<PAGE>
 
                                                                   EXHIBIT 10.24

                           THE RIBEIRO CORPORATION

[LOGO OF        This Lease made and entered into this 23RD day of JANUARY, 
  THE                                                 ----        -------
RIBEIRO         1997, by and between, JOHNNY RIBEIRO, hereinafter called 
CORPORATION]      --                  --------------     
                "LESSOR", and SILICON GAMING, hereinafter called "LESSEE".
                              --------------                    

                                  WITNESSETH:

DEMISED         Lessor hereby leases, demises and lets unto Lessee, and Lessee
PREMISES        hereby leases, hires and takes from Lessor those certain
                premises hereinafter called the "Demised Premises," located in
                that certain building (the "Building"), described as follows:

                THAT CERTAIN 600 SQUARE FEET OF OFFICE SPACE AND 1,028 SQUARE
                --------------------------------------------------------------
                FEET OF WAREHOUSE SPACE LOCATED AT 5401 LONGLEY LANE, RENO,
                --------------------------------------------------------------
                NEVADA 89511 KNOWN AS UNITS #44 & 56 AS OUTLINED IN RED ON THE
                --------------------------------------------------------------
                ATTACHED PLAT MAP MARKED EXHIBIT "A".
                --------------------------------------------------------------

                This lease is made upon the following terms, covenants, and
                conditions to which the parties hereby agree:

TERM            1. The term of this Lease shall commence WITHIN 10 DAYS OF 
                                                         ---------------------
                SIGNED LEASE BEING RECEIVED IN RENO, and shall continue for a
                -----------------------------------
                term UNTIL 8-31-97 from and after said date of commencement. If
                     -------------
                the Demised Premises require improvements to be constructed by
                the Lessor prior to occupancy of the said premises by the
                Lessee, said improvements shall be set out in "Exhibit A"
                attached hereto, consisting of plans, specifications and
                descriptions of the work to be performed prior to said date of
                occupancy, together with the specification as to the cost of
                such improvements and the party to bear such cost of
                improvement. If, despite Lessor's best efforts, said premises,
                as improved in accordance with the agreement of the parties, is
                not delivered by Lessor on or before N/A, 19N/A, this Lease
                                                     ---    ---
                shall have no further force or effect and each party shall be
                relieved of all obligations, each to the other, provided that
                said date will be extended for a period equal to the time
                construction has been delayed due to causes beyond the
                reasonable control of Lessor.

RENTAL         2. (a)    Lessee agrees to pay a Base Monthly Rental (plus any
                excise, privilege or sales taxes or any tax levied on the
                rentals or the receipt thereof, except Lessor's income tax) on
                the first day of each calendar month throughout the demised term
                without offset or deduction of any kind. Rental is to be paid in
                lawful money of the United States of America, which shall be
                legal tender at the time of payment of rents, as follows: ONE
                                                                          -----
                THOUSAND THREE HUNDRED FIFTY DOLLARS AND NO/100'S ($1,350.00)
                ---------------------------------------------------------------
                PER MONTH
                ---------------------------------------------------------------

                (b) Lessee understands that the issuance of a check or draft
                without. funds or with intent to defraud is a criminal offense
                punishable by imprisonment or by a fine or both fine and
                imprisonment.

                (c) In, the event the term of this Lease commences other than on
                the first day of a calendar month, or if the termination date is
                not the last day of a month, a pro-rated monthly installment
                shall be paid for the fractional month during which this Lease
                commences and/or terminates. Payment of rent shall be made by
                Lessee to Lessor at such addresses as shall from time to time be
                designated by Lessor to Lessee in writing.

                (d) If any payment of Base Monthly Rental is not received by
                Lessor by the tenth (10th) day of the calendar month in which it
                is due, then that Base Monthly Rental payment shall be increased
                by five percent (5%). Accordingly, if received after the tenth
                (10th) of the month, Base Monthly Rental shall be: ONE THOUSAND
                                                                  -------------
                FOUR HUNDRED SEVENTEEN DOLLARS AND 50/100'S ($1,417.50)
                ---------------------------------------------------------------

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                                                 INITIALS

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                Nothing in this Lease shall be construed to permit the payment
                of rent after the date on which it is due. The parties hereby
                agree that such late charge represents a fair and reasonable
                estimate of the costs Lessor will incur by reason of late
                payment by Lessee. Acceptance of such late charge by Lessor
                shall in no event constitute a waiver of Lessee's default with
                respect to such overdue amount, nor excuse or cure any default
                by Lessee under this Lease, nor prevent Lessor from excising any
                of the other rights and remedies granted hereunder.

                (e) "Rent", "Rental", "rent" or "rental" includes the Base
                Monthly Rental and other sums as may be due from Lessee pursuant
                to any of the provisions of this Lease, and any other sums, or
                becoming payable to Lessor under this Lease.

                (f) In the event a check comes back for non-sufficient funds, a
                services fee of $25.00 will be assessed to the Lessee.

DEPOSIT         3. For and as additional consideration for the making of this
                Lease, Lessee shall pay to Lessor, upon execution of the Lease,
                the sum of: ONE THOUSAND THREE HUNDRED FIFTY DOLLARS AND
                            ---------------------------------------------------
                NO/100'S ($1,350.00), as a security deposit to insure Lessee's
                --------------------                                          
                faithful performance of the terms, conditions, covenants, and
                agreements of this Lease. The security deposit may not be
                applied against rental payments by the Lessee. If the Lessee
                fully complies with all the terms, conditions, covenants and
                agreements of the Lease, then within thirty (30) days after the
                expiration of the Lease term, and cleanup completed in
                conjunction with Paragraph 33, the security deposit without
                interest shall be refunded to Lessee (or, at Lessor's option at
                the last permitted assignee of Lessee's interests hereunder)
                less the reasonable value of damages suffered by the Lessor,
                including but not limited to rental delinquencies, costs of
                repairs, cleaning, lock and key change charges, and other
                obligations of Lessee to Lessor.

TAXES,          4. (a) As additional rental, Lessee agrees to pay to Lessor in
INSURANCE &     each year of the term of this lease a pro-rated amount equal
ASSESSMENTS     to any rate increase of liability and casualty insurance
                required by the insurance company upon the building and Demised
                Premises in addition to an amount equal to any increases in
                taxes, general or special assessments, improvements or
                retrofitting expenses assessed by any federal, state or
                municipal authority for the real property of which the Building
                and Demised Premises are a part of. The pro-ration of the
                insurance, taxes and assessments set forth above shall be based
                upon the percentage of the total floor space of the Building and
                Demised Premises, whether occupied or not, to the amount of
                floor space being leased by Lessee. Such additional rental shall
                be paid as soon as the amount thereof shall have been determined
                and upon written demand therefore by Lessor to Lessee, with the
                next succeeding installment of rental. Such additional rental
                shall be pro-rated for the first and last years of the demised
                term to reflect periods during either or both of said years not
                included within the demised term.

                (b) Lessee agrees to pay or cause to be paid, before
                delinquency, any and all taxes levied or assessed and which
                become payable during the term hereof upon all equipment,
                furniture, fixtures and other personal property located in the
                Demised Premises, except that which may be owned by Lessor.

PURPOSE         5.  Lessee agrees to use and occupy the Demised Premises during
                the term of this Lease for the purpose of: MANUFACTURING &
                                                           --------------------
                OFFICE and for no other purpose whatsoever without the written
                ------      
                consent of Lessor, Lessee shall not use, or permit the Demised
                Premises, or any part thereof, to be used, for any purpose or
                purposes other than the purpose for which said premises are
                hereby leased; and no use shall be made of the Demised Premises,
                or acts done, which will increase the rate of insurance upon the
                Building in which said premises may be located over the standard
                rate of insurance prevailing in the area in which said premises


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                                                 INITIALS

                                       2
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                 are located, or cause a cancellation of any: part thereof, or
                 make it impossible for Lessor to obtain an insurance policy
                 covering the Building or any part thereof. If the rate of any
                 insurance carried by Lessor is increased as a result of
                 Lessee's use, Lessee shall pay to Lessor the increase within
                 ten (10) days after Lessor delivers to Lessee a certified
                 statement from Lessor's insurance carrier stating that the rate
                 of increase was caused solely by an activity of Lessee on the
                 premises as permitted in this Lease. Any other provision hereof
                 to the contrary notwithstanding, Lessee shall not do or permit
                 anything to be done in or about the premises which will in any
                 way obstruct or interfere with the rights of other Lessees or
                 occupants of the Building or injure or annoy them or use or
                 allow the premises to be used for any improper, immoral,
                 unlawful or objectionable purpose, nor shall Lessee cause,
                 maintain or permit any nuisance in, on or about the premises.
                 Lessee will not commit or suffer to be committed any waste in
                 or upon the premises .

ALTERATIONS 6.   (a) LESSEE SHALL NOT, WITHOUT LESSOR'S PRIOR WRITTEN
AND ADDITIONS    CONSENT, MAKE ANY ALTERATIONS, ADDITIONS OR UTILITY
                 INSTALLATIONS IN, ON, OR ABOUT THE DEMISED PREMISES. As used in
                 Paragraph 6(a), the term "utility installations" shall include
                 ducting, power panels, florescent fixtures, space heaters,
                 conduit and wiring. As a condition to giving such consent,
                 Lessor may require that Lessee agree to remove any such
                 alterations, additions, improvements or utility installations
                 at the expiration of the demised term and to restore the
                 Demised Premises to their prior condition. As a further
                 condition to giving such consent, Lessor may require Lessee to
                 provide Lessor, at Lessee's sole cost and expense, a lien and
                 completion bond in an amount equal to one and one half (1 1/2)
                 times the estimated cost of such improvements, to insure Lessor
                 against any liability for mechanics' and material men's liens
                 and to insure completion of the work.

                 (b) Unless Lessor requires their removal, as set forth in
                 Paragraph 6(a), all alterations, additions, improvements and
                 utility installments (whether or not such utility installations
                 constitute trade fixtures of Lessee), which may be made on the
                 Demised Premises, shall at the expiration or earlier
                 termination of the Lease become the property of the Lessor and
                 remain upon and be surrendered with the Demised Premises.
                 Notwithstanding the provisions of this Paragraph 6(b), personal
                 property, business and trade fixtures, cabinetwork, furniture,
                 movable partitions, machinery and equipment, other than that
                 which is affixed to the Demised Premises so that it cannot be
                 removed without material damage to the Demised Premises, shall
                 remain the property of Lessee and may be removed by Lessee
                 subject to the provisions of Paragraph 32, at any time during
                 the term of this Lease when Lessee is not in default hereunder.

                 (c) If space is equipped with air conditioning and heating
                 system, Lessor has designed air conditioning and heating
                 systems for standard office occupancy only. Such systems are
                 NOT designed for excessive traffic, exposure to outside
                 temperatures, excessive equipment, excessive personnel, nor
                 computer room environment. Upgrading of air conditioning and
                 heating Systems can be done at Lessee's expense.

GLASS AND       7. Lessee shall be responsible for all doors and glass
DOORS           damages by wind, vandalism, etc., on the Demised Premises, and
                Lessee shall forthwith replace or repair same at Lessee's sole
                expense.

ABANDONMENT     8. Lessee agrees not to vacate or abandon the Demised Premises
                at any time during the demised term. Should Lessee vacate or
                abandon the Demised Premises or be dispossessed by process of
                law or otherwise, such abandonment, vacation or dispossession
                shall be a default hereunder. Lessee agrees that any property
                not claimed within thirty (30) days after the abandonment of the
                Demised Premises by the Lessee, or after the expiration or
                earlier termination of, this Lease, becomes the property of the

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                                                 INITIALS

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                Lessor and shall be sold by the Lessor and the Lessor is to
                retain the proceeds derived therefrom as reimbursement for costs
                related to storing said property, and not as a penalty.

LESSOR'S        9. If during the term of this Lease, Lessor shall convey its
CONVEYANCE      interest in the Demised Premises, then from and after the
                effective date of the conveyance, Lessor shall be released and
                discharged from any and all obligations under this Lease except
                those already accrued.

REPAIRS         10. LESSEE, AT LESSEE'S SOLE EXPENSE, SHALL REPAIR AND MAINTAIN
                THE DEMISED PREMISES and every part thereof, including but not
                limited to all glazing, skylights, and signs in good, safe and
                sanitary condition, except those portions which Lessor agrees to
                maintain in the Paragraph 10. Lessor shall, at Lessor's expense,
                repair and maintain only the heating and air conditioning
                equipment and the exterior walls, exterior roof and cement
                bedded or sub surface non-accessible plumbing serving the
                Demised Premises, sidewalks, driveways, landscaping and parking
                lots, except that Lessee shall reimburse Lessor for any costs
                incurred by Lessor in repair and maintenance of damage caused by
                the intentional or negligent act of Lessee, its officers,
                agents, partners, employees, tradesmen or customers. Lessor
                shall not be liable to Lessee or any other party whatsoever for
                any damage or injury caused by Lessor's failure to keep or
                maintain said heating and air conditioning equipment, exterior
                walls, exterior roof, cement-embedded or sub-surface, non-
                accessible plumbing, landscaping, sidewalks, driveways, and
                parking lots unless Lessee has given Lessor written notice of
                the need to repair said portions of the Demised Premises and
                Lessor has failed to make said repairs within a reasonable time
                after receiving written notice. By entry hereunder, Lessee
                accepts the Demised Premises as being in good and sanitary
                order, condition and repair. It is understood and agreed that
                Lessor has no obligation to alter, remodel, improve, repair,
                decorate, or paint the Demised Premises or any part thereof,
                except as specifically herein set forth, and no representation's
                respecting the condition of the Demised Premises have been made
                by Lessor to Lessee, except as specifically herein set forth.

LAWS AND        11. (a) Lessee at its own cost and expense shall comply with
REGULATIONS     all laws, rules, and orders of all Federal, State and Municipal
                Governments, or departments, which may be applicable to the
                Demised Premises.

                (b) Lessee shall faithfully observe and comply with the rules
                and regulations adopted by Lessor from time to time and all
                modifications of and additions thereto from time to time put
                into effect by Lessor. Lessor shall not be responsible to Lessee
                for the nonperformance by any other Lessee or occupant of the
                Building of any of said rules and regulations.

INDEMNIFI-      12. Lessor shall not be liable to Lessee, its officers,
CATION          agents, employees, customers, invitees or third parties for any
                loss or damage to property, including goods, wares and
                merchandise, or for any injury or death to persons, in, on, or
                about the Demised Premises. Lessee agrees to indemnify and hold
                Lessor harmless of and from any and all costs, expenses,
                claims, demands, obligations, and liabilities, cause or causes
                or action by reason of or in connection with the condition of,
                state of, repair, or use of the Building, common areas, Demised
                Premises or appurtenant thereto including all adjacent
                sidewalks, alleys, and parking lots.

SIGNS AND       13. Lessee shall not place or permit to be placed any
AUCTIONS        advertising, sign, marquee, awning, decoration, or other
                attachment to the common areas, or in or on the Building or the
                real property on which the Building is situated or on the roof,
                front, windows, doors, or exterior walls of the Demised Premises
                without the prior written consent of Lessor. Lessor may without
                liability, enter upon the Demised Premises or elsewhere and
                remove any such advertising, sign, marquee, awning, decoration
                or attachment affixed in violation of the Paragraph 13, all at


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                                                 INITIALS

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                Lessee's expense. Lessee shall not conduct any auction in the
                Demised Premises, the Building, or on any portion of the real
                property on which the Building and Demised Premises are
                situated, without: Lessor's consent. ANY SIGN ON ANY BUILDING
                MUST BE APPROVED BY LESSOR IN WRITING.

UTILITIES       14. a) Lessee from the time it first enters the Demised Premises
                for the purpose of setting fixtures, or from the commencement of
                the term of this lease, whichever date shall first occur, and
                throughout the term of this lease shall be responsible for and
                shall pay prior to delinquency for all heat, light, power,
                telephone service and all other utilities and services supplied
                to or consumed in or on the demised premises, whether occupied
                or not, except water, sewer and gas charges, unless separately
                metered.

                b)  LESSOR shall not be held responsible for any interruption in
                utilities whatsoever.

ENTRY BY        15. Lessee shall permit Lessor and its agents to enter the
LESSOR          Demised Premises at all reasonable times for any of the
                following purposes: To inspect same; to show said premises to
                prospective purchasers; to maintain the Building; to make such
                repairs to the Demised Premises as Lessor is obligated or elects
                to make; to make repairs, alterations, additions or utility
                installations to any other portion of the Building; to post
                notices of non responsibility for alterations, additions,
                repairs or any utility installations; for the purpose of placing
                upon the property in which said premises are located any
                ordinary "for sale" sign. Lessee shall permit Lessor within
                sixty (60) days prior to the expiration of this Lease to place
                upon the Demised Premises ordinary "for lease" signs, and to
                show said premises to prospective Lessees during reasonable
                business hours.

PARTIAL AND     16. Lessor shall carry insurance on the Demised Premises
TOTAL           under a standard form of fire and extended coverage policy and
DESTRUCTION     in the event of partial destruction of the Demised Premises
                during the term of this Lease from any cause insured under said
                policy, Lessor shall forthwith repair the same, provided such
                repairs can be made within ninety (90) days from date of such
                destruction, under the then applicable laws and regulations of
                Federal, State, County and Municipal Authorities and in light of
                the extent of such damage and the then condition of the labor
                market and availability of materials and supplies, but such
                partial destruction shall in no way annul or void this Lease,
                except that Lessee shall be entitled to a proportionate
                reduction of rent while such repairs are being made, such
                proportionate reduction to be based upon the extent to which the
                making of such repairs shall interfere with the business carried
                on by Lessee in the Demised Premises. In the event that the
                Building is destroyed to the extent of not less than fifty
                percent (50%) of the replacement cost of the Building, Lessor
                may elect to terminate this Lease, whether the Demised Premises
                be injured or not. A total destruction of the Building shall
                automatically terminate this Lease. Anything in this Paragraph
                16 to the contrary, if at the time of any such damage there is
                less than two (2) months term remaining on this Lease, than this
                Lease may, at the option of Lessor, be canceled by notice in
                writing to Lessee within ten (10) days from the date of such
                damage.

ASSIGNMENT      17. LESSEE SHALL NOT ASSIGN THIS LEASE OR ANY INTEREST
AND SUBLETTING  HEREIN, nor lease or sublet the Demised Premises, or any part
                thereof, or any right or privilege appurtenant thereto, nor
                permit the occupancy or use of any part thereof by any other
                person, WITHOUT THE WRITTEN CONSENT OF LESSOR FIRST HAND AND
                OBTAINED, and a consent td one assignment, subletting, occupancy
                or use, shall not be construed as a consent to any subsequent
                assignment, subletting, occupancy or use. The Lessor may refuse
                its consent without giving any reason whatsoever, and such
                refusal shall nevertheless be binding on Lessee.

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                                                 INITIALS

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DEFAULT         18. If default shall be made in the payment of rent or any
GROUNDS         installment thereof or in the payment of any other amount
                required to be paid by Lessee under this Lease, or any other
                agreement between Lessor and Lessee, or if in default shall be
                made in the performance of any of the other covenants, terms,
                conditions, or agreements which Lessee is required to observe
                and perform hereunder, or if the interest of Lessee in its
                assets and/or this Lease shall be levied on or seized under
                execution or other legal process, or if any petition shall be
                filed by or against Lessee to declare Lessee bankrupt or to
                delay, reduce or modify Lessee's debts or obligations or if any
                petition shall be filed or other action taken to reorganize or
                modify Lessee's capital structure, or if Lessee be declared
                insolvent according to law, or if any assignment of Lessee's
                property shall be made for the benefit of creditors, or if a
                receiver or trustee is appointed for Lessee or its property, or
                if Lessee shall abandon or vacate the Demised Premises during
                the term of this Lease, and thereupon at its option may, without
                notice or demand of any kind to Lessee or any other person, have
                any one or more of the remedies specified in Paragraph 19, in
                addition to all other rights and remedies provided by law or in
                equity.

DEFAULT         19. (a) Lessor may re-enter the Demised Premises with or
REMEDIES        without the process of law and take possession of the same and
                of all equipment and fixtures of Lessee therein and expel or
                remove Lessee and all other parties occupying the Demised
                Premises, using such force as may be reasonably necessary to do
                so, without being liable to any prosecution for such re-entry or
                for the use of such force and without terminating this Lease, at
                any time and from time to time to re-let the Demised Premises or
                any part thereof for the account of Lessee, for such term, upon
                such conditions and at such rental as Lessor may deem proper.
                In such event Lessor may receive and collect rent from such
                re-letting and apply it against any amounts due from Lessee
                hereunder (including without limitation such expenses as Lessor
                may have incurred in recovering possession of the Demised
                Premises, placing same in good order and condition, altering or
                repairing the same for re-letting, and all other expenses,
                commissions, and charges including attorney's fees which
                Lessor may have paid or incurred in connection with such
                repossession and re-letting). Lessor may execute any lease made
                pursuant hereto in Lessor's name or in the name of Lessee as
                Lessor may see fit, and Lessee thereunder shall be under no
                obligation to see to the application by Lessor of any rent
                collected by Lessor nor shall Lessee have any right to collect
                any rent thereunder. Whether or not the Demised Premises are re-
                let, Lessee shall pay Lessor all amounts required to be paid by
                Lessee up to the date of Lessor's re-entry and thereafter Lessee
                shall pay Lessor, until the end of the term hereof, the amount
                of all rent and other charges required to be paid by Lessee
                hereunder, less the proceed of such re-letting during the term
                hereof, if any, after payment of Lessor's expenses as provided
                above. Such payments by Lessee shall be due at such times as are
                provided elsewhere in this Lease, and Lessor need not wait until
                the termination of this Lease to recover them by legal action or
                otherwise Lessor shall not, by any re-entry or other act, be
                deemed to have terminated this Lease or the liability of Lessee
                for the total rent hereunder unless Lessor shall give Lessee
                written notice of Lessor's election to terminate this Lease.

                 (b) Lessor may give written notice to Lessee of Lessor's
                election to terminate this Lease, re-enter the Demised Premises
                with or without process of law and take possession of the same
                and of all equipment and fixtures therein, and expel or remove
                Lessee and all other parties occupying the premises, using such
                force as may be reasonably necessary to do so, without being
                liable to any prosecution for such re-entry of for the use of
                such force. In such event Lessor shall thereupon be entitled to
                recover from Lessee the worth, at the time of such termination,
                of the excess, if any, of the rent and other charges required to
                be paid by Lessee hereunder for the balance of the term hereof
                (if this lease had not been so terminated) over the then

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                                                 INITIALS

                                       6
<PAGE>
 
                reasonable rental value of the Demised Premises for the same
                period.

                (c) Lessee hereby releases, indemnifies, and holds harmless
                Lessor from any liability whatsoever for the removal of persons
                and the removal and storage of property pursuant to
                subparagraphs (a) and (b) of this Paragraph 19.

                (d) To secure the full and timely performance of all the 
                Lessee's obligations under this Lease, Lessee hereby grants to
                Lessor a security interest and lien in all of Lessee's
                equipment, goods, fixtures, furnishings, furniture, inventory,
                machinery, trade fixtures, other property, and the proceeds
                therefrom, now or hereafter to be located within the Demised
                Premises. In the event of default or breach by Lessee, then with
                respect to that security interest, Lessor may exercise all of
                the rights and remedies granted a secure party under the Uniform
                Commercial Code as adopted in Nevada in effect at the time.

                (e) The remedies given to Lessor in this Paragraph 19 shall be
                in addition to and supplemental to all other rights and remedies
                which Lessor may have under the laws then in force.

HOLDING OVER    20. If Lessee holds possession of all or a part of the Demised
                Premises after the expiration of the term of this Lease, with or
                without the express or implied consent of Lessor, Lessee shall
                become a tenant from month-to-month only, upon the terms,
                covenants, conditions, and agreements herein specified, so far
                as applicable. Such holding over shall not constitute an
                extension or renewal of this Lease. During such holding over,
                the Base Monthly Rental shall be increased fifty (50%) percent
                over the Base Monthly Rental provided in Paragraph 2.

WAIVER          21. No covenant, term, condition or agreement or the breach
                thereof shall be deemed waived, except by written consent of the
                party against whom the waiver is claimed, and any waiver or the
                breach of any covenant, term, condition or agreement shall not
                be deemed to be a waiver of any preceding or succeeding breach
                of the same or any other covenant, term, condition or agreement.
                Acceptance by Lessor of any performance by Lessee after the time
                the same shall become due shall not constitute a waiver by
                Lessor of the breach or default of any covenant, term, condition
                or agreement unless other wise expressly agreed to by Lessor in
                writing.

NOTICES         22. Except as otherwise provided in this Lease, all notices or
                demands of any kind required or desired to be given by Lessor to
                Lessee hereunder shall be in writing and shall be deemed
                delivered when hand delivered or forty eight (48) hours after
                depositing the notice or demand in the United States Mail,
                certified or registered, postage prepaid, addressed to the
                Lessee at the Demised Premises, whether or not Lessee has
                departed from, abandoned or vacated the Demised Premises. All
                notices or demands of any kind by Lessee to Lessor shall be in
                writing and shall be deemed delivered when hand delivered or
                forty eight (48) hours after depositing the notice in the United
                States Mail, certified or registered, postage prepaid, addressed
                to the Lessor at such address as shall from time to time be
                designated by Lessor to Lessee in writing.

CONDEMNATION    23. In the event any condemnation proceedings shall be commenced
                affecting the Demised Premises, Lessee shall have no right to
                claim any valuation for its leasehold interest or otherwise by
                reason of its occupancy of or improvements to said premises, and
                any condemnation award (Whether adjudicated or by way of
                settlement) shall belong in its entirety to Lessor. In the event
                of condemnation of a part of the Demised Premises, the rent
                shall be reduced in the proportion that the floor area taken
                bears to the total floor area prior to the taking. If
                condemnation takes more than twenty five percent (25%) of the
                floor area of the Demised Premises or if the amount of Lessee's
                parking area following condemnation is not sufficient to meet

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                                                 INITIALS

                                       7
<PAGE>
 
                the deed restrictions, if any, concerning parking on the real
                property on which the Demised Premises are situated, or the
                local parking ordinances, if any, only then, may Lessee, at
                Lessee's option, terminate this Lease as of the date the
                condemning authority takes possession of said condemned portion
                by giving written notice of termination to Lessor within ten
                (10) days after the condemning authority takes such
                possession. 
                 If Lessee does not terminate this Lease as herein
                above immediately provided, then the rent payable shall be
                reduced as set forth above.

SUBORDINATION   24.  This Lease at Lessor's option shall be subject and
                subordinate to the lien of any mortgages or deeds of trust in
                any amount or amounts whatsoever now or hereafter placed on or
                against the real property or improvements, or either thereof, of
                which the Demised Premises are a part, or on or against Lessor's
                interest or estate therein, without the necessity of the
                execution and delivery of any further instruments on the part of
                Lessee to effectuate such subordination. If any mortgage or
                trustee shall elect to have this Lease prior to the lien of its
                mortgage or deed of trust, and shall give written notice thereof
                to Lessee, this Lease shall be deemed prior to such mortgage or
                deed or trust, whether this Lease is dated prior or subsequent
                to the date of said mortgage or deed of trust or the date of the
                recording thereof: Lessee covenants and agrees to execute and
                deliver upon demand, without charge therefore, such further
                instruments evidencing such subordination of this Lease to the
                lien of any such mortgages or deeds of trust as may be required
                by Lessor. Lessee hereby appoints Lessor as Lessee's attorney-
                in-fact, irrevocably, to execute and deliver any such
                agreements, instruments, releases or other documents.

PARKING         25. (a) Lessee and its customers, employees and tradesmen may
                park only operative vehicles on the surfaced parking lot
                adjacent to the Demised Premises only during Lessee's normal
                business hours on terms and conditions as may be established by
                Lessor from time to time during the term of this Lease. The
                parking areas referred to in this Paragraph 25 shall be used on
                a non-exclusive basis with other occupants of the Building. THE
                PARKING LOT MAY NOT BE USED TO STORE VEHICLES OR TO WORK ON
                VEHICLES. NO VEHICLE SHALL BE PARKED IN A PARKING LOT FOR MORE
                THAN TWENTY FOUR (24) CONSECUTIVE HOURS. Any vehicles parked in
                the parking lots in breach of these terms may be towed away at
                Lessee's expense. Lessee releases, indemnifies, and holds
                harmless Lessor and Lessor's officers, employees, and agents
                from any claims arising from or relating to such towing of
                vehicles including any consequential damages or loss of property
                or the use of the vehicle or other. property. The right to tow a
                vehicle is in addition to Lessor's rights under the Lease for
                default or breach of any of the terms hereof.

                (b) Other than parking, egress and ingress, Lessee has no right
                to use the common area, and Lessee shall not obstruct the
                common areas, including the sidewalks, landscaped areas, paved
                areas, parking, lots, or driveways. ANIMALS, INCLUDING
                WATCHDOGS, ARE NOT ALLOWED ON THE DEMISED PREMISES OR COMMON
                AREAS.

SUCCESSORS      26. All terms, covenants, conditions hereof shall be binding
                upon and inure to the benefit of the heirs, executors,
                administrators, successors, and assigns of the parties hereto,
                provided that nothing in this paragraph shall be deemed to
                permit any assignment, sub-letting, occupancy or use contrary to
                the provisions of Paragraph 17.

ENTIRE          27. This Lease, along with any exhibits and attachments
AGREEMENT       hereto constitutes the entire agreement between Lessor and
                Lessee relative to the Demised Premises and this Lease and the
                exhibits and attachments may be altered, amended or revoked only
                by an instrument in writing signed by both Lessor and Lessee.

                Lessor and Lessee hereby agree that all oral agreements between
                and among themselves and their agents or representatives
                relative to the leasing of the Demised Premises are merged in or
                revoked by this Lease.

                                                 ________

                                                 ________
                                                 INITIALS

                                       8
<PAGE>
 
DEFAULT BY      28. Lessor shall not be in default under this Lease unless
LESSOR          Lessor fails to perform obligations required of Lessor within a
                reasonable time, but in no event later than thirty (30) days
                after written notice by Lessee to Lessor, specifying wherein
                Lessor has failed to perform such obligation; provided, however,
                that if the nature of Lessor's obligation is such that more than
                thirty (30) days are required for performance, then Lessor shall
                not be in default if Lessor commences performance within such
                thirty (30) day period and thereafter diligently prosecutes the
                same to completion.

LIABILITY       29. Lessee shall, at Lessee's sole cost and expense, obtain and
                keep in force during the term of this Lease a policy of
                comprehensive public liability insurance insuring Lessor, Lessee
                and Lessor's mortgage against any liability arising out of the
                ownership, use, occupancy or maintenance of the Premises and all
                areas appurtenant thereto. Such insurance shall be in the amount
                of not less than $1,000,000.00 for injury or death of one person
                                 -------------                                  
                in any one accident or occurrence and in the amount of not less
                than $1,000,000.00 for injury or death of more than one person
                     -------------                                            
                in any one accident or occurrence. Such insurance shall further
                insure Lessor and Lessee against liability for property damage
                of at least $500,000.00. The limit of any such insurance shall
                            -----------                                       
                not, however, limit the liability of the Lessee hereunder.
                 Lessee may provide this insurance under a blanket policy,
                provided that said insurance shall have a Lessor's protective
                liability endorsement attached thereto. If Lessee shall fail to
                procure and maintain said insurance, Lessor may, but shall not
                be required to, procure and maintain same, but at the expense of
                Lessee. Insurance required hereunder shall be in companies
                approved by Lessor which approval shall not be unreasonably
                withheld. Lessee shall deliver to Lessor, upon request, copies
                of policies of liability insurance required herein or
                certificates evidencing the existence and amounts of such
                insurance with loss payable clauses satisfactory to Lessor. No
                policy shall be cancelable or subject to reduction of coverage
                which Lessor may carry.

ESTOPPEL        30. Lessee shall at any time upon not less than ten (10) days
CERTIFICATE     prior written notice from Lessor execute, acknowledge and
                deliver to Lessor a statement in writing; (i) certifying that
                this Lease is unmodified in full force and effect, (or if
                modified, state the nature of such modification and certifying
                that this Lease, as so modified, is in full force and effect)
                and the date to which the rent and other charges are paid in
                advance, if any and (ii) acknowledging that there are not, to
                Lessee's knowledge, any uncured defaults on the part of Lessor
                hereunder, or specifying such defaults, if any, are claimed. Any
                such statement may be conclusively relied upon by a prospective
                purchaser or encumbrance of the Demised Premises. Lessee's
                failure to deliver such statement within such time shall be
                conclusive upon Lessee (i) that this Lease is in full force and
                effect, without modification except as may be represented by
                Lessor, (ii) that there are no uncured defaults in Lessor's
                performance, and (iii) that not more than one (1) month's rent
                has been paid in advance. If Lessor desires to finance or
                refinance the Demised Premises, or any part thereof, Lessee
                hereby agrees to deliver to any lender designated by Lessor such
                financial statements of Lessee as may be reasonably required by
                such lender. Such statements shall include the past three (3)
                years financial statements of Lessee. All such financial
                statements shall be received by Lessor in confidence and shall
                be used only for the purposes herein set forth.

COSTS OF SUIT   31. (a) If Lessee or Lessor shall bring any action for any
                relief against the other, declaratory or otherwise, arising out
                of this Lease, including any suit by Lessor for the recovery of
                rent or possession of the Demised Premises, the prevailing party
                is entitled to an award of reasonable attorney's fees which
                shall be deemed to have accrued on the commencement of such
                action and shall be paid whether or not such action is
                prosecuted to judgment.

                                                 ________

                                                 ________
                                                 INITIALS

                                       9
<PAGE>
 
                (b) Should Lessor, without fault on Lessor's part, be made a
                party to any litigation instituted by Lessee or by a third
                party against Lessee, or by or against any person holding over
                or using the Demised Premises by license of Lessee, or for the
                foreclosure of any lien for labor or material furnished to or
                for Lessee or any such other person or otherwise arising out of
                or resulting from any act or transaction of Lessee or of any
                such other person, Lessee covenants to save and hold Lessor
                harmless from any judgment rendered against Lessor or the
                Demised Premises or any part thereof, and all costs and
                expenses, including reasonable attorney's fees, incurred in or
                in connection with such litigation.

CHOICE OF LAW   32. The Lease shall be governed, construed and enforced by the
                laws of the State of NEVADA.
                                     ------

SURRENDER       33. Upon the expiration or earlier termination of this Lease,
                Lessee shall remove all its signs from the Demised Premises,
                return the keys and surrender the Demised Premises in a
                condition satisfactory to Lessor. Lessee, at its sole cost and
                expense, agrees to repair any damage to the Demised premises
                caused by or in connection with the removal of any articles of
                personal property, business or trade fixtures, machinery,
                equipment, cabinetwork, furniture, movable partitions, or
                permanent improvements or additions, including without
                limitation thereto, repairing the floor and patching and
                painting the walls where required by Lessor to Lessor's
                reasonable satisfaction. Lessee shall indemnify Lessor against
                any loss or liability resulting from delay by Lessee in so
                surrendering the Demised Premises, including without limitation,
                any claims made by any succeeding tenant founded on such delay.

MISCELLANEOUS   34. The marginal captions of this Lease are for convenience only
                and shall not in any way limit or be deemed to construe or
                interpret the terms and provisions hereof. The words "Lessor"
                and "Lessee" as used herein shall include the plural as well as
                the singular. Words used in neuter gender include the masculine
                and feminine, words in the masculine or feminine gender include
                the neuter. If there be more than one Lessor or Lessee, the
                obligations hereunder imposed upon Lessor or Lessee shall be
                joint and several.

TIME            35. Time is of the essence of this Lease and each and all of its
                provisions.

PARKING         36. (a) Lessor shall have the right to limit the amount of
LIMITATIONS     vehicles parked on the demised premises in connection with
                Lessee's business during the term of this Lease.

                (b) No storage, repairs, or cleaning of vehicles, parts, or
                equipment outside the units will be permitted.

PROMOTIONAL     37. Lessee shall not use pictures of Lessor's properties for,
MATERIALS       but limited to, brochures, advertising, or promotional
                activities without written consent of Lessor.

ALARM SYSTEMS   38. No alarm system shall be attached to the exterior walls of
                the Building.  When installing a system, the alarm box must be
                inside the unit.  Lessee shall, at Lessee's sole expense, be
                responsible for removal  of alarm system and restoring the
                Demised Premises to its original condition.

USE OF          39.  "IN THE AREAS WHERE DUMPSTERS ARE PROVIDED, LESSEE MAY
DUMPSTERS       UTILIZE THE DUMPSTERS FOR WASTE PAPER TRASH ONLY."   Packing
                skids, boxes and garbage from the complex or home are not to be
                placed in or around dumpsters.  It is the sole responsibility
                of Lessee to dispose of excessive trash and packaging materials
                somewhere else or obtain their own dumpster.  "IN AREAS WHERE
                DUMPSTERS ARE NOT PROVIDED, IT IS LESSEE'S RESPONSIBILITY TO
                DISPOSE OF THEIR TRASH OR PROVIDE THEIR OWN DUMPSTER."  Trash
                stored outside the Building, not in dumpster, is prohibited and
                Lessor shall have the right to charge a fine to Lessee for

                                                 ________

                                                 ________
                                                 INITIALS

                                       10
<PAGE>
 
                committing said storage or waste on the premises.  Lessee shall
                reimburse Lessor $30.00 per month for garbage reimbursement.

    TEC         40.  Lessee agrees not to park vehicles in front of other units
____________    whether vacant or occupied.

    TEC         41.  Lessee agrees not to store vehicles in parking lot more
____________    than twenty four (24) hours, or they will be towed at Owner's
                expense.

    TEC         42.   Lessee agrees not to wash or work on vehicles outside
____________    Demised Premises.

    TEC         43.  Lessee is with understanding that he is allotted one (1)
____________    parking space per 250 square feet of office space and one (1)
                parking space per 1,000 square feet of warehouse space.

N/A             44.  Lessee is aware that "Park 2001" Associates have signed an
____________    aviation easement with the Reno Cannon International Airport
                Authority.

N/A             45.   Lessee understands that because of the proximity of the
____________    leased premised to Reno Cannon International Airport, the noise
                levels may be experienced by reason of the operation of the
                airport within FAA parameters and the Lessee agrees to hold the
                Airport Authority, the City of Reno, Park 2001 Associates, and
                The Ribeiro Corporation harmless from any claim or litigation
                stemming from normal or reasonable operations of the airport
                that fall within FAA parameters of conduct of operations.

IN WITNESS WHEREOF, the parties hereto have executed this Lease,
                or as the case may be, have caused their officers thereunto duly
                authorized to execute this Lease in duplicate, the day and year
                first written above.

JOHNNY RIBEIRO                      SILICON GAMING
__________________________________  ____________________________________
LESSOR                              LESSEE

/s/ Edward G. Yuill                 BY: /s/ Thomas E. Carlson
__________________________________  ____________________________________
Edward G. Yuill                       Thomas E. Carlson
Vice President of Leasing, Reno          CFO

DATE:         2-12-97               AS:
__________________________________  ____________________________________
 

                                    PERSONALLY GUARANTEED:

                                    BY:_________________________________

                                    DATE:_______________________________


                                    BY:_________________________________

                                    DATE:_______________________________

                                    PERSONALLY GUARANTEED:

                                    BY:_________________________________

                                    DATE:_______________________________

                                       11
<PAGE>
 
                 DUTIES OWED BY A NEVADA REAL ESTATE LICENSEE

In Nevada, a real estate licensee can (1) act for only one party to a real 
estate transaction, (2) act for more than one party to a real estate transaction
with written consent of each party, (3) act as a broker who assigns different
licensees affiliated with the broker's company to separate parties to a real
estate transaction. A licensee, acting as an agent, must act in one of the above
capacities in every real estate transaction. If this form is used for a lease,
the term Seller shall mean Landlord/Lessor and the term Buyer means
Tenant/Lessee.

LICENSEE:  The licensee in the real estate transactions is Edward G. Yuill 
                                                           ---------------
("Licensee"), whose license number is 18931. The Licensee is acting for Edward 
                                      -----                             ------  
G. Yuill, ("Broker"), whose company is THE RIBEIRO CORPORATION ("Company").
--------                               -----------------------


       A NEVADA REAL ESTATE LICENSEE IN A REAL ESTATE TRANSACTION SHALL:

1.  Disclose to each party to the real estate transaction as soon as is 
    practicable:
    (a)  Any material and relevant facts, data or information which Licensee, or
         which by the subject of the real estate care and diligence licensee
         should have known, relating to the property which is the subject of the
         real estate transaction.
    (b)  Each source from which Licensee will receive compensation as a result 
         of the transaction.
    (c)  That Licensee is a principal to the transaction or has an interest in a
         principal to the transaction.
    (d)  Any changes in Licensee's relationship to a party to the real estate 
         transaction.
2.  Disclose, if applicable, that Licensee is acting for more than one party to 
the transaction. Upon making such a disclosure the licensee is acting for more 
than on party to the transaction for whom the Licensee is acting before Licensee
may continue to act in Licensee;s capacity as an agent.
3.  Exercise reasonable skill and care with respect to all parties to the real 
estate transaction.
4.  Provide to each party to the real estate transaction this form.
5.  Not to disclose, except to the Broker confidential information relating to a
client.
6.  Exercise reasonable skill and care to carry out the terms of the brokerage 
agreement and to carry out Licensee's duties pursuant to the terms of the 
brokerage agreement.
7.  Not to disclose confidential information relating to a client for 1 year 
after the revocation or termination of the brokerage agreement, unless Licensee 
is required to do so by order of the court. Confidential information includes, 
but is not limited to the client's motivation to purchase, sell or trade and 
other information of a personal nature.
8.  Promote the interest of his client by:
    (a)  Seeking a sale, lease or property at the price and terms stated in the 
         brokerage agreement or at a price acceptable to the client.
    (b)  Presenting all offers made to or by the client as soon as it is 
         practicable. 
    (c)  Disclosing to the client material facts of which the licensee has 
         knowledge concerning the transaction.
    (d)  Advising the client to obtain advice from an expert relating to matters
         which are beyond the expertise of the licensee.
    (e)  Accounting for all money and property Licensee receives in which the 
         client may have an interest as soon as practicable.
9.  Not deal with any party to a real estate transaction in a manner which is 
deceitful, fraudulent or dishonest.
10.  Abide by all duties, responsibilities and obligations required of Licensee 
in chapters 119, 119A, 119B, 645, 645A and 645C of the NRS.

In the event any part of the real estate transaction is also represented by a 
licensee who is affiliated with the same Company, the Broker may assign another 
Licensee to act for that party. The above Licensee will continue to act for you.
As set forth above, no confidential information will be disclosed.

I/We acknowledge receipt of a copy of this list of licensee duties, and have 
read and understand this disclosure.

Lessee /s/ Thomas E. Carlson          Date         Date          Time      am/pm
       --------------------- -------     ---------     ----------    ------

Lessor                               Date         Date          Time      am/pm
       --------------------- -------     ---------     ----------    -------

             CONFIRMATION REGARDING REAL ESTATE AGENT RELATIONSHIP

Property Address:  5401 Longley Lane #44 & 56, Reno, Nevada 89511
                 ---------------------------------------------------------------
I/We confirm the duties of a real estate licensee of which has been presented 
and explained to me/us. My/Our representative's relationship is: _______________
________________________ is the AGENT of ___________________________ is the 
AGENT of 

  ___Seller Exclusively*   ___Both Buyer & Seller**    ___Buyer Exclusively**

              ___Seller Exclusively*    ___Both Buyer & Seller**

**IF AGENT IS ACTING FOR MORE THAN ONE PARTY IN THIS TRANSACTION, you will be 
provided a Consent to Act Form for your review, consideration and approval or 
rejection. A licensee can legally represent both the Lessor and Lessee in a 
transaction ONLY with the knowledge and written consent of BOTH the Lessor and 
Lessee.
*A licensee who is acting for the Lessor exclusively, is not representing the 
Lessee and has not duty to advocate or negotiate for the Lessee.
**A licensee who is acting for the Lessee exclusively, is not representing the 
Lessor and has no duty to advocate or negotiate for the Lessor.

The Ribeiro Corporation         Silicon Gaming            
-----------------------------   -------------------------     ----------------
Listing Company                 Lessee's Company              Date

/s/ Edward G. Yuill                                       
-----------------------------------       -----------------------------------  
By:  Licensed Real Estate Agent           By: Licensed Real Estate Agent


                                          /s/ Thomas E. Carlson    2/10/97
-----------------------------------       -----------------------------------  
Lessor                   Date             Lessee                    Date


                                         
-----------------------------------       -----------------------------------  
Lessor                   Date             Lessee                    Date


<PAGE>
 
                    [LETTERHEAD OF THE RIBEIRO CORPORATION]

                   TOXIC AND/OR HAZARDOUS MATERIALS ADDENDUM

      Lessee guarantees that neither Lessee nor any of Lessee's employees,
      agents, or visitors to his premises shall use, store, or dispose of any
      hazardous or toxic materials or chemicals within the subject premises or
      any other area within the Project of which the premises is a part. Any
      such use or storage of any hazardous or toxic materials or chemicals
      within the subject premises or other parts of the Project shall constitute
      a material breach of this Lease, and Lessor shall be entitled to carry out
      all means necessary to recover from this breach (as outlined within the
      Lease). In addition, Lessee shall have sole financial and legal
      responsibility for the proper and legal cleanup of any spillage or other
      contamination caused by any use of toxic or hazardous materials by Lessee.

      It is further agreed that, if, upon written notice from Lessor that Lessee
      has violated the above provisions of this Agreement, Lessee does not
      complete necessary steps (as outlined in said written notice from Lessor)
      to achieve satisfactory cleanup within 72 hours, Lessor shall have the
      right to complete necessary cleanup and bill the entire cost (including
      any legal costs incurred by Lessor) of same to Lessee.

      Lessee will also bear the entire cost of any government cleanup order or
      any third-party lawsuit, caused by spillage or contamination caused by any
      use of toxic or hazardous materials by Lessee.

      Hazardous or toxic material means any substance now, or hereafter,
      identified by :any government agency requiring special handling, disposal,
      or control unlike regular refuse.


Johnny Ribeiro                      Silicon Gaming
__________________________________  ____________________________________
Lessor                              Lessee

/s/ Edward G. Yuill                     /s/ Thomas E. Carlson
__________________________________  ____________________________________
By: Edward G. Yuill                 By: 
    Vice President 

         2-12-97                             2/10/97
__________________________________  ____________________________________
Date                                Date


<PAGE>
 
                    [LETTERHEAD OF THE RIBEIRO CORPORATION]

                              INSURANCE AGREEMENT
                              -------------------



I, Silicon Gaming, do hereby agree that myself or my company has or will have
   --------------                                                            
insurance required in my lease, and that rider shall be given to The Ribeiro
Corporation within thirty days of the signing of my lease. This rider shall
include The Ribeiro Corporation as an additional insured for the demised
premises that I lease. At no time do I understand that insurance is not needed
for leasing property with The Ribeiro Corporation.



/s/ Edward G. Yuill                             2-12-97
_________________________________       _____________________________________
By: Edward G. Yuill                     Date
    Vice President of Leasing           

/s/ Thomas E. Carlson                           2/10/97
_________________________________       _____________________________________
By: Silicon Gaming                      Date


<PAGE>
 
                    [LETTERHEAD OF THE RIBEIRO CORPORATION]

                                   Disclaimer
                                   ----------

All agreements and concessions between Lessor and Lessee for the property
located at 5401 Longley Lane, Reno, Nevada 89511 Unit(s) #44 & 56 are
           --------------------------------------         --------    
Contained within this Lease, dated January 23, 1997; Addenda or attached letters
                                   ----------------                             
(no verbal agreements). Any modifications, remodels or maintenance of leased
unit(s) required after Lessor and Lessee have signed this Lease that are not
specifically described in this Lease, Addenda, attached letters and walk-through
will be at no cost to the Lessor. Prior to vacating unit(s), Lessee agrees to
restore unit(s) to the condition in which it was received, except for normal
wear and tear, at Lessee's expense unless changes to the unit are approved, in
writing, by Lessor Discrepancies identified during the initial walk-through
inspection that are not repaired by Lessor will be included in the Lease file,
and Lessee will not be charged for such repairs.


Johnny Ribeiro                                     2-12-97
___________________________________   _______________________________
Lessor                                Date

___________________________________  
By: Edward G. Yuill
    Vice President of Leasing
    The Ribeiro Corporation


Silicon Gaming                                     2/10/97
___________________________________   _______________________________
Lessee                                Date


/s/ Thomas E. Carlson
___________________________________
By: