<PAGE>

                                  EXHIBIT 10.14
                              EMPLOYMENT AGREEMENT

This Employment Agreement ("Agreement") is entered into March 26, 2003, by and
between Multimedia Games, Inc., a Texas corporation ("Company") and Gordon T.
Graves ("Executive") (either party individually, a "Party"; collectively, the
"Parties").

WHEREAS, Executive has, prior to the Effective Date, served the Company as its
Chief Executive Officer;

WHEREAS, as part of the planned succession of the Chief Executive Officer
position, Executive wishes to resign his position as Chief Executive Officer,
effective upon the date of the Company's annual meeting of shareholders
scheduled to be held on or about February 18, 2003;

WHEREAS, the Company desires to retain the services of Executive as Chairman
("Chairman") of the Company's Board of Directors (the "Board") and as a member
of the Company's Executive Committee, and Executive desires to continue his
service to the Company in that capacity;

WHEREAS, the Parties desire to enter into this Agreement to set forth the terms
and conditions of Executive's service to the Company and to address certain
matters related to Executive's position with the Company;

NOW, THEREFORE, in consideration of the foregoing and the mutual provisions
contained herein, and for other good and valuable consideration, the Parties
hereto agree as follows:

1.     Resignation. Executive hereby confirms his resignation from his position
       as Chief Executive Officer of the Company, effective immediately
       following the Company's next annual meeting of shareholders (the
       "Effective Date"), currently scheduled to be held on or about February
       18, 2003.

2.     Agreement to Serve as Chairman. Company hereby retains Executive as
       Chairman, and Executive hereby accepts such position, upon the terms and
       conditions set forth herein.

3.     Duties.

       3.1    Position. Executive is retained as Chairman and shall generally
              have the duties and responsibilities described in that certain
              Confidential MGAM Internal Memorandum dated November 12, 2002
              addressing the roles and responsibilities of the Company's Chief
              Executive Officer and Chairman. Executive will serve as a member
              of the Company's Executive Committee and, in addition, Executive
              shall perform such other duties assigned by the Board as are
              consistent with the position of Chairman. Executive shall report
              to the Board. Executive shall perform faithfully and diligently
              all such duties assigned to Executive by the Board.

       3.2    Standard of Conduct/Full-time. During the term of this Agreement,
              Executive will act loyally and in good faith to discharge the
              duties of Chairman, and will abide by all policies and decisions
              made by the Board of Directors, as well as all applicable federal,
              state and local laws, regulations or ordinances. In his capacity
              as Chairman, Executive will act solely on behalf of Company. While
              serving as a member of the Executive Committee, Executive shall
              devote an average of at least 40 hours per week to the performance
              of Executive's assigned duties for Company, unless Executive
              notifies the Board in advance of Executive's intent to engage in
              other paid work and the Board does not express its written
              objection thereto. Notwithstanding the foregoing, Executive may
              devote a portion of his available business time to a charitable
              foundation and other non-competitive, family-related corporate
              endeavors.

       3.3    No Conflict of Interest. Executive will not, at any time while
              serving as a director of the Company, accept any engagement for
              work, paid or unpaid, that at the time such engagement is
              undertaken creates a conflict of interest with the Company that is
              imminent and evident. If the Board reasonably believes such a
              conflict exists and can demonstrate that such a conflict existed
              at the time the Executive commenced such work, the Board may ask
              Executive to discontinue such work. If the parties cannot reach
              agreement, either party may request a determination by an
              arbitrator pursuant to Section 13, below, and if the Board's
              determination hereunder is upheld by the arbitrator, and
              Executive then refuses to promptly resign his conflicting
              engagement, such refusal shall constitute a material breach of
              this Agreement.

                                       1

<PAGE>

     3.4  Work Location. The Company will provide an executive office and
          related clerical and administrative support for Executive at the
          Company's headquarters in Austin, Texas that Executive may use for his
          work as a member of the Executive Committee. Notwithstanding the
          foregoing, Executive is expected to operate for the majority of his
          time from his home or other off-site location, and may have the
          assistance of a Company secretary at such off-site location.

4.   Term.

     4.1  Initial Term. Unless sooner terminated in accordance with the terms of
          this Agreement, Executive shall serve as Chairman and as a member of
          the Executive Committee for an initial term commencing on the
          Effective Date and continuing for nine (9) months from the Effective
          Date (the "Initial Term").

     4.2  Service following Expiration of Initial Term. Following expiration of
          the Initial Term, Executive may continue to serve as Chairman and as a
          member of the Executive Committee at the pleasure of the Board. The
          term of this Agreement shall renew for successive thirty (30) day
          periods until terminated in accordance with the provisions of this
          Agreement.

5.   Compensation.

     5.1  Base Salary for Service as Member of Executive Committee. As
          compensation for Executive's service on the Executive Committee,
          Company shall pay to Executive a salary of $12,500 per month, payable
          in monthly installments and in accordance with the normal payroll
          practices of Company.

     5.2  Outside Director Compensation. During any period that Executive serves
          as a member of the Board but does not serve on the Executive
          Committee, Executive shall be entitled to the same compensation and
          benefits paid to the Company's other non-employee directors.

6.   Other Benefits. Executive will be eligible for all customary and usual
     fringe benefits generally available to non-employee directors of Company
     (including benefits available to non-employee members of the Executive
     Committee) subject to the terms and conditions of Company's benefit plan
     documents. Company reserves the right to change or eliminate the fringe
     benefits on a prospective basis, at any time, effective upon notice to
     Executive; provided, however, that during the Initial Term, Executive (and
     his spouse and eligible dependents) shall be entitled to receive all
     benefits generally available to other non-employee members of Company's
     Board (including benefits available to non-employee members of the
     Executive Committee). The benefits currently made available to Executive
     are listed in Exhibit A. In addition to the foregoing, during the Initial
     Term Executive shall be entitled to receive the same or similar benefits as
     those received by Executive prior to his resignation as the Company's Chief
     Executive Officer.

     6.1  [Intentionally Omitted]

     6.2  The Company shall deliver to Steve Fleckman, Executive's attorney, all
          instruments and certificates in the Company's possession evidencing
          the Company's shares, options, and warrants outstanding in favor of
          Executive.

7.   Business Expenses. Executive will be reimbursed for all reasonable,
     out-of-pocket business expenses incurred in the performance of Executive's
     duties on behalf of Company. To obtain reimbursement, expenses must be
     submitted promptly with appropriate supporting documentation in accordance
     with Company's policies.

8.   Termination of Executive's Positions.

     8.1  Removal for Cause by Company. The Company may remove Executive from
          the position of Chairman or from the Executive Committee immediately
          at any time for Cause. For purposes of this Agreement, "Cause" is
          defined as: (a) theft, dishonesty, or intentional falsification of any
          employment or Company records; improper disclosure of the Company's
          confidential or proprietary information; (b) Executive's conviction
          (including any plea of guilty or nolo contendere) for any criminal act
          that materially impairs his ability to perform his duties for the
          Company; or (c) a material breach of this agreement by Executive which
          is not cured within thirty (30) days of receipt by executive of
          reasonably detailed written notice from the Company. In the event
          Executive's employment as a member of the Executive Committee is
          terminated in accordance with this Section 8.1, Executive shall be
          entitled to receive only unpaid Base Salary then in effect, prorated
          to the date of termination, together with any amounts to which
          Executive is entitled pursuant to Sections 6 or 7 hereof. All other
          Company obligations to Executive pursuant to this Agreement will
          become automatically terminated and completely

                                       2

<PAGE>

          extinguished (except those arising pursuant Section 9, which shall not
          be affected by this Section). Executive will not be entitled to
          receive the Severance Payments described in Section 8.2, below.

     8.2  Removal Without Cause by Company/Severance. Company may remove
          Executive from the position of Chairman or from the Executive
          Committee without Cause at any time on thirty (30) days' advance
          written notice to Executive. In the event Executive is terminated only
          from his position as Chairman he shall continue to receive
          compensation and benefits as provided above for so long as he is a
          member of the Executive Committee. In the event of Executive's
          termination as a member of the Executive Committee, whether he
          continues as Chairman or not, Executive will receive ratably, in equal
          monthly installments in accordance with the Company's standard payroll
          practices, (i) all unpaid Base Salary pursuant to Section 5 as of the
          date of termination; (ii) continued payment of Executive's Base Salary
          pursuant to Section 5 for the balance of the Initial Term following
          the effective date of Executive's termination; and (iii) any amounts
          to which Executive is entitled pursuant to Section 5 or 6 hereof (the
          amounts due under clauses (i), (ii) and (iii) are collectively
          referred to as the "Severance Payments"), provided that Executive: (a)
          shall comply with all surviving provisions of this Agreement,
          including without limitation those provisions specified in subsection
          17.8, below; and (b) executes a full general release, releasing all
          claims, known or unknown, that Executive may have against Company
          arising out of or any way related to Executive's employment or
          termination of employment with Company, in substantially the form
          contained herein as Section 14 below, or in another form that is
          mutually acceptable to Company and Executive, provided that such
          release shall exclude amounts due or to become due Executive as
          contemplated by this Agreement. Except as provided above in this
          Section 8.2 and except for (i) any compensation or benefits accruing
          to Executive for any continuing service as a non-employee member of
          the Board under Sections 5.2, 6 and 7, and (ii) any compensation
          accruing to Executive under Section 9, all other Company obligations
          to Executive under this Agreement will be automatically terminated and
          completely extinguished upon removal of Executive from the position of
          Chairman and from the Executive Committee. This provision will not
          impair Executive's rights under Section 9.

     8.3  Resignation by Executive/Severance Upon Breach by the Company.
          Executive may resign either or both of his positions under this
          Agreement at any time on five (5) days' advance written notice to
          Company in the event of any material breach of this Agreement by the
          Company. In the event of such resignation, Executive will be entitled
          to receive the Severance Payments described in Section 8.2, above,
          provided that Executive complies with the conditions to receiving the
          Severance Payments described in Sections 8.2(a) and 8.2(b), above.
          Excluding the Severance Payments and any amounts due or to become due
          Executive under Section 9 of this Agreement, all other Company
          obligations to Executive will be automatically terminated and
          completely extinguished upon resignation by Executive of his position
          on the Executive Committee and his position as Chairman. This
          provision will not affect Executive's rights under Section 9.

     8.4  Voluntary Resignation by Executive. Executive may voluntarily resign
          Executive's position as Chairman of the Company or as a member of its
          Executive Committee for any reason, at any time after the Effective
          Date, on five (5) days' advance written notice. In the event of
          Executive's resignation as a member of the Executive Committee,
          Executive will be entitled to receive only the unpaid Base Salary and
          any benefits under Section 6 and 7 that have accrued through the
          five-day notice period and no other amount for the remaining months of
          the current term. Excluding amounts due or to become due Executive
          under Section 9, all other Company obligations to Executive pursuant
          to this Agreement (including obligations to make the Severance
          Payments described in Section 8.2) will be automatically terminated
          and completely extinguished from and after the effective date of
          notice of Executive's resignation from the Executive Committee
          pursuant to this Section. The provisions of this Section 8.4 shall not
          apply to Executive's resignation pursuant to Section 8.3. This
          provision will not impair Executive's rights under Section 9.

9.   Post-Termination Non-Competition.

     9.1  Consideration For Promise To Refrain From Competing. Executive agrees
          that Executive's services are special and unique, that Company's
          disclosure of confidential, proprietary information and specialized
          training and knowledge to Executive, and that Executive's level of
          compensation and benefits are partly in consideration of and
          conditioned upon Executive not competing with Company. In addition, in
          further consideration for the promise to refrain from competing, the
          Company agrees to pay Executive $250,000.00 per year during the
          Non-Compete Period (defined below), in equal monthly

                                       3

<PAGE>

          installments of $20,833.33 beginning February 28, 2003. Executive
          acknowledges that such consideration is adequate for and supports
          Executive's promises contained within this Section 9.

     9.2  Promise To Refrain From Competing. Executive understands Company's
          need for Executive's promise not to compete with Company is based on
          the following: (a) Company has expended, and will continue to expend,
          substantial time, money and effort in developing its proprietary
          information; (b) Executive will in the course of Executive's service,
          develop, be personally entrusted with and exposed to Company's
          proprietary information; (c) both during and after the term of
          Executive's service, Company will be engaged in the highly competitive
          gaming technology industry; (d) Company provides products and services
          nationally and internationally; and (e) Company will suffer great loss
          and irreparable harm if Executive were to enter into competition with
          Company. Therefore, in exchange for the consideration described in
          Section 9.1 above, Executive agrees that during the term of his
          service as a director of the Company, and for a period of three (3)
          years following the date Executive is no longer affiliated with the
          Company (the "Non-Compete Period"), Executive will not either directly
          or indirectly, whether as an owner, director, officer, manager,
          consultant, agent or employee: (i) work for or provide services or
          assistance to a competitor of Company, which is defined to include
          those entities or persons in the business of developing, marketing,
          selling and supporting technology to or for gaming businesses in which
          the Company engages or in which the Company has an actual intention,
          as evidenced by the Company's written business plans to engage, in any
          country in which the Company does business (the "Restricted
          Business"); or (ii) make or hold any investment in any Restricted
          Business, whether such investment be by way of loan, purchase of stock
          or otherwise, provided that there shall be excluded from the foregoing
          the ownership of not more than 3% of the listed or traded stock of any
          publicly held corporation. For purposes of this Section 9, the term
          "Company" shall mean and include Company, any subsidiary or affiliate
          of Company, any successor to the business of Company (by merger,
          consolidation, sale of assets or stock or otherwise) and any other
          corporation or entity of which Executive may serve as a director,
          officer or employee at the request of Company or any successor of
          Company. Notwithstanding the foregoing, the scope of this covenant not
          to compete shall not be expanded as a result of an acquisition of the
          Company by a successor.

     9.3  Reasonableness of Restrictions. Executive represents and agrees that
          the restrictions on competition, as to time, geographic area, and
          scope of activity, required by this Section 9 are reasonable, do not
          impose a greater restraint than is necessary to protect the goodwill
          and business interests of Company, and are not unduly burdensome to
          Executive. Executive expressly acknowledges that Company competes on
          an international basis and that the geographical scope of these
          limitations is reasonable and necessary for the protection of
          Company's trade secrets and other confidential and proprietary
          information. Executive further agrees that these restrictions allow
          Executive an adequate number and variety of employment alternatives,
          based on Executive's varied skills and abilities. Executive represents
          that Executive is willing and able to compete in other employment not
          prohibited by this Agreement.

     9.4  Non-Exclusive Remedy. In addition to and not exclusive of other legal
          and equitable remedies available to the Company, Executive will
          reimburse the Non-Compete Payment to the Company in its entirety if
          Executive violates the terms of the Promise to Refrain from Competing
          during the three-year Non-Compete Period. Executive agrees that this
          consideration, together with the Company's disclosure of confidential,
          proprietary information and specialized training and knowledge to
          Executive, and Executive's level of compensation and benefits are
          consideration for and conditioned upon Executive not competing with
          the Company. Any repayment of the Non-Compete Payment shall not
          constitute a waiver of the Executive's obligations under the Promise
          to Refrain from Competing set forth in Section 9.2.

     9.5  Voluntary Non-Competition Consideration. Following expiration of the
          Non-Compete Period, and only for so long as Executive continues to
          comply with each of the provisions of Sections 9.2 and 11 hereof,
          above, then following expiration of the Non-Compete Period the Company
          will continue to pay Executive $20,833.33 per month during his life.
          At any time that Executive ceases to comply in any respect with any of
          the provisions of Section 9.2 or Section 11, and failing Executive's
          timely cure of such breach in accordance with Section 9.7, all Company
          obligations to make the continuing payments as provided in this
          section shall immediately terminate and thus shall become null and
          void, but any payments due Executive as of the day preceding the date
          on which Executive ceased to comply with the provisions of Section 9.2
          or Section 11 shall be promptly paid to Executive.

                                       4

<PAGE>

     9.6  Reformation if Necessary. In the event a court of competent
          jurisdiction determines that the geographic area, duration, or scope
          of activity of any restriction under this Section 9 and its
          subsections is unenforceable, the restrictions under this section and
          its subsections shall not be terminated but shall be reformed and
          modified to the extent required to render them valid and enforceable.
          Executive further agrees that the court may reform this Agreement to
          extend the initial three-year Non-Compete Period by an amount of time
          equal to any period (during such Non-Compete Period) in which
          Executive is in breach of his Promise to Refrain from Competing.

     9.7  Notice and Cure. Prior to asserting a right to any legal or equitable
          remedy for an alleged breach by Executive of the provisions of this
          Section 9 or Section 11 (including, without limitation, the cessation
          of any payments provided for herein), (a) the Company will provide
          Executive with a reasonably detailed notice of the alleged breach
          which includes a description of the facts upon which the Company bases
          its claim of breach and a general explanation of the harm experienced
          or anticipated to be experienced by the Company; and (b) Executive
          shall have fourteen calendar (14) days to terminate the conduct
          described in the notice and cure any financial harm actually sustained
          by the Company that the Company identifies with reasonable
          particularity in its notice.

10.  Confidentiality and Proprietary Rights. Executive agrees to read, sign and
     abide by Company's Employee Innovations and Proprietary Rights Assignment
     Agreement, which was previously executed by Executive and incorporated
     herein by reference.

11.  Nonsolicitation.

     11.1 Nonsolicitation of Customers or Prospects. Executive acknowledges that
          information about Company's customers is confidential and constitutes
          trade secrets. Accordingly, Executive agrees that during the
          Non-Compete Period, Executive will not, either directly or indirectly,
          separately or in association with others, interfere with, impair,
          disrupt or damage Company's relationship with any of its customers or
          customer prospects by soliciting or encouraging others to solicit any
          of them for the purpose of diverting or taking away business from
          Company.

     11.2 Nonsolicitation of Company's Employees. Executive agrees that during
          the Non-Compete Period, Executive will not, either directly or
          indirectly, separately or in association with others, interfere with,
          impair, disrupt or damage Company's business by soliciting,
          encouraging, hiring or attempting to hire any of Company's employees
          or causing others to solicit or encourage any of Company's employees
          to discontinue their employment with Company.

12.  Injunctive Relief. Executive acknowledges that Executive's breach of the
     covenants contained in Sections 9-11 (collectively, the "Covenants") would
     cause irreparable injury to Company and agrees that in the event of any
     such breach, Company shall be entitled to seek temporary, preliminary and
     permanent injunctive relief without the necessity of proving actual damages
     or posting any bond or other security (except as required by law).

13.  Agreement to Arbitrate. To the fullest extent permitted by law, and in any
     event subject to the specific provisions of Exhibit B attached, Executive
     and Company agree to arbitrate any controversy, claim or dispute between
     them arising out of or in any way related to this Agreement, the employment
     relationship between Company and Executive and any disputes upon
     termination of employment, including but not limited to breach of contract,
     tort, discrimination, harassment, wrongful termination, demotion,
     discipline, failure to accommodate, family and medical leave, compensation
     or benefits claims, constitutional claims; and any claims for violation of
     any local, state or federal law, statute, regulation or ordinance or common
     law. Claims relating to physical torts, the right to workers' compensation,
     and unemployment insurance benefits are excluded, and except as provided in
     Exhibit B, claims for enforcement of the parties' rights under the
     Covenants, are excluded. For the purpose of this agreement to arbitrate,
     references to "Company" include all parent, subsidiary or related entities
     and their employees, supervisors, officers, directors, agents, pension or
     benefit plans, pension or benefit plan sponsors, fiduciaries,
     administrators, affiliates and all successors and assigns of any of them,
     and this Agreement shall apply to them to the extent Executive's claims
     arise out of or relate to their actions on behalf of Company. The
     Arbitration shall be governed by, initiated and conducted in accordance
     with the provisions of Exhibit B hereof.

14.  Release of Claims. Executive for himself and on behalf of his attorneys,
     heirs, assigns, successors, executors, and administrators IRREVOCABLY AND
     UNCONDITIONALLY RELEASES, ACQUITS AND

                                       5

<PAGE>

          FOREVER DISCHARGES the Company and any current and former parent,
          subsidiary, affiliated, and related corporations, firms, associations,
          partnerships, and entities, and their successors and assigns, of and
          from all claims and causes of action whatsoever, whether known or
          unknown or whether connected with Employee's employment by the Company
          or not, which may have arisen, or which may arise, prior to, or at the
          time of, the execution of this Agreement, including, but not limited
          to, any claim or cause of action arising under Title VII of the Civil
          Rights Act of 1964, the Americans with Disabilities Act, the Texas
          Commission on Human Rights Act, the Age Discrimination in Employment
          Act, the Texas Labor Code, the Texas Payday Act, or any other
          municipal, local, state, or federal law, common or statutory.
          Notwithstanding the foregoing, Executive reserves all rights (A) to
          indemnification that he may currently or hereafter possess as an
          officer, director or agent or former officer, director or agent of the
          Company (or its affiliates) under applicable corporate statutes or the
          organic corporate documents of the Company (and the scope of any
          indemnification existing as of this date shall not be reduced as to
          Executive by future action of the Company); (B) under any employee
          insurance policies or benefit programs that by their terms continue to
          apply to Executive [(C) to participate as a passive member (but not
          active member or class representative) of any class action brought for
          the benefit of public investors of the Company;]; and (D) under any
          other provision of this Agreement. Company hereby represents that,
          without investigation or undertaking any duty of inquiry, its Board of
          Directors and executive officers are unaware of any claims Company may
          have against Executive as of the date of this Agreement.

     15.  Voting Agreement. Executive agrees from and after the date of this
          Agreement and until Midnight, September 30, 2003 (the "Voting
          Agreement Period"), that he shall vote, or cause the vote of, all
          shares of Common Stock, Preferred Stock, and other voting securities
          of the Company over which he has or shares voting control, in favor of
          the Company's current Board of Directors and any additional
          director(s) nominated unanimously by the current Board of Directors to
          stand for election to the Company's Board of Directors at any special
          or annual meeting of the stockholders of the Company. Executive
          further agrees that during the Voting Agreement Period he will not
          make or in any way participate, directly or indirectly, in any
          "solicitation" of "proxies" to vote (as such terms are used in the
          rules of the Securities and Exchange Commission), or seek to advise or
          influence any person or entity with respect to the voting of any
          voting securities of the other party, and Executive shall not form,
          join or in any way participate in a "group" as defined in Section
          13(d)(3) of the Securities Exchange Act of 1934, as amended, in
          connection with the foregoing.

     16.  Patent License; Right of First Offer. As soon as practicable following
          the execution of this Agreement, the parties will continue
          negotiations regarding a Patent License Agreement on substantially the
          terms described in the Term Sheet for Employment between Gordon T.
          Graves and Multimedia Games, Inc. dated November 12, 2002. Executive
          agrees that, prior to transferring or licensing any intellectual
          property or technology developed by Executive, solely or jointly with
          others, to any third party that could reasonably be used by or useful
          to the Company, Executive shall first offer to transfer or lease such
          intellectual property or technology to the Company. The Company shall
          have 60 days to negotiate an acquisition of license of such technology
          or intellectual property with Executive. If, following expiration of
          such 60-day period, Executive and Company have failed to conclude
          negotiations, Executive may, at any time within 240 days after the
          expiration of such period, license or transfer such technology or
          intellectual property to a third party or parties on terms no more
          favorable than those last offered by Executive to the Company. After
          expiration of such 240-day period, Executive may not transfer or
          license such technology or intellectual property without again
          complying with the right of first offer described in this section.

     17.  General Provisions.

          17.1 Successors and Assigns. The rights and obligations of Company
               under this Agreement shall inure to the benefit of and shall be
               binding upon the successors and assigns of Company. Executive
               shall not be entitled to assign any of Executive's rights or
               obligations under this Agreement other than vested rights to
               receive payments hereunder.

          17.2 Waiver. Either party's failure to enforce any provision of this
               Agreement shall not, unless confirmed in writing by the party
               against whom waiver is urged, in any way be construed as a waiver
               of such provision in any other circumstance, or prevent that
               party thereafter from enforcing each and every other provision of
               this Agreement.

          17.3 Attorneys' Fees. In the event of a dispute the prevailing party
               shall be entitled to recover reasonable attorney fees.

                                       6

<PAGE>

     17.4 Severability. In the event any provision of this Agreement is found to
          be unenforceable by an arbitrator or court of competent jurisdiction,
          such provision shall be deemed modified to the extent necessary to
          allow enforceability of the provision as so limited, it being intended
          that the parties shall receive the benefit contemplated herein to the
          fullest extent permitted by law. If a deemed modification is not
          satisfactory in the judgment of such arbitrator or court, the
          unenforceable provision shall be deemed deleted, and the validity and
          enforceability of the remaining provisions shall not be affected
          thereby.

     17.5 Interpretation; Construction. The headings set forth in this Agreement
          are for convenience only and shall not be used in interpreting this
          Agreement. This Agreement has been drafted by legal counsel
          representing Company, but Executive has participated in the
          negotiation of its terms. Furthermore, Executive acknowledges that
          Executive has had an opportunity to review and revise the Agreement
          and have it reviewed by legal counsel, if desired, and, therefore, the
          normal rule of construction to the effect that any ambiguities are to
          be resolved against the drafting party shall not be employed in the
          interpretation of this Agreement.

     17.6 Governing Law. This Agreement will be governed by and construed in
          accordance with the laws of the United States and the State of Texas.
          Each party consents to the jurisdiction and venue of the state or
          federal courts in Travis County, Texas, if applicable, in any action,
          suit, or proceeding arising out of or relating to this Agreement.

     17.7 Notices. Any notice required or permitted by this Agreement shall be
          in writing and shall be delivered as follows with notice deemed given
          as indicated: (a) by personal delivery when delivered personally; (b)
          by overnight courier upon written verification of receipt; (c) by
          telecopy or facsimile transmission upon acknowledgment of receipt of
          electronic transmission; or (d) by certified or registered mail,
          return receipt requested, upon verification of receipt. Notice shall
          be sent to the addresses set forth below, or such other address as
          either party may specify in writing.

     17.8 Survival. Executive's right to receive payments contemplated by this
          Agreement to continue beyond his employment, shall survive except to
          the extent expressly provided otherwise. To the extent reasonably
          contemplated to continue beyond the termination of Executive's
          employment, the following provisions shall also survive: Sections 3.3
          ("No Conflict of Interest"), 5.2 ("Outside Director Compensation"),
          8.2 ("Removal without Cause by Company/Severance"), 9
          ("Post-Termination Non-Competition"), 10 ("Confidentiality and
          Proprietary Rights"), 11 ("Nonsolicitation"), 12 ("Injunctive
          Relief"), 13 ("Agreement to Arbitrate"), 16 ("Patent Licenses; Right
          of First Offer") 17 ("General Provisions") and 18 ("Entire
          Agreement").

     17.9 Entire Agreement. This Agreement, including the Company Employee
          Innovations and Proprietary Rights Assignment Agreement and the Patent
          License Agreement, constitutes the entire agreement between the
          parties relating to this subject matter and supersedes all prior or
          simultaneous representations, discussions, negotiations, and
          agreements, whether written or oral. This Agreement may be amended or
          modified only with the written consent of Executive and the Company.
          No oral waiver, amendment or modification will be effective under any
          circumstances whatsoever.

            [The remainder of this page is intentionally left blank.]

                                       7

<PAGE>

THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY
UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES
HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.

                                          EXECUTIVE

Dated:     March 26, 2003                 By:       /s/ Gordon T. Graves
       ------------------------                 --------------------------------
                                                Gordon T. Graves

                                          Address


                                          MULTIMEDIA GAMES, INC.

Dated:   March 26, 2003                   By:      /s/ Thomas W. Sarnoff
       ------------------------                 --------------------------------
                                                     Thomas W. Sarnoff

                                          Address