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                                                                    EXHIBIT 10.1

                           MASTER SECURITY AGREEMENT



1.   GRANT OF SECURITY INTEREST; DESCRIPTION OF COLLATERAL

     The Debtor named below grants to Secured Party a security interest in the
property described in the Schedules of Indebtedness and Collateral now or
hereafter executed by or pursuant to the authority of the Debtor and accepted by
Secured Party in writing (individually, a "Schedule" and collectively, the
"Schedules"), along with a present and future attachments and accessories
thereto and replacements and proceeds thereof, including amounts payable under
any insurance policy, all hereinafter referred to collectively as "Collateral."
Each Schedule shall be serially numbered.  Unless and only to the extent
otherwise expressly provided in a Schedule, no Schedule shall replace any
previous Schedule but shall be supplementary to all previous Schedules.

2.   WHAT OBLIGATIONS THE COLLATERAL SECURES.

     Each item of Collateral shall secure not only the specific amount which
Debtor promises to pay in each Schedule, but also all other present and future
indebtedness or obligations of Debtor to Secured Party of every kind and nature
arising under this Security Agreement (collectively, the "Obligations").

3.   PROMISE TO PAY; TERMS AND PLACE OF PAYMENT.

     Debtor promises to pay Secured Party the amounts set forth on each Schedule
at the rate and upon such terms as provided therein.

4.   USE OF COLLATERAL.

     Debtor warrants and agrees that the Collateral is to be used primarily for
business or commercial purposes (other than agricultural).

     Debtor and Secured Party agree that regardless of the manner of affixation,
the Collateral shall remain personal property and not become part of the real
estate.  Debtor agrees to keep the Collateral at the location set forth in the
applicable Schedule, and will notify Secured Party promptly in writing of any
change in the location of the Collateral within such State, but will not remove
the collateral from such State without the prior written consent of Secured
Party.

5.   LATE CHARGES AND OTHER FEES.

     Any payment not made when due shall, at the option of Secured Party, bear
late charges thereon calculated at the rate of 1 1/2% per month, but in no event
greater than the highest rate permitted by relevant law.  Debtor shall be
responsible for and pay to Secured Party a returned check fee, not to exceed the
maximum permitted by law, which fee will be equal to the sum of (i) the actual
bank charges incurred by Secured Party plus (ii) all other actual costs and
expenses incurred by Secured Party.  Returned check fees are payable upon demand
as Obligations secured by the Collateral under this Security Agreement.

6.   DEBTOR'S WARRANTIES AND REPRESENTATIONS.

     To induce Secured Party to enter into this Security Agreement and to make
the loans contemplated hereby, Debtor warrants and represents that:

     (a)  Debtor is justly indebted to Secured Party for the full amount of the
          Obligations set forth on each Schedule;
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     (b)  except for the security interest granted hereby, the Collateral is
          free from and will be kept free from all liens, claims, security
          interests and encumbrances;

     (c)  Debtor is not aware of any financing statement covering the Collateral
          or any proceeds thereof on file in favor of anyone other than Secured
          Party, but if such other financing statement is on file, it will be
          terminated or subordinated;

     (d)  all material information supplied and material statements made by
          Debtor in any financial, credit or accounting statement or application
          for credit prior to, contemporaneously with or subsequent to the
          execution of this Security Agreement with respect to this transaction
          are and shall be true, correct, valid and genuine;

     (e)  Debtor has full authority to enter into, deliver and perform this
          Security Agreement and each of the other documents heretofore, now or
          hereafter executed by Debtor in favor of or delivered to Secured Party
          in respect to the transactions contemplated by this Security Agreement
          (collectively, the "Loan Documents") to which it is a party, and in so
          doing it is not violating its charter or by-laws, any law or
          regulation or agreement with third parties, and it has taken all such
          action as may be necessary or appropriate to make this Security
          Agreement and the other Loan Documents binding upon it;

     (f)  the Collateral is new and in good operating condition and repair;

     (g)  Debtor is a corporation duly organized, validly existing and in good
          standing under the laws of the State of Nevada.  Debtor has duly
          qualified and is authorized to do business and is in good standing as
          a foreign corporation in all states and jurisdictions where the
          character of its properties or the nature of its activities make such
          qualification necessary;

     (h)  this Security Agreement is, and each of the other Loan Documents when
          delivered will be, a legal, valid and binding obligation of Debtor
          enforceable against it in accordance with their respective terms;

     (i)  Debtor has all governmental licenses, consents, approvals,
          authorizations, permits, certificates, inspections, and franchises
          necessary to conduct its business as heretofore or proposed to be
          conducted by it and to own or lease and operate its properties as now
          owned or leased by it;

     (j)  there are no actions, suits, proceedings or investigations pending, or
          to the knowledge or Debtor, threatened, against or affecting Debtor or
          any of its properties in any court or before any governmental
          authority or arbitration board or tribunal, that if determined
          adversely, would have a material adverse effect on its financial
          condition, business, properties or operations, or its ability to
          perform its obligations under this Security Agreement and all other
          Loan Documents to which it is a party;

     (k)  Debtor has filed all federal, state and local tax returns and other
          reports it is required by applicable law to file and has paid, or made
          provision for the payment of, all taxes, assessments, levies, claims
          or charges upon Debtor, its income or sales or any of its properties
          that are due and payable;

     (l)  Debtor has duly complied with, and its properties and business
          operations are in compliance in all respects with, the provisions of
          all applicable laws;

     (m)  no Event of Default (as defined below) exists or will exist or result
          from the execution and delivery of this Security Agreement or Debtor's
          performance hereunder,

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     (n)  the balance sheets of Debtor as of March 31, 1996 and the related
          statements of income, changes in stockholders' equity, and changes in
          financial position for the period entered on such date, have been
          prepared in accordance with generally accepted accounting principles
          ("GAAP") (except for changes in application in which Debtor's
          independent certified public accountants concur), and present fairly
          the financial position of Debtor at such dates and the results of
          Debtor's operations for such periods.  Since March 31, 1996 there has
          been no material change in the condition, financial or otherwise, of
          Debtor, except changes in the ordinary course of business, none of
          which individually or in the aggregate has been materially adverse;
          and

     (o)  there are no claims for brokerage commissions, finder's fees or
          investment banking fees in connection with the transactions
          contemplated by this Security Agreement.

     Debtor warrants to Secured Party that all representations and warranties of
     Debtor contained in this Security Agreement and all other Loan Documents
     shall be true at the time of Debtor's execution of this Security Agreement
     and shall survive the execution, delivery and acceptance hereof by the
     parties hereto and the closing of the transactions described herein or
     related thereto.

7.   DEBTOR'S AGREEMENTS.

     Debtor agrees:

     (a)  to defend at Debtor's own cost any action, proceeding, or claim
          affecting the Collateral;

     (b)  to pay reasonable attorneys' fees and other expenses incurred by
          Secured Party in enforcing its rights against Debtor under this
          Security Agreement subsequent to an Event of Default hereunder or the
          occurrence of an event which with the lapse of time or the giving of
          notice or both would become an Event of Default;

     (c)  to pay promptly all taxes, assessments, license fees and other public
          or private charges when levied or assessed against the Collateral or
          this Security Agreement, and this obligation shall survive the
          termination of this Security Agreement;

     (d)  that if a certificate of title be required or permitted by law, Debtor
          shall obtain such certificate with respect to the Collateral, showing
          the security interest of Secured Party thereon and in any event do
          everything necessary or expedient to preserve or perfect the security
          interest of Secured Party;

     (e)  that Debtor will not misuse, fail to keep in good repair, secrete or
          without the prior written consent of Secured Party, sell, rent, lend,
          encumber or transfer any of the Collateral notwithstanding Secured
          Party's right to proceeds;

     (f)  that Secured Party may enter upon Debtor's premises or wherever the
          Collateral may be located at any reasonable time to inspect the
          Collateral and Debtor's books and records pertaining to the
          Collateral, and Debtor shall assist Secured Party in making such
          inspection;

     (g)  that the security interest granted by Debtor to Secured Party shall
          continue effective irrespective of any retaking or redelivery of any
          Collateral and irrespective of the payment of the Obligations
          described in any Schedule so long as there are any Obligations of any
          kind, including obligations under guaranties or assignments, owed by
          Debtor to Secured Party, provided, however, upon any assignment of any
          Schedule under this Security Agreement the Assignee shall thereafter
          be deemed for the purpose of this Paragraph the Secured Party under
          this Security Agreement with respect to such Schedule;

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     (h)  to preserve and maintain its separate corporate existence and all
          rights, privileges, and franchises in connection therewith, and
          maintain its qualification and good standing in all states in which
          such qualification is necessary;

     (i)  to comply with all applicable laws and obtain and keep in force any
          and all licenses, permits, franchises, or other governmental
          authorizations necessary to the ownership of its properties or to the
          conduct of its business;

     (j)  to notify Secured Party in writing:  (i) promptly after Debtor's
          learning thereof, of the commencement of any litigation or the
          institution of any administrative proceeding which Debtor reasonably
          believes, if determined adversely, may materially and adversely affect
          Debtor's operations, financial condition, properties or business or
          Secured Party's lien upon any of the Collateral; (ii) promptly after
          Debtor's learning thereof, of any material default by Debtor under any
          note, indenture, loan agreement, mortgage, lease, deed, guaranty or
          other similar agreement relating to any indebtedness of Debtor
          exceeding $1,000,000, (iii) promptly after the occurrence thereof, of
          any Event of Default or any event or condition the occurrence of which
          would, with the lapse of time or the giving of notice, or both, become
          an Event of Default; and (iv) promptly after the rendition thereof, of
          any judgment, order or decree rendered against Debtor in excess of
          $1,000,000;

     (k)  to permit Secured Party to communicate directly with any of the
          following persons and entities concerning Debtor, its business and the
          Collateral (and Secured Party is irrevocably authorized to communicate
          with each such persons) upon at least 24 hours' oral or written notice
          to Debtor (unless an Event of Default exists, in which event no notice
          shall be required):  (a) any service bureau, warehousing service,
          landlords or trade creditors; (b) any person employed by the Debtor
          (but no prior notice shall be required for Secured Party to discuss
          any matters pertaining to Debtor, its business or the Collateral with
          any officer of Debtor or attorney for Debtor or any other person
          designated by an officer of Debtor to deal on a day-to-day basis with
          Secured Party); and (c) Debtor's present and future independent public
          accountants; and each of the foregoing is authorized by Debtor to
          communicate with Secured Party and to disclose to Secured Party any
          and all matters relating to Debtor, its financial condition and
          business prospects, and the Collateral;

     (l)  that Debtor will not enter into any transaction with any person or
          entity which is a stockholder of Debtor or which directly or
          indirectly controls, or is controlled by, or is under common control
          with, Debtor or which beneficially owns or holds 5% or more of any
          class of voting securities of Debtor, or 5% or more of the voting
          securities or equity interest of which is beneficially owned or held
          by Debtor, except in the ordinary course and pursuant to the
          reasonable requirements of Debtor's business and upon fair and
          reasonable terms, and, with respect to any such transaction which
          affects the Collateral, upon fair and reasonable terms which are fully
          disclosed to Secured Party;

     (m)  that Debtor will not transfer its principal place of business or chief
          executive office to any location other than those at which the same is
          presently kept or maintained, except upon at least sixty (60) days
          prior written notice to Secured Party and after the delivery to
          Secured Party of duly executed UCC-1 financing statements, if required
          by Secured Party, in form satisfactory to Secured Party to perfect or
          continue the perfection of Secured Party's lien and security interest
          hereunder,

     (n)  to cause to be prepared and furnished to Secured Party the following
          (all to be kept and prepared in accordance with GAAP applied on a
          consistent basis, unless Debtor's certified public accountants concur
          in any change therein and such change is disclosed to Secured Party
          and is consistent with GAAP):  (i) as soon as possible, but not later
          than ninety (90) days after the close of each fiscal year of Debtor,
          unqualified audited financial statements of Debtor as of the end of

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          such year, certified by a firm of independent certified public
          accountants of recognized national standing or otherwise acceptable to
          Secured Party; and (ii) as soon as possible, but not later than forty-
          five (45) days after the end of each of Debtor's fiscal quarter
          hereafter, unaudited interim financial statements of Debtor as of the
          end of such quarter and of the portion of Debtor's fiscal year then
          elapsed, certified by the principal financial officer of Debtor as
          prepared in accordance with GAAP and fairly presenting the financial
          position and results of operations of Debtor for such quarter and
          period.  Concurrently with the delivery of the financial statements
          described in clause (i) of this Paragraph, Debtor shall furnish to
          Secured Party a copy of the accountants' letter to Debtor's
          management, if any, that is prepared in connection with such financial
          statements.  Concurrently with the delivery of the financial
          statements described in this Paragraph, Debtor shall cause to be
          prepared and furnished to Secured Party a certificate from the chief
          financial officer of Debtor certifying to Secured Party that to the
          best of his knowledge, Debtor has kept, observed, performed and
          fulfilled each and every covenant, obligation and agreement binding
          upon Debtor in this Security Agreement and the other Loan Documents
          and that no Event of Default has occurred, or, if such Event of
          Default has occurred, specifying the nature hereof;

     (o)  that all the covenants and agreements made by Debtor, Coast Resorts,
          Inc. and Coast West, Inc. in the $175,000,000 13% First Mortgage Notes
          Indenture dated as of January 30, 1996 (the "Indenture") by and among
          Debtor, Coast West, Inc., Coast Resorts, Inc., and American Bank
          National Association as trustee, are incorporated herein and made part
          hereof as such covenants and agreements were in effect on July 1, 1996
          (without giving effect to any waiver or amendment of such covenants
          and agreements after July 1, 1996 except as provided in the last
          paragraph of this Section 7);

     (p)  within ten (10) business days of the date of this Security Agreement,
          to execute and deliver to the Nevada Gaming Commission a report in
          compliance with Regulation 8.130 of that Commission reporting the loan
          made under this Security Agreement and the other Loan Documents, and
          to give simultaneously a copy of the filed report to Secured Party;

     (q)  it will not declare or pay any dividend (other than a dividend payable
          in stock of the Debtor) or authorize or make any other distribution on
          any stock of the Debtor, whether now or hereafter outstanding which
          would exceed (i) 50% of the Debtor's after tax net profit for the
          preceding fiscal year or (ii) $3,000,000.00 annually, whichever is
          less; and

     (r)  it will not consent or agree to the sale, lease, transfer, conveyance,
          or other disposition (other than by way of merger or consolidation
          with Coast Resorts, Inc.) of all or substantially all of the Debtor's
          assets.

     Debtor's obligation to comply with the covenants and agreements in the
Indenture as such covenants and agreements were in effect on July 1, 1996,
applies only to amendments which (i) impair Secured Party's rights in the
Collateral or (ii) materially impair Debtor's ability to pay the Obligations.
With respect to amendments not covered by clauses (i) and (ii), Secured Party
agrees that Debtor shall comply with the applicable covenant or agreement as
amended.  With respect to amendments which (y) do impair Secured Party's rights
in the Collateral or (z) do materially impair Debtor's ability to pay the
Obligations, such amendments shall be accorded no effect for purposes hereof and
Debtor shall comply with the applicable covenant or agreement as if it had not
been amended.

     The parties hereto agree that any and all amendments and other
modifications of whatever kind to Section 4.09 of the Indenture subsequent to
July 1, 1996 shall be deemed to (i) impair Secured Party's rights in the
collateral and (ii) materially impair Debtor's ability to pay the Obligations,
and shall be accorded no effect for the purposes hereof and Debtor shall comply
with Section 4.09 as if it had not been amended or modified.

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8.   INSURANCE AND RISK OF LOSS.

     All risk of loss, damage to or destruction of the Collateral shall at all
times be on Debtor.  Debtor will procure forthwith and maintain at Debtor's
expense insurance against all risks of loss or physical damage to the Collateral
for the full insurable value thereof for the life of this Security Agreement
plus breach of warranty insurance and such other insurance thereon in amounts
and against such risks as Secured Party may specify, and shall promptly deliver
each policy to Secured Party with a standard long-form mortgagee endorsement
attached thereto showing loss payable to Secured Party; and providing Secured
Party with not less than 30 days written notice of cancellation; each such
policy shall be in form, terms and amount and with insurance carriers
satisfactory to Secured Party; Secured Party's acceptance of policies in lesser
amounts or risks shall not be a waiver of Debtor's foregoing obligations.  As to
Secured Party's interest in such policy, no act or omission of Debtor or any of
its officers, agents, employees or representatives shall affect the obligations
of the insurer to pay the full amount of any loss.  The insurance maintained by
Debtor should be primary without any right of contribution from insurance which
may be maintained by Secured Party.  Debtor shall be liable for all deductible
portions of all required insurance.

     Debtor hereby assigns to Secured Party any moneys which may become payable
under any such policy of insurance and irrevocably constitutes and appoints
Secured Party as Debtor's attorney in fact (a) to hold each original insurance
policy, (b) to make, settle and adjust claims under each policy of insurance,
(c) to make claims for any moneys which may become payable under such and other
insurance on the Collateral including returned or unearned premiums, and (d) to
endorse Debtor's on any check, draft or other instrument received in payment of
claims or returned or unearned premiums under each policy and to apply the funds
to the payment of the Obligations owing to Secured Party; provided, however,
Secured Party is under no obligation to do any of the foregoing.

     Should Debtor fail to furnish such insurance policy to Secured Party, or to
maintain such policy in full force, or to pay any premium in whole or in part
relating thereto, then Secured Party, without waiving or releasing any default
or obligation by Debtor, may (but shall be under no obligation to) obtain and
maintain insurance and pay the premium therefor on behalf of Debtor and charge
the premium to Debtor's Obligations under this Security Agreement.  The full
amount of any such premium paid by Secured Party shall be payable by Debtor upon
demand, and failure to pay same shall constitute an event of default under this
Security Agreement.

9.   EVENTS OF DEFAULT; ACCELERATION.

     A very important element of this Security Agreement is that Debtor make all
its payments promptly as agreed upon.  It is essential that the Collateral
remain in good condition and adequate security for the Obligations.  Each of the
following is an Event of Default under this Security Agreement which will allow
Secured Party to take such action under this Paragraph and under Paragraph 10 as
it deems necessary:

     (a)  Debtor shall fail to pay any installment of principal or interest
          owing with respect to a Schedule within fifteen (15) days after the
          due date thereof;

     (b)  Debtor shaft fail to pay any of the Obligations not evidenced by a
          Schedule on the due date thereof (whether due at stated maturity, on
          demand, upon acceleration or otherwise) and such failure shall not be
          cured within fifteen (I 5) days after the date on which Secured Party
          gives to Debtor written notice of Debtor's failure to make such
          payment on or before the due date thereof;

     (c)  Debtor breaches any warranty or provision hereof, or of any other Loan
          Document, any note or of any other instrument or agreement delivered
          by Debtor to Secured Party in connection with this or any other
          transaction;

     (d)  Coast Resorts, Inc. shall fail to comply with the terms of the non-
          spinoff letter dated October 24, 1996.

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     (e)  it is determined that Debtor has given Secured Party materially
          misleading information regarding its financial condition;

     (f)  there shall occur any loss, theft, damage or destruction of Collateral
          not fully covered by insurance (as required by this Security Agreement
          and subject to such deductibles as Secured Party shall have agreed to
          in writing), or the making of any levy, seizure, or attachment thereof
          or thereon;

     (g)  Debtor shall (i) admit in writing its inability to pay its debts
          generally as they become due, (ii) make an assignment for the benefit
          of its creditors, or (iii) commence a proceeding for the appointment
          of a receiver, trustee, liquidator or conservator of itself or of the
          whole or any substantial part of its property, or (iv) a compliant or
          petition or answer seeking reorganization or arrangement or any
          similar relief under the Federal bankruptcy laws or any other
          applicable law or statute of the United States of America or any state
          is filed by or against the Debtor and, if filed against the Debtor,
          continues unstayed and in effect for a period of 60 days, or (v) a
          court of competent jurisdiction, trustee or conservator shall
          otherwise assume custody or control of the Debtor or of the whole or
          any substantial part of its assets;

     (h)  Debtor fails to maintain any and all licenses, permits, approvals or
          authorizations of any kind necessary under Nevada statutes or required
          by the Nevada Gaming Commission to engage in the business of operating
          a Casino.  For the purposes hereof "Casino" shall mean a gaming
          establishment and other property or assets ancillary thereto or used
          in connection therewith, including restaurants, hotels, theaters, non-
          gaming retail businesses, and golf courses and other recreation and
          entertainment facilities;

     (i)  [intentionally left blank]

     (j)  there shall occur any default or event of default on the part of
          Debtor under any agreement, document or instrument to which Debtor is
          a party or by which Debtor or any of its property is bound, creating
          or relating to any indebtedness;

     (k)  there shall occur any material adverse change in the financial
          condition or business prospects of Debtor;

     (l)  Debtor, Coast Resorts, Inc., or Coast West, Inc. shall breach any of
          the covenants set forth in the Indenture in effect on July 1, 1996
          (without giving effect to any waiver or amendment of any such covenant
          on or after July 1, 1996 except as provided in the last paragraph of
          Section 7 and without regarding whether the payment or maturity of the
          indebtedness incurred under the Indenture is accelerated in
          consequence of such breach);

     (m)  there shall occur any default or event of default on the part of Coast
          Resorts, Inc. under any agreement, document or instrument (other than
          the Indenture and related documents) to which it is a party or by
          which it or any of its property is bound, provided Coast Resorts, Inc.
          obligations owing upon such default under or related to such
          agreement, document or instrument exceeds $5,000,000 or its foreign
          currency equivalent; and

     (n)  there shall occur any Event of Default on the part of Coast Resorts,
          Inc., under the Stock Pledge and Security Agreement (the "Pledge
          Agreement") dated as of January 30, 1996, (as Event of Default is
          defined in such Pledge Agreement) in favor of American Bank National
          Association as trustee ("Trustee"), and as a result thereof, such
          Trustee exercises any rights or remedies with regard to Shareholder's
          Stock (as such term is defined in the Pledge Agreement).

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     If an Event of Default shall occur, the Obligations described in each
Schedule and all other Obligations then owing by Debtor to Secured Party under
this or any other present or future agreement shall, if Secured Party shall so
elect, become immediately due and payable.  After acceleration:

     (a)  the unpaid principal balance of the Obligations described in any
          Schedule in which interest has been precomputed shall bear interest at
          the rate of 18% per annum (or, if less, the maximum rate permitted by
          law) until paid in full; and

     (b)  the unpaid principal balance of the Obligations described in any
          Schedule in which interest has not been precomputed shall bear
          interest at the same rate as before acceleration until paid in full.

     In no event shall the Debtor upon demand by Secured Party for payment of
the Obligations, by acceleration of the maturity thereof or otherwise, be
obligated to pay any interest in excess of the amount permitted by law.  Any
acceleration of the Obligations, if elected by Secured Party, shall be subject
to all applicable laws, including laws relating to rebates and refunds of
unearned charges.

     Secured Party agrees that notwithstanding anything herein to the contrary,
it shall not exercise its remedies pursuant to Section 10 with respect to Events
of Default under clauses (c) through (1), with the exception of clauses (g) and
clause (c) as applied to Section 7(a), unless (i) Secured Party first notifies
Debtor that such Event of Default has occurred and (ii) permits Debtor fifteen
(15) days to cure such Event of Default.  With respect to clause (g), Secured
Party is not required to give notice prior to declaring an Event of Default, and
the cure periods applicable thereto are set forth therein.  With respect to
clause (g) and clause (c) as applied to Section 7(a), an Event of Default shall
not be deemed to have occurred until Debtor shall have failed to cure the
default under the Indenture within a reasonable period.  If such default is not
curable within a reasonable time period, Debtor shall provide Secured Party with
such additional documents, security or assurances as Secured Party shall
reasonably request.

10.  SECURED PARTY'S REMEDIES AFTER DEFAULT; CONSENT TO ENTER PREMISES.

     Upon the occurrence of an Event of Default (and the failure of Debtor to
remedy such Event of Default during the time period, if any, provided Debtor to
remedy such Event of Default) and at any time thereafter, Secured Party shall
have all the rights and remedies of a secured party under the Uniform Commercial
Code and any other applicable laws, including the right to any deficiency
remaining after disposition of the Collateral for which Debtor hereby agrees to
remain fully liable.  Debtor agrees that Secured Party, by itself or its agent,
may without notice to any person and without judicial process of any kind, enter
into any premises or upon any land owned, leased or otherwise under the real or
apparent control of Debtor or any agent of Debtor where the Collateral may be or
where Secured Party believes the Collateral may be, and disassemble, render
unusable and/or repossess all or any item of the Collateral, disconnecting and
separating all Collateral from any other property and using all force necessary.
Debtor expressly waives all further rights to possession of the Collateral after
default and all claims for injuries suffered through or loss caused by such
entering and/or repossession.  Secured Party may require Debtor to assemble the
Collateral and return it to Secured Party at a place to be designated by Secured
Party which is reasonably convenient to both parties.

     Secured Party may sell or lease the Collateral at a time and location of
its choosing provided that the Secured Party acts in good faith and in a
commercially reasonable manner.  Secured Party will give Debtor reasonable
notice of the time and place of any public sale of the Collateral or of the time
after which any private sale or any other intended disposition of the Collateral
is to be made.  Unless otherwise provided by law, the requirement of reasonable
notice shall be met if such notice is mailed, postage prepaid, to the address of
Debtor shown herein at least ten days before the time of the sale or
disposition.  Expenses of retaking, holding, preparing for sale, selling and the
like shall include reasonable attorneys' fees and other legal expenses.  Debtor
understands that Secured Party's rights are cumulative and not alternative.

     Secured Party is hereby granted a license or other right to use, without
charge, Debtor's labels, patents, copyrights, rights of use of any name, trade
secrets, tradenames, trademarks and advertising matter, or any

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property of similar nature, as it pertains to the Collateral, in advertising for
sale and selling any Collateral and Debtor's rights under all licenses and all
franchise agreements shall inure to Secured Party's benefit. The proceeds
realized from the sale of any Collateral may be applied, after allowing two (2)
business days for collection, first to the reasonable costs, expenses and
attorneys' fees and expenses incurred by Secured Party for collection and for
acquisition, completion, protection, removal, storage, sale and delivery of the
Collateral; secondly, to interest due upon any of the Obligations; and thirdly,
to the principal of the Obligations. If any deficiency shall arise, Debtor and
Guarantor shall remain liable to Secured Party therefor.

11.  WAIVER OF DEFAULTS; AGREEMENT INCLUSIVE.

     Secured Party may in its sole discretion waive an Event of Default, or
cure, at Debtor's expense, an Event of Default.  Any such waiver in a particular
instance or of a particular Event of Default shall not be a waiver of any other
Event of Defaults or the same kind of default at another time.  No modification
or change in this Security Agreement or any related note, instrument or
agreement shall bind Secured Party unless in writing signed by Secured Party.
No oral agreement shall be binding.

12.  FINANCING STATEMENTS; CERTAIN EXPENSES.

     If permitted by law, Debtor authorizes Secured Party to file a financing
statement with respect to the Collateral signed only by Secured Party, and to
file a carbon, photocopy or other reproduction of this Security Agreement or of
a financing statement.  At the request of Secured Party, Debtor will execute any
financing statements, agreements or documents, in form satisfactory to Secured
Party which Secured Party may deem necessary or advisable to establish and
maintain a perfected security interest in the Collateral.

13.  WAIVER OF DEFENSES ACKNOWLEDGMENT.

     If Secured Party assigns a Schedule under this Security Agreement to a
third party ('Assignee'), then after such assignment:

     (a)  Debtor will make all payments due under such Schedule directly to such
          Assignee at such place as Assignee may from time to time designate in
          writing;

     (b)  Debtor agrees that it will settle all claims, defenses, setoffs and
          counterclaims it may have against Secured Party directly with Secured
          Party and will not set up any such claim, defense, setoff or
          counterclaim against Assignee, Secured Party hereby agreeing to remain
          responsible therefor;

     (c)  Secured Party shall not be Assignee's agent for any purpose and shall
          have no authority to change or modify such Schedule or any related
          document or instrument; and

     (d)  Assignee shall have all of the rights and remedies of Secured Party
          hereunder with respect to such assigned Schedule but none of Secured
          Party's obligations.

14.  MISCELLANEOUS.

     Debtor waives all exemptions.  Secured Party may correct patent errors
herein and fill in such blanks as serial numbers, date of first payment and the
like.  Any provisions hereof contra! to, prohibited by or invalid under
applicable laws or regulations shall be inapplicable and deemed omitted
herefrom, but shall not invalidate the remaining provisions hereof.

     Debtor and Secured Party each hereby waive any right to a trial by jury in
any action or proceeding with respect to, in connection with, or arising out of
this Security Agreement, or any note or document delivered pursuant to this
Security Agreement.  Except as otherwise provided herein or by applicable law,
the Debtor shall have no right to prepay the indebtedness described in any
Schedule.  Debtor acknowledges receipt of a true copy and waives acceptance
hereof.

                                       9
<PAGE>
 
     If Debtor is a corporation, this Security Agreement is executed pursuant to
authority of its Board of Directors.  Except where the context otherwise
requires, 'Debtor' and 'Secured Party' include the heirs, executors or
administrators, successors or assigns of those parties; nothing herein shall
authorize Debtor to assign this Security Agreement or its rights in and to the
Collateral.  If more than one Debtor executes this Security Agreement, their
obligations under this Security Agreement shall be joint and several.

     If at any time this transaction would be usurious under applicable law,
then regardless of any provision contained in this Security Agreement or in any
other agreement made in connection with this transaction, it is agreed that:

     (a)  The total of all consideration which constitutes interest under
          applicable law that is contracted for, charged or received upon this
          Security Agreement or any such other agreement shall under no
          circumstances exceed the maximum rate of interest authorized by
          applicable law and any excess shall be credited to the Debtor; and

     (b)  If Secured Party elects to accelerate the maturity of, or if Secured
          Party permits Debtor to prepay the Obligations described in Paragraph
          3, any amounts which because of such action would constitute interest
          may never include more than the maximum rate of interest authorized by
          applicable law and any excess interest, if any, provided for in this
          Security Agreement or otherwise, shall be credited to Debtor
          automatically as of the date of acceleration or prepayment.

     Debtor hereby agrees to indemnify Secured Party and hold Secured Party
harmless from and against any liability, loss, damage, suit, action or
proceeding ever suffered or incurred by Secured Party as the result of Debtor's
failure to observe, perform or discharge Debtor's duties hereunder.
Additionally, if any taxes (excluding taxes imposed upon or measured by the net
income of Secured Party, but including, without limitation, any intangibles
taxes, stamp taxes, recording taxes, documentary taxes or franchise taxes) shall
be payable by Secured Party or Debtor on account of the execution or delivery of
this Security Agreement, or the execution, delivery, issuance or recording of
any of the other Loan Documents, or the creation of any of the Obligations
hereunder, by reason of any existing or hereafter enacted federal or state
statute, Debtor will pay all such taxes, including, but not limited to, any
interest and penalties thereon, and will indemnify and hold Secured Party
harmless from and against liability in connection therewith.  The obligations of
Debtor under this Paragraph shall survive the payment in full of the Obligations
and the termination of this Security Agreement.

     This Security Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.

     All notices, requests and demands to or upon a party hereto shall be in
writing and shall be sent by certified or registered mail, return receipt
requested, personal delivery against receipt or by telecopier or other facsimile
transmission and, unless otherwise expressly provided herein, shall be deemed to
have been validly served, given or delivered when delivered against receipt or
three (3) business days after deposit in the U.S. mail, postage prepaid, or in
the case of facsimile transmission, when received at the office of the noticed
party, addressed as follows:
 
(A)      If to Secured Party:   The CIT Group/Equipment
                                Financing, Inc.
                                900 Ashwood Parkway
                                Suite 600
                                Atlanta, Georgia 30338
                                Attention:  VP Credit
                                ---------
                                Telecopier No.:  (404) 551-7865
                                --------------

                                       10
<PAGE>
 
(B)      If to Debtor:          Coast Hotels and Casinos, Inc.
                                4500 W. Tropicana Avenue
                                Las Vegas, Nevada 89103
                                Attention:  Harlan Braaten, President
                                Telecopier:  (702) 351-3515

         with copies to         Coast Resorts, Inc.
                                4000 W. Flamingo Road
                                Las Vegas, Nevada 89103
                                Attention:  Barry Lieberman
                                Telecopier:  (702) 351-3515

or to such other address as each party any designate for itself by like notice
given in accordance with this Paragraph (and Debtor shall be authorized to
designate another address for Coast Resorts, Inc.). Any written notice that is
not sent in conformity with the provisions hereof shall nevertheless be
effective on the date that such notice is actually received by the noticed
party.

     This Security Agreement and the other Loan Documents, together with all
other instruments, agreements and certificates executed by the parties in
connection therewith or with reference thereto, embody the entire understanding
and agreement between the parties hereto and thereto with respect to the subject
matter hereof and thereof and supersede all prior agreements, understandings and
inducements, whether express or implied, oral or written.

     This Security Agreement has been delivered at, and shall be effective when
accepted by Secured Party in Atlanta, Georgia.  This Security Agreement shall be
governed by and construed in accordance with the laws of the State of Nevada.

     Debtor waives (i) presentment, demand and protest and notice of
presentment, protest, default, non payment, maturity, release, compromise,
settlement, extension or renewal of any or all guaranties at any time held by
Secured Party on which Debtor may in any way be liable and hereby ratifies and
confirms whatever Secured Party may do in this regard; (ii) any right Debtor may
have upon payment in full of the Obligations to require Secured Party to
terminate its security interest in the Collateral or in any other property of
Debtor until termination of this Security Agreement in accordance with its terms
and the execution by Debtor, and by any person whose loans to Debtor are used in
whole or in party to satisfy the Obligations, of any agreement indemnifying
Secured Party from any loss or damage Secured Party may incur as the result of
dishonored checks or other items of payment received by Secured Party from
Debtor; and (iii) notice of acceptance hereof.


15.  SPECIAL PROVISIONS.

     Prepayment of the obligations under any Schedule shall he permitted as set
forth in such Schedule. 

Dated as of October 24, 1996

                                       11
<PAGE>
 
Secured Party:                               Debtor:
THE CIT GROUP/EQUIPMENT  FINANCING, INC.     COAST HOTELS AND CASINOS, INC.

By:/s/ J.E. Palmer                           By:  /s/Harlan Braaten
-------------------------------              -------------------------------
Title: Senior Credit Operations              Title: President and Chief 
         Manager                                      Operating Officer

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