GTECH HOLDINGS CORPORATION
                            1996 NON-EMPLOYEE DIRECTORS'
                                   STOCK OPTION PLAN
                          (as amended through June 1, 1997)

1.       Purpose

                  This GTECH HOLDINGS  CORPORATION 1996 NON-EMPLOYEE  DIRECTORS'
STOCK  OPTION PLAN (the  "Plan") is intended  to provide a means  whereby  GTECH
Holdings  Corporation  (the "Company") may,  through the grant of  non-qualified
stock  options  ("Options")  to purchase  common  stock of the Company  ("Common
Stock") to  Non-Employee  Directors  (as  defined in Section 3 hereof),  attract
and retain  capable  outside  directors and motivate  such outside  directors to
promote  the  best  interests  of the  Company,  its  related  corporations  and
shareholders.

                  For  purposes  of  the  Plan,  a  Related  Corporation  of the
Company  shall  mean a  corporate  subsidiary  of the  Company,  as  defined  in
section  424(f) of the  Internal  Revenue  Code of 1986,  as  amended  ("Code").
Further, as used in the Plan, the term  "non-qualified  stock option" shall mean
an option  which,  at the time such  option is  granted,  does not qualify as an
incentive stock option within the meaning of section 422 of the Code.
  
2.       Administration

                  The  Plan  shall be  administered  by the  Company's  Board of
Directors  (the  "Board").  The Board shall have all the powers  vested in it by
the  terms  of  the  Plan,  such  powers  to  include   authority   (within  any
limitations  described herein) to prescribe the form of the agreement  embodying
awards of  Options.  The Board  shall,  subject to the  provisions  of the Plan,
implement  the  grant of  Options  under  the Plan and  shall  have the power to
construe the Plan, to determine all questions  arising  thereunder  and to adopt
and amend such rules and  regulations for the  administration  of the Plan as it
may deem  desirable.  Any  decisions of the Board in the  administration  of the
Plan,  as  described  herein,  shall be final  and  conclusive.  The  Board  may
authorize  any one or more of its number or the  Secretary or any other  officer
of the  Company to execute  and  deliver  documents  on behalf of the Board.  No
member of the Board shall be liable for  anything  done or omitted to be done by
him or by any  other  member of the Board in  connection  with the Plan,  except
for his own willful misconduct or as expressly provided by statute.


3.       Eligibility

                  The persons who shall be  eligible  to receive  Options  under
the Plan  ("Non-Employee  Directors")  shall be those  directors  of the Company
who:

                  (a)      Are not  employees  of the  Company or of any Related
         Corporation; and

                  (b)      Have  not been  employees  of the  Company  or of any
         Related  Corporation  during  the  immediately  preceding  twelve  (12)
         month period.


4.       Authorized Shares

                  Options  may be  granted  under the Plan to  purchase  up to a
maximum of one hundred eighty  thousand  (180,000)  shares of Common Stock,  par
value $.01 per share,  subject to adjustment  as  hereinafter  provided.  Shares
issuable  under the Plan may be  authorized  but unissued  shares or  reacquired
shares,  and the Company  may  purchase  shares of Common  Stock  against  which
Options  may  be  granted  hereunder,  from  time  to  time,  if it  deems  such
purchases to be advisable.

                  If any Option  granted  under the Plan  expires  or  otherwise
terminates,  in whole or in part, for any reason  whatever  (including,  without
limitation,  a Non-Employee  Director's  surrender  thereof) without having been
exercised,  the shares subject to the  unexercised  portion of such Option shall
continue to be  available  for the  granting of Options  under the Plan as fully
as if such shares had never been subject to an Option.

5.       Granting of Options

                  Each  year,  commencing  in 1996,  on the third  business  day
following  the  date of the  Company's  Annual  Meeting  of  Stockholders,  each
person   elected,   reelected  or   continuing   as  a   Non-Employee   Director
automatically  shall be  granted an Option to  purchase  ten  thousand  (10,000)
shares of Common  Stock,  subject to the terms of the Plan,  including,  without
limitation, Sections 7 and 12(d) hereof.

 
6.       Terms and Conditions of Options

                  Options granted pursuant to the Plan shall include
expressly or by reference the following terms and conditions:

                  (a)      Number  of  Shares.  A  statement  of the  number  of
         shares to which the Option pertains.

                  (b)      Price.  A  statement  of the  Option  exercise  price
         (the  "Option  Price").  The Option  Price  shall be the greater of one
         hundred  percent  (100%) of the Fair Market Value of the Common  Stock,
         or the par value  thereof,  on the date the Option is granted.  For the
         purposes of the Plan,  the Fair Market  Value of the Common Stock shall
         be:

                                     (i) The  average  of the  high and low sale
                           prices  of a share of  Common  Stock as  reported  on
                           the New York Stock  Exchange  Composite  Transactions
                           Tape or,  if the New York  Stock  Exchange  is closed
                           on that  date,  on the last  preceding  date on which
                           the New York  Stock  Exchange  was open for  trading;
                           or

                                     (ii)   If   paragraph   (b)(i)   above   is
                           inapplicable,  such other method of determining  Fair
                           Market Value as shall be  authorized  by the Code, or
                           the rules or regulations  thereunder,  and adopted by
                           the Board.

                  (c)      Term.  Subject to  earlier  termination  as  provided
         in  Sections  6(e),  (f) and (g) and in  Section 8 hereof,  the term of
         each Option shall be five (5) years from the date of grant.

                  (d)      Exercise.  Options  shall be  exercisable  commencing
         one (1) year after the date of grant,  except that,  if the date of the
         next  succeeding  annual meeting of  shareholders  is less than one (1)
         year from the date of grant of the  Options,  then such  Options  shall
         be  exercisable,  commencing  on the  day  preceding  the  date  of the
         annual  meeting of  shareholders  next  succeeding the date of grant of
         such Options.  Except as otherwise  provided in Sections  6(e), (f) and
         (g) hereof,  Options  shall only be  exercisable  while a  Non-Employee
         Director  remains a director of the  Company.  Any Option  shares,  the
         right to the  purchase of which has  accrued,  may be  purchased at any
         time up to the  expiration or  termination  of the Option.  Exercisable
         Options  may be  exercised,  in whole or in part,  from time to time by
         giving  written  notice of  exercise  to the  Company at its  principal
         office,   specifying   the  number  of  shares  to  be  purchased   and
         accompanied  by  payment  in  full  of the  aggregate  price  for  such
         shares.  Only  full  shares  shall be issued  under  the Plan,  and any
         fractional  share which might  otherwise be issuable  upon  exercise of
         an Option granted hereunder shall be forfeited.

                  The Option Price shall be payable:

                           (1)      In United  States  dollars by cash or check;
                                    or

                           (2)      In  lieu   thereof,   by  tendering  to  the
                  Company Common    Stock    owned   by   the   person
                  exercising  the Option and having a Fair  Market  Value on the
                  date of  exercise  equal to the  Option  Price  applicable  to
                  such Option; or

                           (3)      By a combination  of United  States  dollars
                  and Common Stock as aforesaid.

                  (e)      Termination   of   Service  as  a   Director.   If  a
         Non-Employee   Director's   service  as  a  director   of  the  Company
         terminates prior to the expiration date of his or her Options
         for any reason (such as, without  limitation,  failure to be re-elected
         by the  shareholders  or  resignation)  other  than  those set forth in
         Sections  6(f)  and  (g)  below,  all  such   Non-Employee   Director's
         outstanding  options  immediately shall terminate,  except that if such
         Non-Employee  Director  has been a director of the Company for at least
         eighteen (18) months  immediately  prior to his or her  termination  of
         service as a director,  any of his or her  unexercisable  Options which
         have been  outstanding for at least four (4) months  immediately  shall
         become fully  exercisable,  and all his or her outstanding  Options may
         be exercised  by the  Non-Employee  Director,  at any time prior to the
         earlier of:

                           (1) The  expiration  date  specified in such Options;
                  or

                           (2)  Nine  (9)   months   after   the  date  of  such
                  termination of service as a director.


                  (f)      Disability   of   Non-Employee    Director.    If   a
         Non-Employee  Director  shall  become  disabled  (within the meaning of
         section  22(e)(3) of the Code)  during the period in which he or she is
         a director of the Company and, prior to the  expiration  date fixed for
         his or her Options,  his or her service as a director  with the Company
         is  terminated  as  a  consequence   of  such   disability,   all  such
         Non-Employee   Director's   outstanding   options   immediately   shall
         terminate,  except  that  if  such  Non-Employee  Director  has  been a
         director of the Company for at least  eighteen (18) months  immediately
         prior to his or her  termination  of service as a director,  any of his
         or her  unexercisable  Options which have been outstanding for at least
         four (4) months  immediately  shall become fully  exercisable,  and all
         his or her outstanding  Options may be exercised,  at any time prior to
         the earlier of:

                           (1) The  expiration  date  specified in such Options;
                  or

                           (2) One (1) year  after the date of the  Non-Employee
                  Director's ceasing to be a director by reason of disability.

                   In the event of a Non-Employee  Director's legal  disability,
         such Options may be so exercised by the  Non-Employee  Director's legal
         representative.

                  (g)      Death of  Non-Employee  Director.  If a  Non-Employee
         Director  ceases to be a  director  of the  Company by reason of his or
         her death prior to the  expiration  date fixed for his or her  Options,
         all of such Non-Employee  Director's  outstanding  Options  immediately
         shall  become fully  exercisable,  and such Options may be exercised at
         any time prior to the earlier of:

                           (1)      The   expiration   date  specified  in  such
                  Options; or

                           (2)      Eighteen  (18) months  after the date of the
                  Non-Employee Director's death.

                  If a Non-Employee Director who ceases to be a director
         for  reasons  described  in  Sections  6(e) and (f)  hereof  shall  die
         following  his  or  her  ceasing  to be a  director  but  prior  to the
         earlier of the  expiration  date fixed for his or her  Options,  or the
         expiration  of the  period  determined  under  Sections  6(e)  and  (f)
         hereof,  as the case may be,  such  Options  may be  exercised,  to the
         extent of the number of shares with  respect to which the  Non-Employee
         Director  could have  exercised it on the date of his or her death,  at
         any time prior to the earlier of:

                           (1) The expiration date specified in such Option; or

                           (2) One (1) year  after the date of the  Non-Employee
                  Director's death.

                  In  the  event  of  a  Non-Employee   Director's  death,  such
Options may be so  exercised by the  Non-Employee  Director's  estate,  personal
representative  or  beneficiary  who acquired the right to exercise  such Option
by  bequest  or  inheritance  or by  reason  of the  death  of the  Non-Employee
Director.
 
                  (h)      Non-Transferability.  Except  as  otherwise  provided
         in any Option  Agreement  (as  defined in Section 7 hereof),  no Option
         shall  be  assignable  or  transferable  by the  Non-Employee  Director
         otherwise  than by will or by the  laws of  descent  and  distribution,
         and  during  the  lifetime  of the  Non-Employee  Director,  the Option
         shall be  exercisable  only by him or by his or her  guardian  or legal
         representative.  If the  Non-Employee  Director  is married at the time
         of exercise  and if the  Non-Employee  Director so requests at the time
         of  exercise,   the  share   certificate  or   certificates   shall  be
         registered   in  the  name  of  the   Non-Employee   Director  and  the
         Non-Employee Director's spouse, jointly, with right of survivorship.

                  (i)      Rights  as  a  Shareholder.  An  optionee  under  the
         Plan shall have no rights as a  shareholder  with respect to any shares
         covered  by  his  or  her  Option   until  the   issuance  of  a  stock
         certificate to him or her for such shares.

                  (j)      Listing  and  Registration  of  Shares.  Each  Option
         shall be  subject  to the  requirement  that,  if at any time the Board
         shall determine, in its discretion,  that the listing,  registration or
         qualification  of  the  shares  covered  thereby  upon  any  securities
         exchange  or  under  any  state  or  federal  law,  or the  consent  or
         approval  of  any   governmental   regulatory  body,  is  necessary  or
         desirable as a condition  of, or in  connection  with,  the granting of
         such  Option or the  purchase of shares  thereunder,  or that action by
         the Company or by a Non-Employee  Director  should be taken in order to
         obtain an exemption  from any such  requirement,  no such Option may be
         granted  or be  exercised,  in whole or in part,  unless and until such
         listing,  registration,  qualification,  consent,  approval,  or action
         shall  have  been  effected,   obtained,   or  taken  under  conditions
         acceptable  to  the  Board.  Without  limiting  the  generality  of the
         foregoing,   each   Non-Employee   Director   or  his   or  her   legal
         representative   or   beneficiary   may  also  be   required   to  give
         satisfactory  assurance  that  shares  purchased  upon  exercise  of an
         Option  are  being  purchased  for  investment  and not  with a view to
         distribution,   and  certificates   representing  such  shares  may  be
         legended accordingly.

7.       Option Agreements - Other Provisions

                  Options  granted  under the Plan shall be evidenced by written
documents  ("Option  Agreements") in such form as the Board shall,  from time to
time,  approve,  which Option  Agreements  shall  contain such  provisions,  not
inconsistent   with  the  provisions  of  the  Plan  as  the  Board  shall  deem
advisable.  Each  Non-Employee  Director shall enter into, and be bound by, such
Option Agreements.


8.       Capital Adjustments

                  The  number  of shares  of  Common  Stock  which may be issued
under the Plan, as stated in Section 4 hereof,  the number of shares  covered by
future Option  grants,  as stated in Section 5 hereof,  and the number of shares
issuable  upon  exercise of  outstanding  Options under the Plan (as well as the
Option  price  per share  under  such  outstanding  Options)  shall be  adjusted
proportionately  to reflect any stock dividend,  stock split, share combination,
or similar change in the capitalization of the Company.

                  In the  event of a  corporate  transaction  (as  that  term is
described  in section  424(a) of the Code and the  Treasury  Regulations  issued
thereunder  as, for example,  a merger,  consolidation,  acquisition of property
or stock,  separation,  reorganization,  or  liquidation)  and  provision is not
made for the  continuance  and  assumption  of  Options  under the Plan,  or the
substitution  for such  Options of new  Options to acquire  securities  or other
property to be delivered in connection  with the  transaction,  the Board shall,
upon  written  notice to the holders of Options,  provide  that all  unexercised
Options will terminate  immediately  prior to the  consummation  of such merger,
consolidation,  acquisition,  reorganization,   liquidation,  sale  or  transfer
unless  exercised by the holder  within a specified  number of days (which shall
not be less than fourteen (14) days)  following the date of such notice,  and on
the  date of such  notice  all  such  unexercised  Options  automatically  shall
become fully exercisable.

9.       Amendment, Suspension and Discontinuance of the Plan

                  The Board,  from time to time, may suspend or discontinue  the
Plan or  amend  the  Plan or any  Option  outstanding  under  it in any  respect
whatsoever,  including,  without  limitation,  increasing  the  number of shares
authorized  for issuance  under the Plan and extending the duration of the Plan,
provided,  however,  that  no  amendment  to the  Plan  shall  become  effective
without  shareholder  approval  if such  shareholder  approval  is  required  by
applicable  law, rule or  regulation,  and provided  further,  that no amendment
shall  materially  impair  the  rights of any  holder of an  outstanding  Option
without the consent of such holder.

10.     Effective Date   

                  The Plan  shall  become  effective  when the Plan is  approved
and adopted by the Company's shareholders.

11.      Termination of Plan

                  Unless  earlier  terminated as provided in the Plan,  the Plan
and  all  authority  granted  hereunder  shall  terminate  absolutely  at  12:00
midnight  on  December  31,  1998,  and no  Options  hereunder  shall be granted
thereafter.  Nothing  contained in this Section 11, however,  shall terminate or
affect  the  continued  existence  in  accordance  with  their  terms of Options
outstanding on the date of termination of the Plan.

12.      General Provisions

                  (a)      Nothing  contained  in the  Plan  shall  prevent  the
         Board from adopting other or additional  compensation  arrangements for
         directors  (subject  to  shareholder   approval  if  such  approval  is
         required);  and such  arrangements may be either  generally  applicable
         or applicable only in specific cases.

                  (b)      The  adoption  of the Plan and the  receipt of grants
         hereunder  shall not  confer  upon any  person  any right to  continued
         services as a director of the Company.

                  (c)      In the event of exercise of an Option,  the  optionee
         shall  pay to the  Company,  upon its  demand,  such  amount  as may be
         requested by the Company for the purpose of  satisfying  any  liability
         to withhold  Federal,  state,  local,  or foreign income or other taxes
         (which  payment may be made in any manner  prescribed  in Section  6(d)
         hereof).  The  obligations  of the  Company  under  the  Plan  shall be
         conditioned  on such  payment,  and the Company shall have the right to
         withhold  the  issuance  of shares to the  optionee  and, to the extent
         permitted  by law,  shall  have the right to deduct any such taxes from
         any payment of any kind otherwise due to the Non-Employee Director.

                  (d)      At the time of grant of any  Option,  the  Board  may
         provide  that any  shares  of  Common  Stock  received  as a result  of
         exercise of such Option  shall be subject to a right of first  refusal,
         pursuant  to which  the  Non-Employee  Director  shall be  required  to
         offer to the  Company  any such  shares  that he or she wishes to sell,
         with  the  price  being  the then  Fair  Market  Value  of the  shares,
         subject to such other  terms and  conditions  as the Board may  specify
         at the time of grant.

                  (e)      Each  person  who is or shall  have  been a member of
         the Board shall be  indemnified  and held  harmless by the Company,  to
         the fullest extent  permissible  by Delaware Law,  against and from any
         loss,  cost,  liability,  or  expense  that  may  be  imposed  upon  or
         reasonably  incurred by such  person in  connection  with or  resulting
         from any claim,  action,  suit,  or proceeding to which such person may
         be made a party or in which such  person may be  involved  by reason of
         any action  taken or  failure to act under or with  respect to the Plan
         and  against  and  from  any and all  amounts  paid by such  person  in
         settlement  thereof,  with  the  Company's  approval,  or  paid by such
         person in  satisfaction  of any judgement in any such action,  suit, or
         proceeding  against  such person,  provided  such person shall give the
         Company  an  opportunity,  at the  Company's  expense,  to  handle  and
         defend the same before such person  undertakes  to handle and defend it
         on such  person's own behalf.  The foregoing  right of  indemnification
         shall not be  exclusive  and shall be  independent  of any other rights
         of  indemnification  to which such  persons may be  entitled  under the
         Company's  Certificate of Incorporation or By-laws,  by contract,  as a
         matter of law, or otherwise.

                  (f)      The  Plan  and all  awards  made  and  actions  taken
         thereunder  shall be governed by and construed in accordance  with laws
         of the State of Delaware.