CONFIDENTIAL SEPARATION AGREEMENT

Exhibit 10.1

CONFIDENTIAL SEPARATION AGREEMENT

This Confidential Separation Agreement (“Agreement”) is made by and between Bally Gaming, Inc. (“Bally”), and Mark Lipparelli (“Employee”) dated as of March 8, 2007.

WHEREAS, Employee was employed by Bally;

WHEREAS, Bally and Employee have mutually agreed to terminate their employment relationship on the terms set forth in this Agreement;

NOW THEREFORE, in consideration of the mutual promises made herein, Bally and Employee (collectively referred to as “the Parties”) hereby agree as follows:

1.              Termination of Employment.   Employee acknowledges that the effective date of Employee’s termination of employment with Bally is April 1, 2007 (“Termination Date”).

2.              Severance Payments .  In consideration of Employee’s execution of this Agreement, Bally agrees to pay Employee his base salary (based upon his rate of pay at the time of termination which is equal to $250,000 per year), less standard withhold­ing and deductions, offset by any income earned by Employee from other employment (if such other employment is with and income is from any company or source who designs, manufactures, markets or sells Gaming Devices) during the period for which payment is made, in accordance with Bally’s normal payroll policies, for the ten (10) month period beginning on May 25, 2007 (coinciding with the end date of the Consultant Agreement between Bally and Employee described in Section 3 below).  For purposes of this Agreement only, “Gaming Devices” shall be defined collectively as gambling machines, gaming devices, reel slot machines, video slot machines, video gaming machines, video lottery terminals, casino hardware and software control systems, and casino accounting and promotional systems, and the design, manufacture, or marketing/sale thereof.

3.              Transition Services .  In consideration of Employee’s execution of this Agreement, Bally and Employee have agreed that Employee will be engaged by Bally as a consultant, in accordance with the terms and conditions of Bally’s standard consulting agreement attached hereto as Exhibit A and incorporated herein by reference (the “Consultant Agreement”).  The term of the Consultant Agreement shall begin on the day after the Termination Date set forth in Section 1 above and continue through May 25, 2007.  Bally agrees to pay Employee $4,807.69 per week during the consulting engagement.  In addition, the Parties agree that any rights to or obligations arising out of the “MIP” bonus and “MIP Continuation” (as defined in Employee’s Employment Offer dated September 23, 2003), including during any non-compete period, shall hereby be revoked and null and void and shall be replaced in its entirety with the payments pursuant to the Consulting Agreement. The Parties also acknowledge that any and all Restricted Stock (as defined in the Plan) issued to Employee in conjunction with the FY 2006 MIP payout will expire as set forth and in accordance with the 2001 Stock Option Plan (the “Plan”).

4.              Non-Compete .  Employee agrees not to compete with Bally during the period beginning on the Termination Date (including during the consultancy period described in Section 3 above and the salary continuation period described in Section 2 above) and continuing through March 31, 2008.  Employee agrees that the scope and duration of the foregoing covenant not to compete are reasonable and fair.  If a court of compe­tent jurisdiction determines that the covenant is vague, overbroad, or unenforceable in any respect, Employee agrees that the covenant may be

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enforced to the greatest extent the court deems appropriate and that the court may modify the covenant accordingly.   As used in this Agreement, “compete” means to establish (except as set forth below), engage, or be connected, directly or indirectly, whether as an em­ployee, owner, partner, agent, employer, officer, consultant, advisor, stockholder, or in any other business capacity, for Employee’s own account (except as set forth below) or for the benefit of any person or entity, with any person or entity engaged in a business in competition with the business of Bally in any area where Bally does business; provided, however, that the term does not include beneficial ownership of not more than five (5) percent of the outstanding shares of a corporation with capital stock listed on any national or regional securities exchange or quoted in the daily listing of over-the-counter market securities and in which Employee does not under­take any management or operational or advisory role.  Notwithstanding the non-compete obligations contained in this Section 4, Bally agrees that Employee may establish his own entity or business, so long as Employee is the sole or majority shareholder of such entity or business and no investment or financing of Employee’s entity or business comes from, or services are performed by Employee for, persons or entities, or affiliates thereof, who compete with Bally, and so long as Employee does not on his own behalf or on behalf of any third party, sell, attempt to sell, market, or display at trade shows, any products that compete with Bally during the non-compete period.

5.              Non-Solicitation .  Employee agrees that for the period beginning on the Termination Date and continuing through May 25, 2008, Employee shall not directly or indirectly hire or aid or endeavor to solicit or induce any other employee or consultant of Bally to leave Bally to accept employment of any kind with any other person or entity. Employee also agrees that for the duration of the covenant not to compete described above, Employee will not sell, attempt to sell, market, or provide any products or services to the customers of Bally or its subsidiaries or affiliates or of anyone who has traded or dealt with Bally with respect to any technologies, ser­vices, products, trade secrets, or other matters in which Bally does business. In addition, Employee agrees not to interfere with Bally’s relationships with current or prospective employees, suppliers, customers, investors or business partners known or disclosed to employee during the course of his employment with Bally.  Specifically, Employee agrees he will not act in any manner that he knows or reasonably should know will result in damage to the business or reputation of Bally.

6.              Proprietary Information of Bally .  Employee shall continue to maintain the confidentiality of all confidential and proprietary information of Bally in accordance with the terms and conditions of any confidentiality agreements and proprietary information and invention agreements between Employee and Bally.  For purposes of clarification, Employee and Bally agree that the “Intellectual Property” section of Employee’s employment offer letter dated September 26, 2003, shall expressly survive the Termination Date indefinitely, provided, however, that Bally agrees to hereby delete “or during the first six months after your employment with Bally ends for any reason” and “or within six (6) months after your employment with Bally terminates for any reason” from the first and last sentences of that provision, respectively.  Further, the parties acknowledge and agree that the Employee has no pending patents, or patent applications in discussion or under development that Bally would reasonably conclude are the property of Bally.

7.              Release of Claims .  Employee agrees that execution of this Agreement by Employee and Bally represents settlement in full of all outstanding obligations owed to Employee by Bally.  Employee, on behalf of himself, and his respective heirs, executors, and assigns, hereby fully and forever release