AGREEMENT

         AGREEMENT,  dated this 15th day of July, 1997, by and between LAURANCE
W. GAY ("Executive") and GTECH HOLDINGS CORPORATION, a Delaware corporation (the
"Company").

                              W I T N E S S E T H:

         WHEREAS,   the  Company  wishes  to  assure  itself  of  continuity  of
management  in the event of any actual or  threatened  "Change in  Control"  (as
defined below) of the Company; and

         WHEREAS,  the Company and the  Executive  desire to embody in a written
agreement the terms and conditions  under which the Executive  shall be employed
by the Company in the event of any actual or threatened Change in Control of the
Company;

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants contained herein, the parties hereto hereby agree as follows:

         Section 1.  Definitions.

         1.1      Act.  "Act" means the Securities Exchange Act of 1934, as
amended to date.

         1.2.     Affiliate.  "Affiliate" means any corporation which is a
subsidiary of the Company within the definition of "subsidiary corporation"
under Section 424(f) of the Code.

         1.3.     Board.  "Board" means the Board of Directors of the Company.

         1.4.  Cause.  "Cause"  means (i) the  Executive's  engaging  in serious
misconduct that is injurious to the Company,  (ii) the  Executive's  having been
convicted of, or entered a plea of nolo contendere to a crime that constitutes a
felony,  (iii) the breach by the Executive of any written  covenant or agreement
with the Company not to disclose any  information  pertaining  to the Company or
not to compete or interfere with the Company,  or (iv) abuse of illegal drugs or
other controlled substances, or habitual intoxication.

         1.5.     Change In Control.  "Change in Control" means the happening
of any of the following:

                  (i)      the members of the Board at the beginning of any
                           consecutive twenty-four calendar month period (the
                           "Incumbent Directors") cease for any reason other
                           than due to death to constitute at least a majority
                           of the members of the Board, provided that any
                           director whose election, or nomination for election
                           by the Company's stockholders, was approved by a
                           vote of at least a majority of the members of the
                           Board then still in office who were members of the
                           Board at the beginning of such twenty-four calendar
                           month period, shall be deemed an Incumbent Director;

                  (ii)     any "person", including a "group" (as such terms
                           are used in Sections 13(d) and 14(d) of the Act,
                           but excluding the Company, any of its Affiliates,
                           or any employee benefit plan of the Company or any
                           of its Affiliates) is or becomes the "beneficial
                           owner" (as defined in Rule 13(d)(3) under the Act),
                           directly or indirectly, of securities of the
                           Company representing the greater of 30% or more of
                           the combined voting power of the Company's then
                           outstanding securities;

                  (iii)    the stockholders of the Company shall approve a
                           definitive agreement (1) for the merger or other
                           business combination of the Company with or into
                           another corporation if (A) a majority of the
                           directors of the surviving corporation were not
                           directors of the Company immediately prior to the
                           effective date of such merger or (B) the
                           stockholders of the Company immediately prior to
                           the effective date of such merger own less than 50%
                           of the combined voting power in the then
                           outstanding securities in such surviving
                           corporation or (2) for the sale or other
                           disposition of all or substantially all of the
                           assets of the Company; or

                  (iv)     the purchase of 30% or more of the Stock  pursuant to
                           any tender or  exchange  offer made by any  "person",
                           including  a  "group"  (as  such  terms  are  used in
                           Sections 13(d) and 14(d) of the Act),  other than the
                           Company,  any of  its  Affiliates,  or  any  employee
                           benefit plan of the Company or any of its Affiliates.

         1.6.     Code.  "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.

         1.7. Effective Date.  "Effective Date" means the date on which a Change
in Control occurs.  Anything in this Agreement to the contrary  notwithstanding,
if a Change in Control occurs and if the Executive's employment with the Company
is terminated prior to the date on which the Change in Control occurs, and if it
is reasonably  demonstrated by the Executive that such termination of employment
(i)  was at the  request  of a  third  party  who  has  taken  steps  reasonably
calculated to effect a Change in Control or (ii)  otherwise  arose in connection
with or in  anticipation  of a Change in Control,  then for all purposes of this
Agreement,  the "Effective  Date" shall mean the date  immediately  prior to the
date of such termination of employment.

         1.8      Executive Perquisite Program.  "Executive Perquisite
Program" means the Company's Executive Perquisite Program in effect on the date
hereof, as the same may be amended from time to time.

         1.9  Non-Qualified  Plans.  "Non-Qualified  Plans" means the  Company's
Supplemental  Retirement Plan in existence as of the date hereof,  and any other
unfunded,  non-qualified,   deferred  compensation,  incentive  compensation  or
retirement plan adopted by the Company subsequent to the date hereof, and/or any
successor plan or plans.

         1.10.  Option.  "Option"  means any option to purchase  shares of Stock
granted to  Executive  pursuant to the  Company's  1994 Stock  Option  Plan,  as
amended from time to time, the Company's 1997 Stock Option Plan, as amended from
time to time, or any other stock option plan adopted by the Company.

         1.11   Retirement   Plan.   "Retirement   Plan"  means  the   Company's
profit-sharing  and 401(k)  retirement  plan which is  qualified  under  Section
401(a) and 501(a) of the Code in  existence  as of the date hereof and any other
such plan  adopted  by the  Company  subsequent  to the date  hereof  and/or any
successor plan or plans.

         1.12.    Stock.  "Stock" means the Common Stock $.01 par value per
share of the Company.

         1.13.    Term of Employment.  "Term of Employment" means the period
commencing on the Effective Date and ending on the earliest of:

                  (a)      Executive's death or "Total Disability" (as defined
         below);

                  (b)      Termination of the Term of Employment pursuant to
         Section 4 below;

                  (c) Three (3) years from the Effective Date.

  Neither the expiration of the Term of Employment  nor the  termination of this
  Agreement will relieve the Company of the obligation to provide Executive,  in
  accordance with the terms hereof, the payments, benefits and coverage to which
  he has become entitled under this Agreement.

         1.14.    Total Disability.  "Total Disability" shall mean permanent
and total disability as determined under the Company's long term disability
program.

         Section 2. Employment.

         2.1.  Capacity and Situs of  Employment.  The Company  agrees to employ
Executive  throughout  the Term of  Employment,  during  which  (a)  Executive's
position  (including  reporting  relationships,  status,  offices  and  titles),
authority,  duties and responsibilities  shall be at least equal in all material
respects with the highest position,  authority, duties and responsibilities held
by,  exercised by and assigned to the Executive at any time during the six month
period immediately preceding the Change in Control, and (b) Executive's situs of
employment  will be at the Company's  executive  headquarters in West Greenwich,
Rhode Island or such other situs (the "Other  Situs") to which  Executive may be
assigned prior to the Effective Date (the Company's  executive  headquarters  or
the Other Situs, whichever is applicable to the Executive, is herein referred to
as the  "Applicable  Situs")  or such  other  location  within a fifty (50) mile
radius of the Applicable Situs (hereinafter  referred to as the "Area") to which
the Applicable Situs be moved.

         2.2. Services of the Executive.  Executive agrees,  subject to Sections
4.3 and 4.4  below,  to  remain  in the  Company's  employ  during  the  Term of
Employment, on the terms described in Section 2.1.

         Excluding  periods of  vacation  and sick leave to which  Executive  is
entitled,  Executive agrees to devote substantially all of his attention, energy
and time during normal business hours to the business and affairs of the Company
and,  to  the  extent  necessary,  to  discharge  responsibilities  assigned  to
Executive  hereunder,  to use his best efforts to perform such  responsibilities
faithfully  and  efficiently.  Executive may (a) serve on  corporate,  civic and
charitable  boards or  committees,  (b) deliver  lectures  and fulfill  speaking
engagements and (c) manage personal  investments,  so long as such activities do
not interfere  with the  performance  of  Executive's  responsibilities.  To the
extent that any such  activities  have been conducted by Executive  prior to the
Change in Control,  such prior conduct,  and any subsequent  conduct  similar in
nature and  scope,  shall not be deemed to  interfere  with the  performance  of
Executive's responsibilities.

         Section 3.  Compensation and Benefits During the Term of Employment.

         3.1.  Compensation.  The Company will pay as  compensation to Executive
for his services as an employee during the Term of Employment:

                  (a) base annual  salary at a rate equal to or greater than the
         rate of base salary in effect for  Executive  immediately  prior to the
         Effective Date; plus

                  (b) for the year in  which a Change  in  Control  occurs,  the
         greater of (i) a bonus under the annual  bonus  plan(s) in effect as of
         the  Change  in  Control,  calculated  on the  basis  of the  Company's
         performance up to the Change in Control, and payable in accordance with
         such  plan(s) or (ii) an amount  equal to the bonus  paid to  Executive
         under the  annual  bonus  plan(s)  in effect  for the year  immediately
         preceding  the year in which the Change in Control  occurs,  payable in
         accordance  with the terms of such  plan(s),  provided  that such bonus
         shall  be  equal  to 100% of the  Executive's  base  salary  in  effect
         immediately prior to the Effective Date.

                  (c) in years  subsequent  to the year in which  the  Change in
         Control  occurs,  an annual bonus which is equal to or greater than the
         annual bonus paid in the year preceding the year in which the Change in
         Control occurs,  but shall be equal to 100% of Executive's  base salary
         in effect  immediately  prior to the Effective Date,  payable not later
         than provided for in the plan(s) in effect for such preceding year.

         3.2. Benefits. In addition,  for his services as an employee during the
Term of Employment,  Executive will receive all life,  disability,  accident and
group  health  insurance  benefits,  retirement,   profit-sharing  and  deferred
compensation,  and all other  fringe  benefits  and  payments  under  additional
benefit plans including the Executive  Perquisite  Program,  all in an amount or
with a value at least equal to those  benefits  being provided by the Company to
the Executive immediately prior to the Effective Date, including but not limited
to the following:

                  (a)  Executive  will   participate   fully  in  the  Company's
         Retirement  Plan and  Non-Qualified  Plans with  benefit  accruals  and
         Company  contributions  for the  benefit  of  Executive  under all such
         plans, and all other material  provisions of such plans, being at least
         the same as immediately  prior to the Effective  Date, or Company shall
         pay to Executive  annual cash payments in advance,  each at least being
         equal  to  the  total  value  of  such  benefit  accruals  and  Company
         contributions  under such plans for the last fiscal year of the Company
         ending prior to the Effective Date;

                  (b) At no additional cost to Executive, Company shall continue
         to provide  coverage to  Executive,  together with his  dependents  and
         beneficiaries,  in all life insurance plans, accident and health plans,
         Section 125 plans,  and other welfare plans  maintained or sponsored by
         the  Company,  at a level and  subject  to terms  which are at least as
         favorable to Executive as the coverage  provided  immediately  prior to
         the  Effective  Date,  or the Company  shall pay to Executive  the full
         value thereof in cash annually in advance;

                  (c) Executive  will  participate  fully in additional  benefit
         plans  offered by the  Company to  executives  immediately  prior to or
         after the Effective Date; and

                  (d) Executive will receive fringe benefits and job perquisites
         (which  shall not  include any benefit  referred to  elsewhere  in this
         Section 3), including the Executive  Perquisite Program,  automobile in
         accordance  with the  Company's  Fleet Policy for Vice  Presidents  and
         Corporate  Officers as in effect as of the date hereof,  paid vacation,
         club memberships,  applicable class travel, tax and financial statement
         preparation assistance,  paid financial assistance,  executive physical
         examinations,  office,  office  furnishings  and  equipment and support
         staff, at least  equivalent to those provided to Executive  immediately
         prior to the  Effective  Date,  as well as  reimbursement,  upon proper
         accounting,  of  reasonable  expenses  and  disbursements  incurred  by
         Executive in the course of his duties.

         3.3. Funding of Deferred  Compensation  Benefits.  Contemporaneous with
the Change in Control,  all benefits accrued by Executive under the terms of any
of the Company's  Non-Qualified  Plans shall become fully vested and the Company
shall  immediately  contribute to a rabbi trust for the benefit of the Executive
the  full  amount  of all  such  accrued  benefits.  Not  less  frequently  than
quarterly,  the Company shall make additional  contributions  to the rabbi trust
equal to the  full  amount  of any  additional  benefits  accrued  by  Executive
pursuant to Section 3.2(a) hereof.

         3.4. Acceleration of Vesting of Options. The Company hereby agrees that
on or prior to the date of a Change in Control  any and all  options  awarded to
the Executive not  previously  exercisable  and vested shall become fully vested
and exercisable.  In addition, in the event the Company decides to terminate any
Options   previously  awarded  to  the  Executive  pursuant  to  the  applicable
provisions of any stock option plan adopted by the Company in connection  with a
corporate transaction (as that term is described in Section 424(a) of the Code),
the Company will give the Executive not less than fourteen days' notice prior to
any such  termination  and such  notice  shall  not be given  until  any and all
Options  previously  awarded to  Executive  shall have become  fully  vested and
exercisable.

         Section 4.  Termination of Employment

         4.1. Compensation Prior To Termination. During the year in which either
(i) the Executive's  employment is terminated  during the Term of Employment for
any reason,  or (ii) the  Executive  resigns  during the Term of  Employment  in
accordance  with Section 4.3(b) below,  notwithstanding  any other  provision of
this  Agreement,  the Company and the Executive  hereby agree that the Executive
shall have the right to receive base salary,  annual bonuses,  contributions  to
Retirement Plans and  Non-Qualified  Plans,  gross-up payments made to cover tax
liabilities (to the extent provided in such plans), and all other  compensation,
benefits  and  payments  earned or paid with  respect to the period prior to the
date of termination of employment, all such payments or contributions to be made
at the times provided for in such plans or in accordance  with Company policy as
in effect  immediately prior to the Effective Date, except as expressly provided
below. For purposes of this Section 4.1, the amount of the annual bonuses earned
and the amount of the  contributions to the Retirement  Plans and  Non-Qualified
Plans earned (i) shall be at least equal to the amounts paid to, or  contributed
on behalf of, the Executive for the year immediately preceding the year in which
the  termination  of the  Executive's  employment  occurs which amounts shall be
prorated based on the number of days in the year in which the termination of the
Executive's  employment  occurs  which  have  passed  prior  to the  date of the
termination of the Executive's employment, and (ii) shall be paid or contributed
on behalf of the Executive not later than 10 days after the date of  termination
of  employment.  Nothing  in  this  Section  4.1  shall  in any  way  alter  the
Executive's right to receive all the payments and rights and benefits  described
in Sections 4.2 and 4.3(a).

         4.2. (a)  Termination  other than for Cause.  In the event  Executive's
employment is terminated  by the Company  during the Term of Employment  for any
reason other than Cause, the Company will pay Executive,  as liquidated damages,
a lump sum cash payment, payable within ten (10) days of his termination,  equal
to two and  ninety-nine  hundredths  (2.99)  times  the  sum of (i)  Executive's
current  annual base salary in effect at the date of  termination  (including in
base  salary  for  this  purpose  any  elective  salary  reductions  made by the
Executive  and  contributed  by the  Company  on  his  behalf  to the  Company's
Retirement Plan, any  Non-Qualified  Plan, or a plan meeting the requirements of
Section  125 of the  Code),  plus (ii) the total cash  bonus received by the 
Executive  from the Company  during the most recent full fiscal year of the
Company  pursuant to the Company's annual bonus plan(s) but shall be equal to
100% of Executive's base salary in effect at the date of  termination,  plus
(iii) the maximum amount allowable under the Executive  Perquisite  Program
during  the  most  recent  calendar  year of the Company.

         (b)  Participation  in  Benefit  Plans.  In the event of a  termination
described in Section 4.2(a) above,  Executive,  together with his dependents and
beneficiaries,   will  become  fully  vested  in  and  continue   following  his
termination to  participate  fully in, at no additional  cost to Executive,  all
life  insurance  plans,  accident  and  health  plans and other  welfare  plans,
maintained or sponsored by the Company immediately prior to the termination,  at
the same level and subject to terms at least as  favorable  to  Executive  as in
effect immediately prior to termination (or the full value thereof in cash) from
the Company, until the earlier of (a) the Executive's eligibility for comparable
benefit  plans  with  another   employer  and  (b)  the  third   anniversary  of
termination. Executive will also become fully vested in the Retirement Plan, and
all Non-Qualified Plans, and within thirty (30) days of Executive's  termination
of  employment,  Company  shall  pay to  Executive  the sum of (i) all  benefits
accrued under the Non-Qualified Plans and (ii) an amount equal to 2.99 times the
average benefit accrued and/or Company contributions made to the Retirement Plan
and the Non-Qualified  Plans over the last three fiscal years. In addition,  the
Company shall provide Executive with  out-placement  service through a bona fide
out-placement organization acceptable to Executive that, at a minimum, agrees to
supply   Executive  with   out-placement   counseling,   a  private  office  and
administrative   support  including  telephone  service  until  such  time  that
Executive secures suitable employment, not to be limited by Section 1.13 hereof.

         4.3.     Resignation By Executive - Constructive Termination.

         (a) If Executive  resigns  during the Term of  Employment in accordance
with Section 4.3(b) below, his employment will be deemed to have been terminated
by the  Company  for  reasons  other  than  Cause (and he will be deemed to have
offered to continue to provide  services to the Company),  and,  notwithstanding
any provision  herein to the  contrary,  he will be entitled to all the payments
and rights and benefits  described in Sections 4.1 and 4.2, at the time provided
for therein.

         (b) Executive  may resign in accordance  with this Section 4.3 upon the
occurrence of any of the following events (in each case, "Good Reason"):

                  (i) any  reduction  of, or  failure to pay,  Executive's  base
         annual salary or annual bonus in breach of Section 3.1 above;

                  (ii) any  failure  by the  Company  to  provide  the  benefits
         required  by Section 3.2 above or to make any  contribution  to a rabbi
         trust which might be due in accordance with Section 3.3 above;

                  (iii)  assignment to Executive of any duties  inconsistent  in
         any  respect  with  his  position  (including  the  office  to which he
         reports,   status,   offices,   and  titles),   authority,   duties  or
         responsibilities  as  contemplated  by  Section  2.1 above or any other
         action by the Company which  results in a diminution of such  position,
         authority, duties or responsibilities;

                  (iv) as a result  of the  Change  in  Control  and a change in
         circumstances  thereafter significantly affecting Executive's position,
         including,  without  limitation,  a change in scope of the  business or
         other activities for which he was responsible  immediately prior to the
         Change in Control, he has been rendered  substantially  unable to carry
         out, or has been  substantially  hindered in the performance of, any of
         the authority,  duties or responsibilities  contemplated by Section 2.1
         above;

                  (v) the  failure of the  Company  after a Change in Control to
         comply with and satisfy Section 7.1 or 7.2 below;

                  (vi)  relocation  by the  Company of its  principal  executive
         offices,  or any event  that  causes  Executive  to have his  principal
         location of work changed, to any location outside the Area;

                  (vii) any  requirement  by the Company that  Executive  travel
         away from his  office in the course of his  duties  significantly  more
         than the number of  consecutive  days or aggregate days in any calendar
         year than was required of him prior to the Change in Control; or

                  (viii)  without  limiting  the  generality  or  effect  of the
         foregoing any material  breach of this  Agreement by the Company or any
         successor  thereto or  transferee  of  substantially  all of the assets
         thereof.

For purposes of this Agreement,  any good faith  determination  of "Good Reason"
made by the Executive shall be presumptively correct.

         (c) If Executive  resigns  during the Term of  Employment in accordance
with Section 4.3(b) above,  the Company shall have the right to request that the
Executive  agree to remain as an  employee of the  Company  during a  transition
period of up to three months (the "Transition  Period") and the Executive hereby
agrees that,  if requested by the Company,  he will remain as an employee of the
Company during the Transition Period.  During the Transition Period, the Company
will continue to pay the Executive the Executive's base salary, annual bonus and
all other compensation and benefits on the same basis as such items were paid to
the Executive prior to his resignation.

         4.4. Resignation by Executive.  If Executive resigns during the Term of
Employment  without Good Reason,  the Executive  shall have the right to receive
base salary,  annual bonuses,  contributions  to Retirement  Plans and all other
compensation  and benefits earned during the calendar year of his resignation up
to the date of his resignation.  For purposes of this Section 4.4, the amount of
the annual bonuses and the amount of the  contributions  to the Retirement  Plan
shall be at least equal to the amounts paid to, or contributed on behalf of, the
Executive for the year  immediately  preceding the year in which the resignation
of the Executive  occurs which amounts shall be prorated  based on the number of
days in the year in which such resignation occurs which have passed prior to the
date of such  resignation.  In addition all vested  Non-Qualified  Plan benefits
shall be paid within thirty (30) days of resignation.

         4.5.  Termination  for Cause.  If Executive is dismissed by the Company
for Cause,  he will not be entitled to the payments or benefits  provided  under
Section 4.2.

         4.6.  Dispute  Resolution.  All  disputes  between  the parties to this
Agreement  concerning the matters set forth herein shall be resolved exclusively
pursuant  to  the  dispute  resolution   procedures  of  this  Section  4.6.  In
furtherance  thereof,  Executive  or the  Company,  as the  case  may be,  shall
initiate  binding  arbitration  in Rhode Island before the American  Arbitration
Association  ("AAA") and under its rules by serving a notice to  arbitrate  upon
the other party hereto and AAA within 90 days of the  occurrence  of any dispute
hereunder that is unable to be resolved by negotiation between the parties.  The
parties shall bear their respective costs in any such dispute resolution, except
that with respect to any such action  initiated by the  Executive,  provided the
Executive initiates such action in good faith, the Company agrees (i) to pay the
costs and  expenses  (including  fees of counsel to the  Executive)  of any such
arbitration or judicial proceeding, and (ii) to pay interest to Executive on any
amounts  found to be due to Executive  hereunder  during any period of time that
such amounts are withheld pending arbitration and/or judicial proceedings.  Such
interest  will be at the base or prime  rate most  recently  announced  by Rhode
Island Hospital Trust National Bank (or its successor) prior to the commencement
of the  arbitration  or  litigation.  The Company and  Executive  agree that any
arbitration award shall be binding and may be enforced by any court of competent
jurisdiction.

         4.7.     Death or Total Disability of the Executive.

         (a) If Executive dies or suffers a Total Disability  during the Term of
Employment,  then this Agreement shall terminate and the Company, its successors
and  assigns  shall  be  relieved  and  discharged  of any and  all  obligations
whatsoever  to make further  payment to Executive  pursuant to the terms of this
Agreement after the date of death or Total Disability of Executive, except as to
base salary earned for services actually rendered and vacation pay accrued prior
to the date of death or Total Disability of Executive.

         (b) If  Executive  dies or  suffers  a  Total  Disability  following  a
termination of employment which entitled him to payments and benefits under this
Section  4 but  prior  to  receipt  of  all  such  payments  and  benefits,  his
beneficiary  (as  designated to the Company in writing) or, if none, his estate,
will be  entitled  to receive all unpaid  amounts  and  benefits  due under this
Agreement.

         4.8.  Enforcement of Rights.  Termination  of  Executive's  employment,
whether or not giving rise to payments  or benefits  under this  Section 4, will
not in any way prevent  Executive from enforcing  rights to payments or benefits
under Section 3 relating to periods during which he was employed.

         Section 5.  Certain Additional Payments by the Company.

         (a)  Anything in this  Agreement to the  contrary  notwithstanding  and
except as set forth below,  in the event it shall be determined that any payment
or distribution  by the Company to or for the benefit of the Executive  (whether
paid or payable or  distributed or  distributable  pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 5) (a "Payment")  would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the  Executive  with respect to such excise tax (such excise tax,  together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise  Tax"),  then the  Executive  shall be entitled to receive an additional
payment (a  "Gross-Up  Payment")  in an amount  such that  after  payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such  taxes),  including,  without  limitation,  any  income  taxes  (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up  Payment,  the Executive  retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed on the Payments.

         (b)  Subject to the  provisions  of Section  5(c),  all  determinations
  required  to be made  under  this  Section  5,  including  whether  and when a
  Gross-Up  Payment is required and the amount of such Gross-Up  Payment and the
  assumptions to be utilized in arriving at such determination, shall be made by
  Ernst &  Young  LLP or  such  other  nationally  recognized  certified  public
  accounting firm as may be designated by the Executive (the "Accounting  Firm")
  which shall provide detailed  supporting  calculations both to the Company and
  the  Executive  within 15  business  days of the  receipt  of notice  from the
  Executive that there has been a Payment,  or such earlier time as is requested
  by the Company. In the event that the Accounting Firm is serving as accountant
  or  auditor  for the  individual,  entity  or group  effecting  the  Change in
  Control, the Executive shall appoint another nationally  recognized accounting
  firm to make the  determinations  required  hereunder  (which  accounting firm
  shall then be  referred to as the  Accounting  Firm  hereunder).  All fees and
  expenses of the  Accounting  Firm shall be borne  solely by the  Company.  Any
  Gross-Up Payment,  as determined  pursuant to this Section 5, shall be paid by
  the Company to the Executive within five days of the receipt of the Accounting
  Firm's  determination.  Any  determination  by the  Accounting  Firm  shall be
  binding upon the Company and the Executive.  As a result of the uncertainty in
  the  application  of Section  280G and Section 4999 of the Code at the time of
  the initial  determination  by the Accounting Firm  hereunder,  it is possible
  that  Gross-Up  Payments  which will not have been made by the Company  should
  have been made ("Underpayment"),  consistent with the calculations required to
  be made  hereunder.  In the  event  that the  Company  exhausts  its  remedies
  pursuant to Section 5(c) and the  Executive  thereafter  is required to make a
  payment of any Excise Tax, the Accounting  Firm shall  determine the amount of
  the Underpayment that has occurred and any such Underpayment shall be promptly
  paid by the Company to or for the benefit of the Executive.

         (c) The  Executive  shall notify the Company in writing of any claim by
the Internal  Revenue Service that, if successful,  would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable  but no later than ten business days after the Executive is informed
in  writing of such claim and shall  apprise  the  Company of the nature of such
claim and the date on which such claim is  requested to be paid.  The  Executive
shall not pay such claim prior to the expiration of the 30-day period  following
the date on which he gives such notice to the Company  (or such  shorter  period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:

                  (i)      give the Company any information
         reasonably requested by the Company relating to such claim,

                  (ii) take such action in connection with contesting such claim
         as the Company shall  reasonably  request in writing from time to time,
         including,  without  limitation,  accepting legal  representation  with
         respect  to  such  claim  by an  attorney  reasonably  selected  by the
         Company,

                  (iii)  cooperate  with  the  Company  in good  faith  in order
         effectively to contest such claim, and

                  (iv)     permit the Company to participate in any
         proceedings relating to such claim;

provided,  however,  that the Company  shall bear and pay directly all costs and
expenses  (including  additional  interest and penalties) incurred in connection
with such contest and shall  indemnify  and hold the Executive  harmless,  on an
after-tax  basis,  for any  Excise  Tax or income tax  (including  interest  and
penalties with respect thereto) imposed as a result of such  representation  and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 5(c), the Company shall control all proceedings taken in connection
with such  contest  and,  at its sole  option,  may  pursue or forgo any and all
administrative  appeals,  proceedings,  hearings and conferences with the taxing
authority  in respect of such claim and may, at its sole option,  either  direct
the  Executive  to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a  determination  before  any  administrative  tribunal,  in a court of  initial
jurisdiction  and  in  one or  more  appellate  courts,  as  the  Company  shall
determine;  provided,  however, that if the Company directs the Executive to pay
such claim and sue for a refund,  the Company  shall  advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including  interest or penalties with respect  thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further  provided that any extension of the statute of limitations  relating
to payment of taxes for the taxable year of the Executive  with respect to which
such  contested  amount is claimed to be due is limited solely to such contested
amount.  Furthermore,  the Company's  control of the contest shall be limited to
issues with respect to which a Gross-Up  Payment would be payable  hereunder and
the  Executive  shall be entitled to settle or contest,  as the case may be, any
other  issue  raised  by  the  Internal  Revenue  Service  or any  other  taxing
authority.

         (d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 5(c), the Executive  becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 5(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable  thereto).  If, after the receipt by the Executive of an amount
advanced by the Company  pursuant to Section 5(c), a determination  is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company  does not notify the  Executive  in writing of its intent to contest
such  denial  of  refund  prior  to  the   expiration  of  30  days  after  such
determinative  then such advance  shall be forgiven and shall not be required to
be repaid and the amount of such advance  shall offset,  to the extent  thereof,
the amount of Gross-Up Payment required to be paid.

         Section 6.  Payment of Fees, Costs and Expenses.

         It is the intent of the Company that the  Executive  not be required to
incur the  expenses  associated  with the  enforcement  of his rights under this
Agreement by litigation or other legal action or arbitration  proceeding because
the cost and expense  thereof  would  substantially  detract  from the  benefits
intended to be extended to the Executive  hereunder.  Accordingly,  if Executive
determines  in good faith that the  Company has failed to comply with any of its
obligations under this Agreement or if the Company or any other person takes any
action to declare  this  Agreement  void or  unenforceable,  or  institutes  any
litigation or arbitration  proceeding  designed to deny, or to recover from, the
Executive the benefits  intended to be provided to the Executive under Section 6
hereof, the Company will promptly, upon request of the Executive in the event of
the likelihood of a Change in Control or upon a Change in Control,  use its best
efforts  to secure an  irrevocable  standby  letter of credit  (the  "Letter  of
Credit"), issued by Rhode Island Hospital Trust National Bank or another bank of
comparable  or  greater  size (the  "Bank")  for the  benefit  of the  Executive
providing  that the fees and expenses of counsel  selected  from time to time by
the  Executive  pursuant to this  Section 6 or in  proceedings  contemplated  by
Section  4.6  shall be  paid,  or  reimbursed  to the  Executive  if paid by the
Executive,  on a regular,  periodic basis upon  presentation by the Executive to
the Bank of a statement or  statements  prepared by such  counsel in  accordance
with its  customary  practices.  The Company  shall pay all amounts and take all
action  necessary to maintain the Letter of Credit during the Term of Employment
and for one (1) year thereafter and if,  notwithstanding  the Company's complete
discharge of such obligations,  such Letter of Credit shall be terminated or not
renewed,  the  Company  shall  use its best  efforts  to  obtain  a  replacement
irrevocable  letter of credit  drawn  upon a  commercial  bank  selected  by the
Company and reasonably acceptable to the Executive,  upon substantially the same
terms and  conditions  as  contained  in the  Letter of Credit,  or any  similar
arrangement  which,  in any case,  assures the  Executive  the  benefits of this
Agreement  without  incurring  any cost or expense for  enforcement  against the
Company or the defense thereof.

         Section 7.  Merger or Acquisition.

         7.1. Assumption of Obligations. If the Company is at any time before or
after a Change in Control merged,  consolidated or reorganized  into or with any
other  corporation or other entity  (whether or not the Company is the surviving
entity), or if substantially all of the assets of the Company are transferred to
another  corporation  or other  entity,  the entity  arising  from such  merger,
consolidation  or  reorganization,  or the  acquirer of such  assets,  shall (by
agreement in form and substance  satisfactory to Executive) expressly assume the
obligations of Company under this Agreement.

         7.2.  Executive's  Rights  to  Benefits.  In the  event of any  merger,
consolidation,  reorganization  or  sale  of  assets  described  above,  nothing
contained in this  Agreement  will detract from or otherwise  limit  Executive's
right to or privilege of  participation  in any stock option or purchase plan or
restricted  stock plan or any bonus,  profit sharing,  savings,  pension,  group
insurance,  hospitalization  or other  incentive or benefit plan or  arrangement
which may be or become  applicable to executives  of the  corporation  resulting
from such merger or consolidation  or the corporation,  acquiring such assets of
the Company.

         7.3.   References.   In  the  event  of  any   merger,   consolidation,
reorganization or transfer of assets described above,  references to the Company
in this Agreement  shall,  unless the context suggests  otherwise,  be deemed to
include the entity  resulting from such merger or  consolidation or the acquirer
of such assets of the Company.

         Section 8.  Change in Control Following Certain Circumstances.

         Notwithstanding  any provision herein to the contrary,  should a Change
in Control occur subsequent to Executive's death, Total Disability or retirement
from the Company,  the  remainder  of any  benefits  owed under the terms of any
stock  plans  or  other  non-qualified  deferred  compensation  plan,  including
interest, shall be paid in full on the date of the Change in Control.

         Section 9.  Termination of this Agreement.

         Either the Company or Executive  may, by giving 60 days written  notice
  to the other party, terminate this Agreement as of the third or any subsequent
  annual anniversary of the occurrence of a Change in Control.

         Section 10.  Withholding of Taxes.

         All payments  required to be made by the Company hereunder to Executive
or his dependents, beneficiaries or estate will be subject to the withholding on
such amounts relating to tax and/or other payroll  deductions as may be required
by law.

         Section 11.  Amendment.

         No  amendment,  change or  modification  of this  Agreement may be made
except in a writing, signed by or on behalf of both parties.

         Section 12.  Miscellaneous.

         12.1. Binding Effect. The provisions of this Agreement shall be binding
upon and shall inure to the benefit of Executive, his executors, administrators,
legal  representatives  and  assigns,  and the  Company and its  successors  and
assigns.

         12.2.  Governing Law. The validity,  interpretation  and effect of this
Agreement  shall be governed by and construed in accordance with the laws of the
State of Rhode Island.

         12.3.    Severability.  The invalidity or enforceability of any
provision of this Agreement shall not affect the validity of any other
provision.

         12.4. No Set-Off. There shall be no right of setoff or counterclaim, in
respect of any claim, debt or obligation, against any payments to Executive, his
dependents,  beneficiaries or estate provided for in this Agreement, and nothing
in this  Agreement  shall  relieve the Company of its  obligations  to Executive
under any other  agreement,  plan,  contract or arrangement.  Subject to Section
12.6  hereof,  no right,  benefit  or  interest  hereunder  shall be  subject to
anticipation,   alienation,  sale,  assignment,   encumbrance,  charge,  pledge,
hypothecation  or set-off in respect  of any claim,  debt or  obligation,  or to
execution,  attachment,  levy or similar  process or  assignment by operation of
law. Any attempt,  voluntary or involuntary,  to effect any action  specified in
the immediately  preceding  sentence shall, to the full extent permitted by law,
be null, void and of no effect.  In no event shall the Executive be obligated to
seek  other  employment  or take any other  action by way of  mitigation  of the
amounts  payable to the Executive  under any of the provisions of this Agreement
and, except as otherwise  provided in Section 4.2(b) hereof,  such amounts shall
not  be  reduced  whether  or  not  the  Executive   obtains  other  employment.
Notwithstanding  anything to the  contrary in this  Agreement,  Executive  shall
forfeit all future  payments and benefits  hereunder in the event that Executive
is determined, pursuant to procedures established in Section 4.6 hereof, to have
materially  breached any written covenant or agreement between the Executive and
the Company prohibiting the disclosure of confidential information pertaining to
the Company or respecting competition or interference with the Company, provided
that the Company  shall have given the Executive at least thirty (30) days prior
written  notice of such breach and such breach  shall not have been cured by the
end of such notice period.

         12.5.  Remedies.  The Company and Executive agree that,  because of the
unique nature of this  Agreement,  failure of either party to carry out or abide
by  the  obligations  under  this  Agreement  could  cause  irreparable  injury;
accordingly, the parties agree that, in addition to any other remedies available
to either  party,  any such  failure by either party to perform or abide by this
Agreement shall be subject to appropriate equitable remedies, including specific
performance and injunctive relief.

         12.6.  Assignability.  No right or interest to or in any payments shall
be assignable by the Executive; provided, however, that this provision shall not
preclude him from  designating one or more  beneficiaries  to receive any amount
that  may  be  payable  after  his  death  and  shall  not  preclude  the  legal
representative of his estate from assigning any right hereunder to the person or
persons  entitled  thereto under his will or, in the case of  intestacy,  to the
person or persons entitled thereto under the laws of intestacy applicable to his
estate.  The  term  "beneficiaries"  as  used  in this  Agreement  shall  mean a
beneficiary or beneficiaries so designated to receive any such amount,  or if no
beneficiary has been so designated,  the legal representative of the Executive's
estate.

         12.7.  Counterparts;  Headings;  References.  This  Change  in  Control
Agreement  may be executed in two or more  counterparts,  each of which shall be
deemed an original,  but all of which together shall constitute one and the same
instrument.  The  headings of the  sections of this  Agreement  are inserted for
convenience  only and shall not  constitute  a part  hereof.  References  to the
masculine or feminine  gender (or to the singular or plural number) herein shall
mean the other such gender (or number) as appropriate.

         12.8. Entire Agreement.  This instrument  contains the entire agreement
of the parties  pertaining to the subject matter contained herein and supersedes
and is in lieu  of any and all  other  arrangements  pertaining  to the  subject
matter contained herein having effect as of the effective date.

         12.9.  Notices.  All notices  given  hereunder  shall be in writing and
shall be delivered  personally or sent by prepaid  registered or certified mail,
return receipt  requested,  addressed as follows or to such other address as may
be provided by any party hereto to the other:

If to the Company:                          GTECH Holdings Corporation
                                            55 Technology Way
                                            West Greenwich, RI  02817
                                            Attention:

If to the Executive:                        Laurance W. Gay
                                            143 East Canaan Road
                                            East Canaan, CT  06024

         All  notices  shall be deemed to be given on the date  received  at the
address of the addressee, or if delivered personally, on the date delivered.

         IN WITNESS  WHEREOF,  the Company and  Executive  have each caused this
Agreement to be duly executed and delivered as of the date set forth above.


ATTEST:                               GTECH HOLDINGS CORPORATION


/s/ Kathleen J. Carson                By:/s/ Stephen A. Davidson

                                     Title: Senior Vice President


WITNESS:


/s/ Kathleen J. Carson               /s/ Laurance W. Gay
                                     Laurance W. Gay