<PAGE>

                                                        EXHIBIT 10.29

J8uRopes & Gray
Draft of 11/20/97
ITEM 3.1.1
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                               SECURITY AGREEMENT
                               ------------------


     THIS SECURITY AGREEMENT is made and entered into this 21st day of November,
1997, between COAST HOTELS AND CASINOS, INC., a Nevada corporation (the
"DEBTOR"), and FIRSTAR BANK OF MINNESOTA, N.A., as trustee for the benefit of
the holders of the Notes (as defined below) ("SECURED PARTY").

                                    RECITALS

     A.   NOTES.  Debtor is the issuer of those certain $16,800,000 10 7/8%
          -----
First Mortgage Notes due 2001 (the "NOTES") pursuant to that certain Indenture
dated as of November __, 1997 (the "INDENTURE") by and among Debtor, Coast
Resorts, Inc., a Nevada corporation, as guarantor, and Secured Party.  Any
capitalized term used in this Security Agreement without definition, but defined
in the Indenture, shall have the same meaning here as in the Indenture.

     B.   PURPOSE.  As a material inducement to Secured Party to enter into the
          -------
Indenture, the Debtor has agreed to execute this Security Agreement in favor of
Secured Party and to pledge all its right, title and interest in the collateral
described herein to Secured Party.

                                   AGREEMENT

     Now therefore, in consideration of the above recitals and the mutual
covenants hereinafter set forth, the parties hereto agree as follows:

     1.   CREATION OF SECURITY INTEREST.   Debtor hereby assigns, pledges and
          -----------------------------
grants to Secured Party a security interest in all of Debtor's right, title and
interest in and to the collateral described in Section 2 hereinbelow (the
"COLLATERAL") in each case whether now owned or hereafter acquired by Debtor in
order to secure the payment and performance of the obligations of Debtor to
Secured Party described in Section 3 hereinbelow.

     2.   COLLATERAL.  The Collateral under this Security Agreement is:
          ----------

          a)   all of Debtor's personal property, goods, equipment, supplies,
     building and other materials of every nature whatsoever and all other
     personal property, including, but not limited to, all gaming and general
     equipment and devices which are or are to be installed and used in
     connection with the operation of the Orleans Hotel and Casino, the Barbary
     Coast Hotel and Casino and the Gold Coast Hotel and Casino (collectively,
     the "HOTELS"), all computer equipment, calculators, adding machines, and
     gaming tables,
<PAGE>

     video game and slot machines and any other electronic equipment of every
     nature used or located at the Hotels (all of the foregoing property and
     similar or after-acquired property included as Collateral under Section
     2(g) below being hereinafter referred to as "EQUIPMENT");

          (b)   all of Debtor's accounts and accounts receivable, including,
     without limitation, all rights to payment for goods sold or leased or for
     services rendered which are not evidenced by an instrument or chattel
     paper, all other present or future rights for money due or to become due,
     all of Debtor's chattel paper, instruments, promissory notes, markers and
     general intangibles for money due or to become due of any kind, in each
     case whether now existing or hereafter arising and wherever arising and
     whether or not earned by performance (collectively, the "RECEIVABLES"),
     other general intangibles, documents of title, warehouse receipts, leases,
     deposit accounts: including, without limitation, money, tax refund claims,
     partnership interests, indemnification and other similar claims and
     contract rights, the Contracts and Documents (as such term is defined in
     the Collateral Assignment, dated as of January 30, 1996, between the Debtor
     and American Bank National Association, as trustee) permits and licenses:
     including, without limitation, any licenses held or to be held by Debtor
     necessary to operate the Hotels, franchises, certificates, stock, and all
     rights in, to and under all security agreements, mortgages, deeds of trust,
     guarantees, leases and other agreements or contracts securing or otherwise
     relating to any of the foregoing (all of the foregoing property, including,
     without limitation, the Receivables, and similar or after-acquired property
     included as Collateral under Section 2(g) below being hereinafter referred
     to as "INTANGIBLES");

          (c)   all of the trademarks and service marks now held or hereafter
     acquired by Debtor, which are registered in the United States Patent and
     Trademark Office or in any similar office or agency of the United States or
     any state thereof or any political subdivision thereof and any application
     for such trademarks and service marks, as well as any unregistered marks
     used by Debtor in the United States and trade dress including logos,
     designs, trade names, business names, fictitious business names and other
     business identifiers in connection with which any of these registered or
     unregistered marks are used in the United States ("MARKS") together with
     the registration and right to renewals thereof, and the goodwill of the
     business of Debtor symbolized by the Marks and all licenses associated
     therewith;

          (d)   all United States copyrights which Debtor now or hereafter has
     registered with the United States Copyright Office, as well as any
     application for a United States copyright registration now or hereafter
     made with the United States Copyright Office by Debtor ("COPYRIGHTS") or
     United States patent to which Debtor now or hereafter has title and any
     divisions or continuations thereof, as well as any application for a Untied
     States patent now or hereafter made by Debtor, and all reissues, renewals
     or extension thereof;

          (e)   all patents and patent applications, which are registered in the
     United States

                                      -2-
<PAGE>

     Patent and Trademark Office or any similar office or agency of the United
     States or any state thereof or political subdivision thereof ("PATENTS")
     together with the registration and right to renewals thereof, and the
     goodwill of the business of Debtor symbolized by the Patents;

          (f)   all computer programs of Debtor and all intellectual property
     rights therein and all other proprietary information of Debtor, including,
     but not limited to, trade secrets;

          (g)   the Collateral includes all items described in this Section 2,
     whether now owned or hereafter at any time acquired by Debtor and wherever
     located, and includes all replacements, additions, parts, appurtenances,
     accessions, substitutions, repairs, proceeds, products, offspring, rents
     and profits, relating thereto or therefrom, and all documents, records,
     ledger sheets and files of Debtor relating thereto.  Proceeds hereunder
     include (i) whatever is now or hereafter receivable or received by Debtor
     upon the sale, exchange, collection or other disposition of any item of
     Collateral, whether voluntary or involuntary, whether such proceeds
     constitute Equipment, Intangibles, or other assets; (ii) any such items
     which are now or hereafter acquired by Debtor with any proceeds of
     Collateral hereunder; and (iii) any insurance or payments under any
     indemnity, warranty or guaranty now or hereafter payable by reason of loss
     or damage or otherwise with respect to any item of Collateral or any
     proceeds thereof.  Notwithstanding the foregoing, "Collateral",
     "Equipment", "Receivables", "Intangibles" shall not include any of the
     following assets (the "EXCLUDED ASSETS"): (i) any aircraft owned by the
     Company and any equipment subject to Liens in existence as of the date of
     the 1996 Indenture (as defined in the Indenture) securing Existing
     Indebtedness (as defined in the Indenture); (ii) any agreement with a third
     party that, pursuant to its terms, prohibits the grant of a lien on such
     agreement; provided that the Company shall use its best efforts to obtain
     such third party's consent to assignment of all material agreements; (iii)
     Gaming Licenses (as defined in the Indenture) or any other governmental
     approval or permit, to the extent that, under the terms and conditions of
     such approval or under applicable law, it cannot be subjected to a Lien in
     favor of the Secured Party without the approval of the relevant
     governmental authority, to the extent that such approval has not been
     obtained; and (iv) any Equipment (A) the purchase of which was not financed
     with the proceeds of the Notes and (B) that Debtor is permitted to encumber
     and has encumbered pursuant to clause (ii) of the second paragraph of
     Section 4.9 of the Indenture and (C) in which Secured Party is prohibited
     from maintaining a security interest pursuant to the terms of the FF&E
     Financing Agreement (as defined below) encumbering such Equipment.

     3.   SECURED OBLIGATIONS OF DEBTOR.  The Collateral secures and shall
          -----------------------------
hereafter secure (i) the payment by Debtor to the Holders or Secured Party of
all indebtedness now or hereafter owed to Secured Party by Debtor in connection
with the transactions related to the Notes and the Indenture (the "COAST
FINANCING"), whether at stated maturity, by acceleration or otherwise,
including, without limitation, Debtor's obligations under the Indenture, the
Notes or any related documents securing the obligations thereunder, together
with any interest thereon,

                                      -3-
<PAGE>

payments for early termination, fees, expenses, increased costs, indemnification
or otherwise, in connection therewith and extensions, modifications and renewals
thereof, (ii) the performance by Debtor of all other obligations and the
discharge of all other liabilities of Debtor to Secured Party of every kind and
character arising from the Coast Financing, whether direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter arising, joint,
several and joint and several, and whether created under this Security Agreement
or any other agreement to which Debtor and Secured Party are parties, (iii) any
and all sums advanced by Secured Party in order to preserve the Collateral or
preserve Secured Party's security interest in the Collateral (or the priority,
thereof) and (iv) the expenses of retaking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, of any
proceeding for the collection or enforcement of any indebtedness, obligations or
liabilities of Secured Party referred to above, or of any exercise by Secured
Party of its rights hereunder, together with reasonable attorneys' fees and
disbursements and court costs (collectively, the "SECURED OBLIGATIONS"). All
payments and performance by Debtor with respect to any Secured Obligations shall
be in accordance with the terms under which said indebtedness, obligations and
liabilities were or are hereafter incurred or created.

     4.   DEBTOR'S REPRESENTATIONS AND WARRANTIES.  Debtor represents and
          ---------------------------------------
warrants that:

          (a)   Debtor is (or, to the extent that the Collateral is acquired
     after the date hereof, will be) the sole legal and beneficial owner of the
     Collateral and has exclusive possession and control thereof; there are no
     security interests in, liens, charges or encumbrances on, or adverse claims
     of title to, or any other interest whatsoever in, the Collateral or any
     portion thereof except Permitted Liens (as defined in the Indenture,
     including without limitation Liens that are created by this Security
     Agreement); and no financing statement, notice of lien, mortgage, deed of
     trust or instrument similar in effect covering the Collateral or any
     portion thereof or any proceeds thereof ("LIEN NOTICE") exists or is on
     file in any public office, except as relates to Permitted Liens, including
     without limitation liens as may have been filed in favor of Secured Party
     relating to this Security Agreement or related agreements, or for which
     duly executed termination statements have been delivered to Secured Party
     for filing;

          (b)   Debtor has full right, power and authority to execute, deliver
     and perform this Security Agreement.  This Security Agreement constitutes a
     legally valid and binding obligation of Debtor, enforceable against Debtor
     in accordance with its terms.  Subject to the completion of the items
     identified in Section 4(c) below (and except to the extent that
     registration of motor vehicles, possession of checks, instruments not
     required to be delivered under Section 5(d) and money are required for
     perfection and except with respect to deposit accounts), the provisions of
     this Security Agreement are effective to create in favor of Secured Party a
     valid and enforceable first, prior and perfected security interest in the
     Collateral subject only to Permitted Liens;

          (c)   except for (i) the filing or recording of the financing
     statements and fixture filings done concurrently with the execution and
     delivery hereof, (ii) the actual taking of possession of instruments
     constituting Collateral by the Trustee hereunder or, if the

                                      -4-
<PAGE>

     Collateral is required under the 1996 Indenture to be delivered to the 1996
     Notes Trustee or is in the possession of the 1996 Notes Trustee, the
     providing of such notice to the Secured Party or the taking of such other
     actions as are necessary to perfect the Secured Party's security interest
     in such Collateral, (iii) all consents received and actions taken in
     connection with the closing of the offering of the Notes, (iv) the actions
     contemplated by the parenthetical in the second sentence of Section 4(b),
     and (v) any filings necessary to perfect Secured Party's security interest
     in any Patent, Trademark or Copyright, no authorization, approval or other
     action by, no notice to or registration or filing with, any person or
     entity, including without limitation, any stockholder or creditor of Debtor
     or any governmental authority or regulatory body is required (x) for the
     grant by Debtor of the security interest in the Collateral pursuant to this
     Security Agreement or for the execution, delivery or performance of this
     Security Agreement by Debtor, (y) for the perfection or maintenance of such
     security interest created hereby, including the first priority nature of
     such security interest subject to Permitted Liens, or (except for notices
     required under the UCC) the exercise by Secured Party of the rights and
     remedies provided for in this Security Agreement (other than any required
     governmental consent or filing with respect to any Patents, Trademarks,
     Copyrights, governmental claims, tax refunds, licenses or permits; the
     exercise of remedies requiring prior court approval, notices, consents,
     approvals or authorizations in connection with the sale of any securities
     under laws affecting the offering and sale of securities generally), or (z)
     for the enforceability of such security interest against third parties,
     including, without limitation, judgment lien creditors;

          (d)   Except as indicated on Schedule 1, Debtor does not do business,
     and for the previous five years has not done business, under any fictitious
     business names or trade names;

          (e)   the Collateral has not been and will not be used or bought by
     Debtor for personal, family or household purposes.  In addition, the
     Collateral does not include crops, timber, farm products, minerals or the
     like or accounts resulting from the sale of such minerals at the wellhead
     or minehead;

          (f)   (i) Debtor's chief executive office is located at 4500 West
     Tropicana Avenue, Las Vegas, Nevada 89103, Debtor has no places of business
     other than such address and other places of business indicated on Schedule
     2 and the Collateral is now and will at all times hereafter be located at
     Debtor's places of business or as Debtor may otherwise notify Secured Party
     in writing;

          (g)   Debtor does not maintain any deposit accounts other than those
     set forth in Exhibit "A" hereto and Debtor is not now indebted to any
                  -----------
     organization with which Debtor maintains a deposit account;

          (h)   Except for purchases in the ordinary course of business, Debtor
     has not purchased any Collateral, other than for cash, within twenty-one
     (21) days prior to the date hereof;

                                      -5-
<PAGE>

          (i)  all originals of all promissory notes, other instruments or
     chattel paper which evidence Receivables (other than checks, which Debtor
     promptly shall deposit into one of the deposit accounts encumbered
     hereunder, or markers, received by Debtor in the ordinary course of
     business) with a face or fair market value not to exceed, in the aggregate
     $250,000, have been delivered to Secured Party (with all necessary or
     appropriate endorsements) or, if such notes, instruments or chattel paper
     are required under the 1996 Indenture to be delivered to the 1996 Notes
     Trustee or are in the possession of the 1996 Notes Trustee, such notice has
     been provided to the Secured Party or any such other actions have been
     taken as are necessary to perfect the Secured Party's security interest in
     such notes, instruments or chattel paper;

          (j)   none of the execution, delivery and performance of this Security
     Agreement by Debtor, the consummation of the transactions herein
     contemplated, the fulfillment of the terms hereof or the exercise by
     Secured Party of any rights or remedies hereunder will constitute or result
     in a breach of any of the terms or provisions of, or constitute a default
     under, or constitute an event which with notice or lapse of time or both
     will result in a breach of or constitute a default under, any material
     agreement, indenture, mortgage, deed of trust, equipment lease, instrument
     or other document to which Debtor is a party, conflict with or require
     approval, authorization, notice or consent under any material law, order,
     rule, regulation, license or permit applicable to Debtor of any court or
     any federal or state government, regulatory body or administrative agency,
     or any other governmental body having jurisdiction over Debtor or its
     properties or require notice, consent, approval or authorization by or
     registration or filing with any person or entity (including, without
     limitation, any stockholder or creditor of Debtor) other than (i) any
     notices to Debtor or any Guarantor from Secured Party required hereunder,
     (ii) notices and filings in connection with the perfection of Liens
     hereunder and (iii) notices, consents, approvals or authorizations in
     connection with the sale of any securities under laws affecting the
     offering and sale of securities generally.  Except for documents entered
     into in connection with Permitted Liens or Indebtedness permitted under the
     Indenture, none of the Collateral is subject to any material agreement,
     indenture, mortgage, deed of trust, equipment lease, instrument or other
     document to which Debtor is a party which may restrict or inhibit Secured
     Party's rights or ability to sell or dispose of the Collateral or any part
     thereof after the occurrence of an Event of Default (as defined herein);

          (k)   Debtor represents and warrants that it is the true lawful
     exclusive owner or licensee of the Marks listed in Annex 1, except those
                                                        -------
     listed as being held under a nonexclusive license, and that said listed
     Marks include all the United States federal registrations or applications
     registered in the United States Patent and Trademark office and that said
     Marks are valid, subsisting and have not been canceled.  Debtor represents
     and warrants that except as indicated on Annex 1, it owns or is licensed to
     use or not prohibited from using all Marks that it uses.  Debtor further
     warrants that except as indicated on Annex 1, it is aware of no third party
     claim that any aspect of Debtor's present or contemplated business
     operations infringes or will infringe Debtor's

                                      -6-
<PAGE>

     Mark; and

          (l)   Debtor represents and warrants that it is the true and lawful
     exclusive owner or licensee of all rights in the Patents listed in Annex 2
                                                                        -------
     hereto and in the Copyrights listed in Annex 3 hereto, that said Patents
                                            -------
     include all the United States patents and applications for United States
     patents that Debtor owns and that said Copyrights constitute all the United
     States copyrights registered in the United States Copyright Office and
     applications, for United States copyrights that it now uses or practices
     under.  Debtor further warrants that, except as indicated on Annex 2 or 3,
     it is aware of no third party claim that any aspect of Debtor's present or
     contemplated business operations infringes or will infringe any Patent or
     any copyright.

     5.   COVENANTS OF DEBTOR.  Debtor covenants and agrees that:
          -------------------

          (a)   Debtor will not move or permit to be moved the Collateral or any
     portion thereof to any location other than that set forth in or referred in
     Section 4(f) hereof or the respective Hotels or locations established in
     compliance with Section 5(b) hereof without the prior written consent of
     the Secured Party and the prior filing of a financing statement with the
     proper office and in the proper form, to the extent necessary or
     appropriate, to perfect or continue the perfection (without loss of
     priority) of the security interests created herein, which filing shall be
     satisfactory in form, substance and location to Secured Party prior to such
     filing; provided, however that (i) Debtor shall be permitted to move assets
     pursuant to Section 4.10 of the Indenture and (ii) the foregoing shall not
     apply to deposit accounts (so long as Debtor complies with Section 5(c)
     below) or any other intangible Collateral or any vehicles included in the
     Collateral;

          (b)   Debtor will not voluntarily or involuntarily change its name,
     identity, corporate structure, or location of its chief executive office or
     any of its other places of business, unless in any such case (i) Debtor
     shall have delivered written notice to Secured Party, (ii) Debtor shall
     have executed and caused to be filed financing statements with the proper
     offices and in the proper form, to the extent necessary or appropriate, to
     perfect or continue the perfection (without loss of priority) of the
     security interests created herein, which filing shall be satisfactory in
     form, substance and location to Secured Party prior to such filing, and
     (iii) Debtor shall have delivered to Secured Party any other documents that
     may be required by Secured Party in a form and substance reasonably
     satisfactory to Secured Party to perfect or continue the perfection
     (without loss of priority) of the security interest created herein subject
     to the terms and conditions of the 1996 Indenture and the Intercreditor
     Agreement, or Debtor will at all times maintain its status as a citizen of
     the United States as provided in Section 4(f) hereof;

          (c)   Debtor will not establish or create any deposit accounts other
     than those set forth in Exhibit "A" without giving Secured Party prior
                             ----------
     written notice;

          (d)   Debtor will promptly, and in no event later than 21 days after a
     request by

                                      -7-
<PAGE>

     Secured Party, procure or execute and deliver all further instruments and
     documents (including, without limitation, notices, legal opinions,
     financing statements, mortgagee waivers, landlord disclaimers and
     subordination agreements) satisfactory to Secured Party subject to the
     terms and conditions of the 1996 Indenture and the Intercreditor Agreement,
     and take any other actions which are necessary or, in the judgment of
     Secured Party, desirable or appropriate to perfect or to continue the
     perfection, priority and enforceability of Secured Party's security
     interests in the Collateral, to enable Secured Party to exercise and
     enforce its rights and remedies hereunder with respect to any Collateral,
     to protect the Collateral against the rights, claims or interests of third
     persons (other than holders of Permitted Liens), or to effect or to assure
     further the purposes and provisions of this Security Agreement, and will
     pay all costs incurred in connection therewith. Without limiting the
     generality of the foregoing, Debtor will: (i) mark conspicuously each item
     of chattel paper included in the Collateral with a legend, in form and
     substance satisfactory to Secured Party, indicating that such chattel paper
     and other contracts are subject to the security interests granted hereby;
     (ii) execute and file such financing or continuation statements, or
     amendments thereto, and such other instruments or notices as may be
     necessary or desirable, which Secured Party may reasonably request in order
     to perfect and preserve the perfection and priority of the security
     interests granted or purported to be granted hereby; (iii) if any
     Receivable shall be evidenced by a promissory note or other instrument or
     chattel paper (other than checks, which Debtor promptly shall deposit into
     one of the deposit accounts encumbered hereunder or markers, received by
     Debtor in the ordinary course of business), deliver and pledge to Secured
     Party such note or instrument or chattel paper duly endorsed and
     accompanied by duly executed instruments of transfer or assignment, all in
     form and substance reasonably satisfactory to Secured Party; (iv) if any
     Collateral is at any time in the possession or control of any warehouseman,
     bailee, consignee or any of Debtor's agents or processors, Debtor shall
     notify such warehouseman, bailee, consignee, agent or processor of the
     security interests created or purported to be created hereby, shall cause
     such warehouseman, bailee, consignee, agent or processor to execute any
     financing statements or other documents which Secured Party may request,
     and, upon the request of Secured Party after the occurrence and during the
     continuation of an Event of Default, shall instruct such person to hold all
     such Collateral for Secured Party's account subject to Secured Party's
     instructions; (v) deliver and pledge to Secured Party all securities and
     instruments (other than checks, which Debtor promptly shall deposit into
     one of the deposit accounts encumbered hereunder, or markers received by
     Debtor in the ordinary course of business) constituting Collateral duly
     endorsed and accompanied by duly executed instruments of transfer or
     assignment, all in form and substance satisfactory to Secured Party; and
     (vi) at the request of Secured Party following the occurrence of a default
     that, with the passage of time would result in an Event of Default, deliver
     to Secured Party any and all certificates of title, applications for title
     or similar evidence of ownership of all Equipment and shall cause Secured
     Party to be named as lienholder on any such certificate of title or other
     evidence of ownership; provided, however, that notwithstanding anything to
     the contrary in this Agreement, the actions under clauses (iii) and (v)
     shall not be required with respect to promissory notes, other instruments,

                                      -8-
<PAGE>

     securities and chattel paper with a face or fair market value not to exceed
     in the aggregate $250,000;

          (e)   without the prior written consent of Secured Party or as
     otherwise expressly permitted by the Indenture, Debtor will not in any way
     encumber, or hypothecate, or create or permit to exist, any lien, security
     interest, charge or encumbrance or adverse claim upon or other interest in
     the Collateral, except for Permitted Liens, including without limitation
     encumbrances permitted by the Indenture and the liens created by this
     Security Agreement, and Debtor will defend the Collateral against all
     claims and demands of all persons at any time claiming the same or any
     interest therein (other than holders of Permitted Liens), except as
     expressly provided herein. Debtor will not permit any Lien Notices to exist
     or be on file in any public office with respect to all or any portion of
     the Collateral except, in each case, for Lien Notices of holders of
     Permitted Liens including without limitation encumbrances permitted by the
     Indenture or except as may have been filed by or for the benefit of Secured
     Party relating to this Security Agreement or related agreements. Debtor
     shall promptly notify Secured Party of any attachment or other legal
     process levied against any of the Collateral and any information received
     by Debtor relative to the Collateral, which may in any material way affect
     the value of the Collateral or the rights and remedies of Secured Party in
     respect thereto;

          (f)   without the prior written consent of Secured Party, Debtor will
     not sell, transfer, assign (by operation of law or otherwise), exchange or
     otherwise dispose of all or any portion of the Collateral or any interest
     therein, except as permitted by the Indenture.  If the proceeds of any such
     prohibited sale are notes, instruments, documents of title, letters of
     credit or chattel paper, such proceeds shall be promptly delivered to
     Secured Party to be held as Collateral hereunder (with all necessary or
     appropriate endorsements) or, if such proceeds are required to be delivered
     under the 1996 Indenture to the 1996 Notes Trustee, Debtor shall promptly
     provide appropriate notice to the Secured Party or take any such other
     actions as are necessary to perfect the Secured Party's security interest
     in such proceeds.  If the Collateral, or any part thereof or interest
     therein, is sold, transferred, assigned, exchanged, or otherwise disposed
     of in violation of these provisions, the security interest of Secured Party
     shall continue in such Collateral or part thereof notwithstanding such
     sale, transfer, assignment, exchange or other disposition, and Debtor will
     hold the proceeds thereof in a separate account for Secured Party's
     benefit.  Debtor will, at Secured Party's request, transfer such proceeds
     to Secured Party in kind;

          (g)   Secured Party is hereby authorized to file one or more financing
     statements or fixture filings, and continuations thereof and amendments
     thereto, relative to all or any part of the Collateral, without the
     signature of Debtor where permitted by law;

          (h)   Except as expressly permitted by the Indenture, Debtor will pay
     and discharge all taxes, assessments and governmental charges or levies
     against the Collateral prior to delinquency thereof and will keep the
     Collateral free of all unpaid

                                      -9-
<PAGE>

     claims and charges (including claims for labor, materials and supplies)
     whatsoever;

          (i)   Debtor will keep and maintain the Collateral in good condition,
     working order and repair, ordinary wear and tear excepted, and from time to
     time will make or cause to be made all repairs, replacements and other
     improvements in connection therewith that are necessary or desirable toward
     such end.  Debtor will not misuse or abuse the Collateral, or waste or
     allow it to deteriorate except for the ordinary wear and tear of its normal
     and expected use in Debtor's business in accordance with Debtor's policies
     as then in effect (provided that no changes are made to Debtor's policies
                        --------
     as in effect on the date hereof that would be materially adverse to the
     interests of the Secured Party), and will comply with all material laws,
     statutes and regulations pertaining to the use or ownership of the
     Collateral.  Debtor will promptly notify Secured Party regarding any loss
     or damage to any material portion of the Collateral or portion thereof;

          (j)   Upon the occurrence and during the continuation of an Event of
     Default or a material default which, with the passage of time is reasonably
     likely to cause an Event of Default, (i) Debtor will take all actions
     directed by Secured Party in Secured Party's sole and absolute discretion,
     to create, preserve and enforce any liens or guaranties available to secure
     or guaranty payments due Debtor under any contracts or other agreements
     with third parties, will not voluntarily permit any such payments to become
     more than thirty (30) days delinquent and will in a timely manner record
     and assign to Secured Party, to the extent and at the earliest time
     permitted by law, any such liens and rights under such guaranties and (ii)
     Debtor will give Secured Party written notice of any payments due Debtor
     within five (5) days after any such payments become thirty (30) days
     delinquent;

          (k)   Upon Secured Party's request, Debtor will deliver to Secured
     Party records and schedules that show the status, condition and location of
     the Collateral, including reports reasonably requested by Secured Party,
     all in reasonable detail; will promptly notify Secured Party in writing of
     any event, or change of law, regulation, business practice, or business
     condition that may materially adversely affect the value of the Collateral.
     Secured Party shall have the right to review and verify such records,
     schedules, and notices, and Debtor will reimburse Secured Party for all
     costs incurred thereby;

          (l)   Except as otherwise provided in this Section 5(l), Debtor shall
     continue to collect, at its own expense, all amounts due or to be become
     due Debtor under the Receivables.  In connection with such collections,
     Debtor may take (and upon the occurrence and during the continuation of an
     Event of Default, at Secured Party's direction, shall take) such action as
     Debtor (or, upon the occurrence and during the continuation of an Event of
     Default, Secured Party) may deem necessary or advisable to enforce
     collection of the Receivables; provided, however that Debtor shall not
                                    --------
     adjust, settle or compromise the amount or payment of any Receivable, or
     release wholly or partly any account debtor or obligor thereof, or allow
     any credit or discount thereon,

                                      -10-
<PAGE>

     other than adjustments, settlements, or discounts that are in accordance
     with Debtor's policies as then in effect. Secured Party shall have the
     right at any time after the occurrence and during the continuation of an
     Event of Default to notify the account debtors or obligors under any of the
     Receivables of the assignment of such Receivables to Secured Party and to
     direct such account debtors or obligors to make payment of all amounts due
     or to become due to Debtor thereunder directly to Secured Party and, upon
     such notification and at the expense of Debtor, to enforce collection of
     any such Receivables, and to adjust, settle or compromise the amount or
     payment thereof, as Secured Party may deem appropriate in its sole
     discretion, subject to the Intercreditor Agreement. After the occurrence
     and during the continuation of an Event of Default (i) all amounts and
     proceeds (including instruments) received by Debtor in respect of the
     Receivables shall be received in trust for the benefit of Secured Party
     hereunder and, upon notice from Secured Party, shall be segregated from
     other funds of Debtor and shall be forthwith paid over to Secured Party in
     the same form as so received (with all necessary or appropriate
     endorsements) to be held as cash collateral and applied as provided by the
     Indenture, subject to the Intercreditor Agreement, and (ii) Debtor shall
     not adjust, settle or compromise the amount or payment of any Receivable,
     or release wholly or partly any account debtor or obligor thereof, or allow
     any credit or discount thereon;

          (m)   Secured Party shall have the right during regular business hours
     and upon prior notice to Debtor to enter into and upon any premises where
     any of the Collateral or records with respect thereto are located for the
     purpose of inspecting the same, performing any audit, making copies of
     records, observing the use of any part of the Collateral, or otherwise
     protecting its security interest in the Collateral.  Debtor will hold and
     preserve all records concerning the Receivables and all originals of all
     chattel paper that evidences any Receivables;

          (n)   Secured Party shall have the right at any time while an Event of
     Default exists, but shall not be obligated, to make any payments and do any
     other acts Secured Party may deem necessary or desirable to protect its
     security interest in the Collateral, including, without limitation, the
     right to pay, purchase, contest or compromise any encumbrance, charge or
     lien (excluding any Permitted Liens) applicable or purported to be
     applicable to any Collateral hereunder, and appear in and defend any action
     or proceeding purporting to affect its security interest in and/or the
     value of any Collateral, and in exercising any such powers or authority,
     the right to pay all expenses incurred in connection therewith, including
     reasonable attorneys' fees.  Debtor hereby agrees that it shall be bound by
     any such payment made or incurred or act taken by Secured Party hereunder
     and shall reimburse Secured Party for all payments made and expenses
     incurred under this Security Agreement, which amounts shall be secured
     under this Security Agreement.  Secured Party shall have no obligation to
     make any of the foregoing payments or perform any of the foregoing acts;

          (o)   if Debtor shall become entitled to receive or shall receive any
     certificate, instrument, option or rights (other than checks, which Debtor
     promptly shall deposit

                                      -11-
<PAGE>

     into one of the deposit accounts encumbered hereunder, or markers, received
     by Debtor in the ordinary course of business and instruments not required
     to be delivered under Section 5(d)), whether as an addition to, in
     substitution of, or in exchange for any or all of the Collateral or any
     part thereof, or otherwise, Debtor shall accept any such instruments as
     Secured Party's agent, shall hold them in trust for Secured Party, and
     shall deliver them forthwith to Secured Party or, if required under the
     1996 Indenture, to the 1996 Notes Trustee in the exact form received, with
     Debtor's endorsement when necessary or appropriate, or accompanied by duly
     executed instruments of transfer or assignment in blank or, if requested by
     Secured Party, an additional pledge agreement or security agreement
     executed and delivered by Debtor, all in form and substance satisfactory to
     Secured Party, to be held by Secured Party, subject to the terms hereof, as
     additional Collateral to secure the obligations hereunder;

          (p)   Secured Party is hereby authorized to pay all reasonable costs
     and expenses incurred in the exercise or enforcement of its rights
     hereunder, including reasonable attorneys' fees, and, while an Event of
     Default exists to apply any Collateral or proceeds thereof against such
     amounts, and then to credit or use any further proceeds of the Collateral
     in accordance herewith;

          (q)   Secured Party may take any actions permitted hereunder or in
     connection with the Collateral by or through agents or employees and shall
     be entitled to retain counsel and to act in reliance upon the advice of
     counsel concerning all such matters;

          (r)   Debtor hereby agrees to take all actions necessary to maintain
     Secured Party's first prior security interest (subject to Permitted Liens)
     in all Marks, Patents and Copyrights (if any), to preserve the value of all
     Marks, Patents and Copyrights (if any), to prosecute and defend such Marks,
     Patents and Copyrights against infringement, and to provide Secured Party
     with notice of any material pertinent information regarding any such
     infringement, any material actions with the United States Patent and
     Trademark Office and any other information which could have a material
     adverse effect on the Marks, Patents and Copyrights; and

          (s)   This Security Agreement, as applied to Equipment subject to an
     FF&E Financing Agreement (as defined below), shall be subordinated to the
     liens of any FF&E Financing Agreements (or if required by an FF&E Financing
     Agreement, it shall be released) and any future or further advances made
     thereunder and to any modifications, renewals or extensions thereof to
     which the lien of this Security Agreement attaches, provided, however, that
                                                         --------  -------
     any such FF&E Financing Agreement shall encumber only that Equipment
     specifically subject to the FF&E Financing Agreement.  Debtor covenants and
     agrees to comply with all of the terms and conditions set forth in any FF&E
     Financing Agreement covering Equipment in which Secured Party has taken a
     lien hereunder.  If, under any FF&E Financing Agreement covering Equipment
     in which Secured Party has taken a lien hereunder, Secured Party shall fail
     to make any payment of principal of or interest, except where Debtor is
     contesting such payment in good faith, then Secured Party may make such
     payment of

                                      -12-
<PAGE>

     the principal of or interest on the sums secured by such security interest
     or may make any payment in order to perform or observe any other term,
     covenant, condition or agreement of any such FF&E Financing Agreement on
     Debtor's part to be performed or observed and any and all sums so expended
     by Secured Party shall be secured by this Security Agreement and shall be
     repaid by Debtor upon demand, together with interest thereon at the
     interest rate on the Notes from the date of advance. In furtherance of such
     subordination or release, as applicable, Secured Party, upon receipt of an
     officer's certificate from Debtor certifying that the requirements of this
     Section 5(t)) have been satisfied, shall execute, acknowledge and deliver
     to Debtor, at Debtor's expense, any and all such evidence and documents
     necessary to evidence the subordination or release of this Security
     Agreement in accordance with the foregoing provisions of this Section 5(t).
     As used herein, "FF&E Financing Agreement" shall mean (A) any financing (i)
     as to which the lender holds a security interest in only the assets
     purchased, fabricated or leased by such financing for the payment of
     principal, interest and other amounts in connection therewith, (ii) which
     is permitted by the Indenture to be incurred and (iii) the proceeds of
     which are used to acquire, construct or lease the Equipment subject to such
     security interest, and (B) any refinancing or renewal of any financing
     under clause (A).

     6.   DEFAULTS AND REMEDIES
          ---------------------

          (a)   The occurrence of any "Event of Default" under the Indenture
     (subject to the cure rights set forth therein) shall constitute an Event of
     Default under this Security Agreement.

          (b)   Upon the occurrence and continuation of an Event of Default
     hereunder, Debtor expressly covenants and agrees that Secured Party may, at
     its option, subject to the terms of the Indenture, in addition to other
     rights and remedies provided herein or otherwise available to it, without
     notice to or demand upon Debtor (except as otherwise required herein),
     exercise any one or more of the rights as set forth as follows:

               (i)   in accordance with the provisions in the Indenture, declare
          all advances made by Secured Party to Debtor hereunder, all other
          indebtedness owed by Debtor to Secured Party and all Secured
          Obligations to be immediately due and payable, whereupon all unpaid
          principal and interest on said advances and other indebtedness and
          Secured Obligations shall become and be immediately due and payable;

               (ii)  immediately take possession of any of the Collateral
          wherever it may be found or require Debtor to assemble the Collateral
          or any part thereof and make it available at one or more places as
          Secured Party may designate, and to deliver possession of the
          Collateral or any part thereof to Secured Party, who shall have full
          right to enter upon any or all of Debtor's places of business,
          premises and property to exercise Secured Party's rights hereunder;

                                      -13-
<PAGE>

               (iii)  exercise any or all of the rights and remedies provided
          for by the Nevada Uniform Commercial Code, specifically including,
          without limitation, the right to recover the attorneys' fees and other
          expenses incurred by Secured Party in the enforcement of this Security
          Agreement or in connection with Debtor's redemption of the Collateral.
          Secured Party may exercise its rights under this Security Agreement
          independently of any other collateral or guaranty that Debtor may have
          granted or provided to Secured Party in order to secure payment and
          performance of the Secured Obligations, and Secured Party shall be
          under no obligation or duty to foreclose or levy upon any other
          collateral given by Debtor to secure any Secured Obligation or to
          proceed against any guarantor before enforcing its rights under this
          Security Agreement;

               (iv)   use, manage, operate and control the Collateral and
          Debtor's business and property to preserve the Collateral or its
          value, or to pay the indebtedness secured hereunder, including,
          without limitation, the rights to take possession of all of Debtor's
          premises and property, to exclude Debtor and any third parties,
          whether or not claiming under Debtor, from such premises and property,
          to make repairs, replacements, alterations, additions and improvements
          to the Collateral and to dispose of all or any portion of the
          Collateral in the ordinary course of Debtor's business;

               (v)   without notice (except as specified below), sell the
          Collateral or any part thereof in one or more parcels at one or more
          public or private sales, at any of Secured Party's offices or
          elsewhere, at such time or times, for cash, on credit or for future
          delivery, and at such price or prices and upon such other terms as
          shall be commercially reasonable.  Debtor acknowledges and agrees
          that, to the extent notice of sale shall be required by law, at least
          ten (10) days' written notice to Debtor of the time and place of any
          public sale or of the date on or after which any private sale is to be
          made shall constitute reasonable notification.  Any public sale shall
          be held at such time or times during ordinary business hours and at
          such place or places as Secured Party may fix in the notice of such
          sale.  Notwithstanding the foregoing, Secured Party shall not be
          obligated to make any sale of Collateral regardless of notice of sale
          having been given.  Secured Party may, without notice or publication,
          adjourn any public or private sale, or cause the same to be adjourned
          from time to time by announcement at the time and place fixed for sale
          or, with respect to a private sale, after which such sale may take
          place, and any such sale may, without further notice, be made at the
          time and place to which it was so adjourned or, with respect to a
          private sale, after which such sale may take place.  Each purchaser at
          any such sale shall hold the property sold free from any claim or
          right on the part of Debtor, and Debtor hereby waives, to the full
          extent permitted by law, all rights of stay and/or appraisal which
          Debtor now has or may at any time in the future have under any rule of
          law or statute now existing or hereafter enacted.  Debtor also hereby
          waives any claims against Secured Party arising by reason of the fact
          that the price at which any Collateral may

                                      -14-
<PAGE>

          have been sold at a private sale was less than the price which might
          have been obtained at a public sale, even if Secured Party accepts the
          first offer received and does not offer such Collateral to more than
          one offeree. The parties hereto agree that the notice provisions,
          method, manner and terms of any sale, transfer or disposition of any
          Collateral in compliance with the terms set forth herein or any other
          provision of this Security Agreement are commercially reasonable;

               (vi)   proceed by an action or actions at law or in equity to
          recover the indebtedness secured hereunder or to foreclose this
          Security Agreement and sell the Collateral, or any portion thereof,
          pursuant to a judgment or decree of a court or courts of competent
          jurisdiction in any manner permitted by law, or provided for herein;

               (vii)   in the event Secured Party recovers possession of all or
          any part of the Collateral pursuant to a writ of possession or other
          judicial process, whether prejudgment or otherwise, Secured Party may
          retain, sell or otherwise dispose of such Collateral in accordance
          with this Security Agreement or the Nevada Uniform Commercial Code,
          and following such retention, sale or other disposition, Secured Party
          may voluntarily dismiss without prejudice the judicial action in which
          such writ of possession or other judicial process was issued.  Debtor
          hereby consents to the voluntary dismissal without prejudice by
          Secured Party of such judicial action, and Debtor further consents to
          the exoneration of any bond which Secured Party files in such action;

               (viii)   with respect to the sale of securities constituting
          Collateral, to the extent Secured Party deems it advisable to do so,
          in its sole discretion or as may be required by applicable law,
          restrict the prospective bidders or purchasers to persons who in
          Secured Party's sole judgment are sufficiently sophisticated and who
          will represent and agree that they are purchasing the securities
          constituting Collateral then being sold for their own account and not
          with a view to the distribution or resale thereof, and upon
          consummation of any such sale, Secured Party shall have the right to
          assign, transfer and deliver to the purchaser or purchasers thereof
          the securities constituting Collateral so sold;

               (ix)   Secured Party, in its sole discretion, if permitted by
          law, may bid (which bid may be, in whole or in part, in the form of
          cancellation of indebtedness) for and purchase for its account the
          whole or any part of the Collateral at any public sale or sale on any
          securities exchange or other recognized market;

               (x)   to the full extent provided by law, have a court having
          jurisdiction appoint a receiver, which receiver shall take charge and
          possession of and protect, preserve, replace and repair the Collateral
          or any part thereof, and manage and operate the same, and receive and
          collect all rents, income, receipts, royalties, revenues, issues and
          profits therefrom.  Debtor shall

                                      -15-
<PAGE>

          irrevocably consent and shall be deemed to have hereby irrevocably
          consented to the appointment thereof, and upon such appointment,
          Debtor shall immediately deliver possession of such Collateral to the
          receiver. Debtor also irrevocably consents to the entry of an order
          authorizing such receiver to invest upon interest any funds held or
          received by the receiver in connection with such receivership. Secured
          Party shall be entitled to such appointment as a matter of right, if
          it shall so elect, without the giving of notice to any other party and
          without regard to the adequacy of the security of the Collateral;

                (xi)  enforce one or more remedies hereunder, successively or
          concurrently, and such action shall not operate to estop or prevent
          Secured Party from pursuing any other or further remedy which it may
          have hereunder or by law, and any repossession or retaking or sale of
          the Collateral pursuant to the terms hereof shall not operate to
          release Debtor until full and final payment of any deficiency has been
          made in cash.  Debtor shall reimburse Secured Party upon demand for,
          or Secured Party may apply any proceeds of Collateral to, the costs
          and expenses (including attorneys' fees, transfer taxes and any other
          charges) incurred by Secured Party in connection with any sale,
          disposition, repair, replacement, alteration, addition, improvement or
          retention of any Collateral hereunder;

               (xii)  upon the occurrence of a default hereunder, any cash held
          by Secured Party as Collateral and all cash proceeds received by
          Secured Party in respect of any sale of, collection from, or other
          realization upon all or any part of the Collateral may, in the
          discretion of Secured Party, be held by Secured Party as collateral
          for and/or then or at any time thereafter applied (including
          application to the payment of any costs, expenses, indemnification and
          other amounts payable to Secured Party hereunder, which amounts may be
          paid in whole or in part prior to the other obligations secured
          hereby) in whole or in part by Secured Party against all or any part
          of the obligations secured hereby in such order as Secured Party shall
          elect.  Any surplus of such cash or cash proceeds held by Secured
          Party and remaining after payment in full of all the obligations
          secured hereby shall be paid over to Debtor or to whomever may be
          lawfully entitled to receive such surplus or as a court of competent
          jurisdiction may direct, provided, however, that in the event that all
                                   --------
          of the conditions to termination of this Security Agreement under
          Section 7(l) shall have not been fulfilled, such balance shall be held
          as additional Collateral hereunder and applied from time to time to
          Secured Party's costs and expenses and as otherwise provided hereunder
          until all such conditions shall have been fulfilled; and

               (xiii)  effect an absolute assignment of all of Debtor's right,
          title and interest in and to each Mark (and the goodwill of the
          business of Debtor associated therewith), Patent and Copyright.

                                      -16-
<PAGE>

7.   MISCELLANEOUS PROVISIONS
     ------------------------

          (a)   Notices.  All notices, requests, approvals, consents and other
                -------
          communications required or permitted to be made hereunder shall,
          except as otherwise provided, be in writing and may be delivered
          personally or sent by telegram, telecopy, facsimile, telex, first
          class mail or overnight courier, postage prepaid, to the parties
          addressed as follows:

          To Debtor:     Coast Hotels and Casinos, Inc.
                         4500 West Tropicana Avenue
                         Las Vegas, Nevada 89103
                         Attn: Michael Gaughan
                         Ph: (702) 365-7111
                         FAX: (702) 365-7566

                         With a Copy to:

                         Barry Lieberman, Esq.
                         General Counsel
                         Coast Hotels and Casinos, Inc.
                         4500 West Tropicana Avenue
                         Las Vegas, Nevada 89103
                         Ph: (702) 365-7111
                         FAX: (702) 365-7566

To Secured Party:        Firstar Bank of Minnesota, N.A.
                         101 East 5th Street
                         St. Paul, Minnesota  55101
                         FAX:   (612) 229-6415
                         Atten:  Frank Leslie, III

          Such notices, requests and other communications sent as provided
     hereinabove shall be effective when received by the addressee thereof,
     unless sent by registered or certified mail, postage prepaid in which case
     they shall be effective exactly three (3) business days after being
     deposited in the United States mail.  The parties hereto may change their
     addresses by giving notice thereof to the other parties hereto in
     conformity with this section.

          (b)   Headings.  The various headings in this Security Agreement are
                --------
     inserted for convenience only and shall not affect the meaning or
     interpretation of this Security Agreement or any provision hereof.

          (c)   Amendments.  This Security Agreement or any provision hereof may
                ----------
     be changed, waived, or terminated only by a statement in writing signed by
     the party against which such change, waiver or termination is sought to be
     enforced, and then

                                      -17-
<PAGE>

     any such waiver or consent shall be effective only in the specific instance
     and for the specific purpose for which given.

          (d)   No Waiver.  No failure on the part of Secured Party to exercise,
                ---------
     and no delay in exercising, and no course of dealing with respect to, any
     power, privilege or right under this Security Agreement or any related
     agreement shall operate as a waiver thereof nor shall any single or partial
     exercise by Secured Party of any power, privilege or right under this
     Security Agreement or any related agreement preclude any other or further
     exercise thereof or the exercise of any other power, privilege or right.
     The powers, privileges and rights in this Security Agreement are cumulative
     and are not exclusive of any other remedies provided by law.  No waiver by
     Secured Party of any default hereunder shall be effective unless in
     writing, nor shall any waiver operate as a waiver of any other default or
     of the same default on a future occasion.

          (e)   Binding Agreement.  All rights of Secured Party hereunder shall
                -----------------
     inure to the benefit of its successors and assigns.  Debtor shall not
     assign any of its interest under this Security Agreement without the prior
     written consent of Secured Party.  Any purported assignment inconsistent
     with this provision shall, at the option of Secured Party, be null and
     void.

          (f)   Entire Agreement.  This Security Agreement, together with any
                ----------------
     other agreement executed in connection herewith, is intended by the parties
     as a final expression of their agreement and is intended as a complete and
     exclusive statement of the terms and conditions thereof.  Acceptance of or
     acquiescence in a course of performance rendered under this Security
     Agreement shall not be relevant to determine the meaning of this Security
     Agreement even though the accepting or acquiescing party had knowledge of
     the nature of the performance and opportunity for objection.

          (g)   Choice of Law.  The existence, validity, construction, operation
                -------------
     and effect of any and all terms and provisions of this Security Agreement
     shall be determined in accordance with and governed by the substantive laws
     of the State of Nevada, without giving effect to its conflicts of law
     principles.

          (h)   Severability.  If any provision or obligation of this Security
                ------------
     Agreement should be found to be invalid, illegal or unenforceable in any
     jurisdiction, the validity, legality and enforceability of the remaining
     provisions and obligations or any other agreement executed in connection
     herewith, or of such provision or obligation in any other jurisdiction,
     shall not in any way be affected or impaired thereby and shall nonetheless
     remain in full force and effect to the maximum extent permitted by law.

          (i)   Survival of Provisions.  All representations, warranties and
                ----------------------
     covenants of Debtor contained herein shall survive the execution and
     delivery of this Security Agreement, and shall terminate only upon the
     termination of this Security Agreement pursuant to Subsection 7(k) hereof.

                                      -18-
<PAGE>

          (j)    Power of Attorney.  Debtor hereby irrevocably appoints Secured
                 -----------------
     Party its attorney-in-fact, which appointment is coupled with an interest,
     with full authority in the place and stead of Debtor and in the name of
     Debtor, Secured Party or otherwise, from time to time in Secured Party's
     discretion (a) to execute and file financing and continuation statements
     (and amendments thereto and modifications thereof) on behalf and in the
     name of Debtor with respect to the security interests granted or purported
     to be granted hereby, (b) to take any action and to execute any instrument
     which Secured Party may deem necessary or advisable to exercise its rights
     under Section 5(p) hereunder, and (c) upon the occurrence and during the
     continuance of an Event of Default, to take any action and to execute any
     instrument which Secured Party may deem necessary or advisable to
     accomplish the purposes of this Security Agreement, including, without
     limitation:

               (i)   to obtain and adjust insurance required to be paid to
          Secured Party pursuant hereto;

               (ii)  to ask, demand, collect, sue for, recover, compound,
          receive and give acquittance and receipts for moneys due and to become
          due under or in respect of any of the Collateral;

               (iii) to receive, endorse and collect any drafts or other
          instruments, documents and chattel paper, in connection with clauses
          (i) and (ii) above;

               (iv)  to sell, convey or otherwise transfer any item of
          Collateral to any purchaser thereof; and

               (v)   to file any claims or take any action or institute any
          proceedings which Secured Party may deem necessary or desirable for
          the collection of any of the Collateral or otherwise to enforce the
          rights of Secured Party with respect to any of the Collateral.

          (k)   Counterparts.  This Security Agreement and any amendments,
                ------------
     waivers, consents or supplements may be executed in any number of
     counterparts, each of which when so executed and delivered shall be deemed
     an original, but all of which shall together constitute one and the same
     agreement.

          (l)   Termination of Agreement.  Subject to Section 10.1 of the
                ------------------------
     Indenture, this Security Agreement and the security interest hereunder
     shall not terminate until full and final payment and performance of all
     indebtedness and obligations secured hereunder.  At such time, Secured
     Party shall reassign and redeliver to Debtor all of the Collateral
     hereunder which has not been sold, disposed of, retained or applied by
     Secured Party in accordance with the terms hereof, and execute and deliver
     to Debtor such documents as Debtor may reasonably request to evidence such
     termination.  Such reassignment and redelivery shall be without warranty by
     or recourse to Secured Party, and shall be at the expense of Debtor;
     provided, however, that this Security Agreement (including all
     --------  -------

                                      -19-
<PAGE>

     representations, warranties and covenants contained herein) shall continue
     to be effective or be reinstated, as the case may be, if at any time any
     amount received by Secured Party in respect of the indebtedness and
     obligations secured hereunder is rescinded or must otherwise be restored or
     returned by Secured Party upon or in connection with the insolvency,
     bankruptcy, dissolution, liquidation or reorganization of Debtor or any
     other person or upon or in connection with the appointment of any
     intervenor or conservator of, or trustee or similar official for, Debtor or
     any other person or any substantial part of its assets, or otherwise, all
     as though such payments had not been made.

          (m)   Successors and Assigns.  This Security Agreement shall inure to
                ----------------------

     the benefit of Secured Party, its successors and assigns, including the
     assignees of any Secured Obligation or of the benefit of any Secured
     Obligation and shall bind the heirs, executors, administrators, successors
     and assigns of Debtor.  This Security Agreement is assignable by Secured
     Party with respect to all or any portion of the Secured Obligations, and
     when so assigned, Debtor shall be liable to the assignees under this
     Security Agreement without in any manner affecting the liability of Debtor
     hereunder with respect to any of the Secured Obligations retained by
     Secured Party.  Each reference herein to powers or rights of Secured Party
     shall also be deemed a reference to the same power or right of such
     assignees, to the extent of the interest assigned to them.

          (n)   Interaction with Financing Documents.
                ------------------------------------

               (i)   Incorporation by Reference. All terms, covenants,
                     --------------------------
          conditions, provisions and requirements of the Indenture are
          incorporated by reference in this Security Agreement.

               (ii)   Conflicts with Indenture.  Notwithstanding any other
                      ------------------------
          provision of this Security Agreement, the terms and provisions of this
          Security Agreement shall be subject and subordinate to the terms of
          the Indenture.  To the extent that the Indenture provides Debtor with
          a particular cure or notice period, or establishes any limitations or
          conditions on Secured Party's actions with regard to a particular set
          of facts, Debtor shall be entitled to the same cure periods and notice
          periods, and Secured Party shall be subject to the same limitations
          and conditions in place of the cure periods, notice periods,
          limitations and conditions provided for under the Indenture; provided,
                                                                       ---------
          however, that such cure periods, notice periods, limitations and
          -------
          conditions shall not be cumulative as between the Indenture and this
          Security Agreement.  In the event of any conflict or inconsistency
          between the provisions of this Security Agreement and those of the
          Indenture, including, without limitation, any conflicts or
          inconsistencies in any definitions herein or therein, the-provisions
          or definitions of the Indenture shall govern.

               (iii)  Conflicts with the Deed of Trust.  In the event of any
                      --------------------------------
          conflict or

                                      -20-
<PAGE>

          inconsistency between the provisions of this Security Agreement (as
          they apply to the Collateral) and those of the Deed of Trust (as they
          apply to the Collateral), including, without limitation, any conflicts
          or inconsistencies in any definitions herein or therein, the
          provisions or definitions of this Security Agreement shall govern.

          (o)   Intercreditor Agreement.  Notwithstanding anything herein to the
                -----------------------
     contrary, all rights and remedies of the Secured Party under this Agreement
     are expressly subject to the terms and conditions of the Intercreditor
     Agreement.

                                      -21-
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to be duly executed and delivered by their respective undersigned duly
authorized officers as of the date first above written.

                              DEBTOR:

                              COAST HOTELS AND CASINOS, INC.
                              a Nevada corporation



                              By:  /s/  Harlan D. Braaten
                                 ------------------------
                              Name:  Harlan D. Braaten
                              Title: President & COO

                              SECURED PARTY:

                              FIRSTAR BANK OF MINNESOTA, N.A.
                              as Trustee


                              By:  /s/  Frank Leslie, III
                                 ------------------------
                              Name:  Frank Leslie, III
                              Title: Vice President

                                      -22-
<PAGE>

                                  Exhibit "A"
                                  -----------

                                DEPOSIT ACCOUNTS
<PAGE>

                                                                         ANNEX I
                                                                         -------


A.   SCHEDULE OF U.S. TRADEMARKS REGISTRATIONS

          None

B.   SCHEDULE OF PENDING APPLICATIONS FOR U.S. TRADEMARK REGISTRATIONS ON THE
     BASIS OF USE IN COMMERCE UNDER 17 USC (S) 1051(A)

          None

C.   SCHEDULE OF PENDING APPLICATION FOR U.S. TRADEMARK REGISTRATIONS ON THE
     BASIS OF INTENT TO USE THE MARK IN COMMERCE UNDER 17 USC (S) 1051(B)

          None
<PAGE>

                                                                         ANNEX 2
                                                                         -------


                      SCHEDULE OF PATENTS AND APPLICATIONS
                      ------------------------------------


                                      None
<PAGE>

                                                                         ANNEX 3
                                                                         -------


                    SCHEDULE OF COPYRIGHTS AND APPLICATIONS
                    ---------------------------------------