms of this Award Agreement, the Corporation hereby grants to the Participant an Award with respect to an aggregate of 107,300 shares of Common Stock of the Corporation (the “ Performance Shares ”).

      3.  Vesting . Subject to Section 8(a) below, a portion of the total number of Performance Shares subject to the Award as determined under Section 3(a) (the “ Eligible Shares ”) shall be eligible to vest with respect to each of the five consecutive fiscal years of the Corporation commencing with the fiscal year ending September 30, 2007 (each such fiscal year, a " Performance Year ”). The number of Performance Shares that vest for each Performance Year shall be determined by multiplying the number of Eligible Shares for such Performance Year by the Vesting Percentage for such Performance Year (as determined under Section 3(b)) and rounding to the nearest whole share. In all cases, the number of Performance Shares referred to in this Section 3 is subject to adjustment under Section 6.2(a) of the Plan.

     Notwithstanding any other provision herein, the vesting of any Eligible Shares for a Performance Year is subject to the condition that the Participant be employed by or providing services to the Corporation or its Subsidiaries as of the second Friday of the November that follows the end of such Performance Year (or, if such date is not a business day, the next preceding business day).

          (a) Eligible Shares . The number of Eligible Shares for a Performance Year shall equal:

          By way of example only, the following chart illustrates the number of Performance Shares that would be Eligible Shares for each Performance Year, assuming a 1,000-share grant and a Vesting Percentage for each such Performance Year of 80% (which assumes a 12% EPS CAGR multiplied by 6.67, as determined under Section 3(b)):

          In no event shall any Performance Shares be eligible to vest with respect to any period after the Performance Year ending September 30, 2011 (other than those shares that vest on the second Friday of November 2011 with respect to the immediately preceding fiscal year). Accordingly, one hundred percent (100%) of the Performance Shares eligible to vest for the Performance Year ending September 30, 2011 that do not vest after application of the Vesting Percentage for such Performance Year shall be forfeited as of the second Friday of November 2011.

          (b) Vesting Percentage . The “ Vesting Percentage ” for any Performance Year shall be based on the Corporation’s Earnings Per Share Compound Annual Growth Rate (as such term is defined below) (“EPS CAGR”) as follows:

Any fractional percentage of the EPS CAGR shall be rounded to the nearest whole percentage.

          For purposes of this Award Agreement, the term “ Earnings Per Share Compound Annual Growth Rate ” with respect to a Performance Year shall mean the compound annual growth rate of the Corporation’s Adjusted Earnings Per Share for the period commencing on October 1, 2006 and ending on the last day of such Performance Year, and the term “ Adjusted Earnings Per Share ” shall mean the Corporation’s Earnings Per Share for the relevant period, as determined on a consolidated basis in accordance with generally accepted accounting principles as applied in the Corporation’s financial reporting generally as of the Award Date (disregarding any changes in such principles after such date) and excluding the following items: (i) impairment charges related to goodwill and intangible assets that were acquired before the Participant was hired as an employee of the Corporation, (ii) charges related to natural disasters and related insurance recoveries, (iii) charges related to debt retirement, (iv) charges related to acquisition            in-process research and development, (v) stock-based compensation expense related to the Participant, (vi) gain or loss on the sale of a building or airplane, and (vii) gain or loss on the sale of a business.

      4.  Continuance of Employment . The vesting schedule requires continued employment or service through each applicable vesting date as a condition to the vesting of the applicable installment of the Award and the rights and benefits under this Award Agreement. Employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Participant to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or services as provided in Section 8(a) below or under the Plan.

     Nothing contained in this Award Agreement or the Plan constitutes an employment or service commitment by the Corporation, affects the Participant’s status as an employee at will who is subject to termination without cause, confers upon the Participant any right to remain employed by or in service to the Corporation or any of its Subsidiaries, interferes in any way with the right of the Corporation or any of its Subsidiaries at any time to terminate such employment or services, or affects the right of the Corporation or any of its Subsidiaries to increase or decrease the Participant’s other compensation or benefits. Nothing in this paragraph, however, is intended to adversely affect any independent contractual right of the Participant without his or her consent thereto.

      5.  Dividend and Voting Rights . After the Award Date, the Participant shall be entitled to cash dividends and voting rights with respect to the Performance Shares subject to the Award even though such shares are not vested, provided that such rights shall terminate immediately as to any Performance Shares that are forfeited pursuant to Section 3 or Section 8(a).

      6.  Restrictions on Transfer . Prior to the time that they have become vested pursuant to Section 3 hereof or Section 6.2 of the Plan, neither the Performance Shares, nor any interest therein, amount payable in respect thereof, or Restricted Property (as defined in Section 9 hereof) may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply to (a) transfers to the Corporation, or (b) transfers by will or the laws of descent and distribution.

      7.  Stock Certificates .

          (a) Book Entry Form . The Corporation shall issue the Performance Shares subject to the Award either: (a) in certificate form as provided in Section 7(b) below; or (b) in book entry form, registered in the name of the Participant with notations regarding the applicable restrictions on transfer imposed under this Award Agreement.

          (b) Certificates to be Held by Corporation; Legend . Any certificates representing Performance Shares that may be delivered to the Participant by the Corporation prior to vesting shall be redelivered to the Corporation to be held by the Corporation until the restrictions on such shares shall have lapsed and the shares shall thereby have become vested or the shares represented thereby have been forfeited hereunder. Such certificates shall bear the following legend and any other legends the Corporation may determine to be necessary or advisable to comply with all applicable laws, rules, and regulations:

“The ownership of this certificate and the shares of stock evidenced hereby and any interest therein are subject to substantial restrictions on transfer under an Agreement entered into betw