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                             THIRD AMENDMENT TO THE
                        AMENDED AND RESTATED STOCK OPTION
                      PLAN FOR EXECUTIVE AND KEY EMPLOYEES
                                       OF
                                THE SANDS REGENT


               This Third Amendment to the Amended and Restated Stock Option
Plan for Executive and Key Employees of the Sands Regent (the "Amendment") is
adopted by The Sands Regent, a Nevada corporation (the "Company), effective as
of August 17, 1998, subject to receipt of required shareholder approval.

                                    RECITALS

               A. The Amended and Restated Stock Option Plan for Executive and
Key Employees of the Sands Regent (the "Restated Plan") was adopted by the Board
of Directors of the Company (the "Board") on September 16, 1992 and approved by
the shareholders of the Company on November 2, 1992.

               B. On February 26, 1993, the Company effected a 100% stock
dividend which, pursuant to the terms of the Restated Plan, resulted in an
automatic increase in the number of shares the Company's Common Stock reserved
for issuance under the Restated Plan from 250,000 shares to 500,000 shares.
               
               C. On August 4, 1997 the Board adopted, and on November 3, 1997
the shareholders of the Company approved, an amendment to the Restated Plan as
follows: (i) increasing the number of shares of the Company's common stock
reserved for issuance under the Restated Plan from 500,000 shares to 800,000
shares, (ii) extending the expiration on the period during which options to
purchase Common Stock may be granted under the Restated Plan from 


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September 16, 2002 to August 4, 2007 and (iii) deleting all reference to
"Special Committee" and instead provide that all option grants to Officers be in
compliance with Rule 16b-3 and related rules, as amended from time to time,
promulgated under the Securities Exchange Act of 1934, as amended.

               D. On December 12, 1997, the Restated Plan was amended to permit
repricing of incentive stock options, in addition to the repricing of
non-qualified options then permitted under the Restated Plan.

               E. The Board of Directors desires to amend the Restated Plan,
subject to shareholder approval, to provide for the automatic grant of options
to non-employee directors of the Company on the terms specified herein and to
provide for expanded means of exercising options granted under the Restated
Plan, including cashless exercises of options.

                                   AMENDMENTS

               The Restated Plan is amended as follows:

               1. Section 1.11 of the Restated Plan entitled "Optionee" is
hereby amended and restated in its entirety to read as follows:

               SECTION 1.11 - OPTIONEE

                      "Optionee" shall mean an Employee or Independent Director
to whom an Option is granted under the Plan.

               2. Section 1.19 of the Restated Plan entitled "Independent
Director" is hereby added and reads in its entirety as follows:

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               SECTION 1.19 - INDEPENDENT DIRECTOR

                      "Independent Director" shall mean a member of the Board
who is not an Employee of the Company.

               3. Section 1.20 of the Restated Plan entitled "Termination of
Directorship" is hereby added and reads in its entirety as follows:

               SECTION 1.20 - TERMINATION OF DIRECTORSHIP

                      "Termination of Directorship" shall mean the time when an
Optionee who is an Independent Director ceases to be a member of the Board for
any reason, including but not by way of limitation, a termination by
resignation, failure to be re-elected, death, disability or retirement. The
Board, in its sole and absolute discretion, shall determine the effect of all
matters and question relating to Termination of Directorship with respect to
each Independent Director.

               4. Section 2.5 of the Restated Plan entitled "Granting of Options
to Independent Directors" is hereby added and reads in its entirety as follows:

               SECTION 2.5 - GRANTING OF OPTIONS TO INDEPENDENT DIRECTORS

               (a) During the term of the Plan, a person who continues as an
Independent Director at the 1998 Annual Meeting of Stockholders of the Company
automatically shall be granted (i) an Option to purchase seven thousand five
hundred (7,500) shares of Common Stock on the date of the 1998 Annual Meeting of
Stockholders of the Company, and (ii) an Option to purchase seven thousand five
hundred (7,500) shares of Common Stock on the date of each annual meeting of
stockholders following the 1998 Annual Meeting of Stockholders at which


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such Independent Director is re-elected to the Board or continues to serve on
the Board; provided, however, that there shall be no grant of Options to an
Independent Director pursuant to clause (i) if the date of the 1998 Annual
Meeting of Stockholders is less than six months following the date of an initial
grant of options to such Independent Director in connection with such
Independent Director's initial appointment or election to the Board.

               (b) During the term of the Plan, a person who is initially
elected or appointed to the Board on or after the effective date of this Section
2.5 (i.e., August 17, 1998) and is at the time of such election or appointment
an Independent Director (i) may be granted, by the Board, an Option to purchase
not more that twenty-five thousand (25,000) shares of Common Stock effective as
of the date of such initial election or appointment to the Board and (ii)
automatically shall be granted an Option to purchase seven thousand five hundred
(7,500) shares of Common Stock on the date of each annual meeting of
stockholders following such initial election or appointment to the Board at
which the Independent Director is re-elected to the Board or continues to serve
on the Board; provided, however, that there shall be no grant of Options to an
Independent Director pursuant to clause (ii) if the annual meeting date
referenced in clause (ii) is less than six months following the date of an
initial grant of Options to such Independent Director pursuant to clause (i).

               (c) A member of the Board who is an employee of the Company but
whose employment with the Company is terminated after the effective date of this
Section 2.5 (i.e., August 17, 1998) and who remains on the Board as an
Independent Director after such terminated employment will not receive an
initial Option grant pursuant to subparagraph (b)(i),


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but to the extent that he or she is otherwise eligible, will receive, after
termination of employment with the Company, Options as described in subparagraph
(b)(ii).

               5. Section 4.8 entitled "Terms of Options Granted to Independent
Directors" of the Restated Plan is hereby added and reads in its entirety as
follows:

               SECTION 4.8 - TERMS OF OPTIONS GRANTED TO INDEPENDENT DIRECTORS

               Notwithstanding anything in the Plan to the contrary, the terms
set forth in this Section 4.8 shall apply to Options granted to Independent
Directors.

               (a) Each Option granted to an Independent Director shall be a
Non-Qualified Option.

               (b) The price per share of the shares subject to each Option
granted to an Independent Director shall equal 100% of the fair market value of
a share of Common Stock (as determined pursuant to the provisions of Section
4.2(b)) on the date the Option is granted.

               (c) Options granted to Independent Directors shall become
exercisable in full on the first anniversary of the date of Option grant,
without variation or acceleration hereunder except as provided in Section 4.7.
No portion of an Option which is unexercisable at Termination of Directorship
shall thereafter become exercisable.

               (d) No Option granted to an Independent Director may be exercised
to any extent by anyone after the first to occur of the following events:

                      (i) The expiration of one (1) year following the date of
               the Optionee's death, permanent and total disability (within the
               meaning of Section 22(e)(3) of


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               the Code), retirement, resignation, failure to be re-elected,
               discharge or termination; or
                      
                      (ii) The expiration of ten (10) years from the date the
               Option was granted.

               (e) The Board shall administer the Plan, and assume all duties of
the Committee under the Plan, as to all Options granted to Independent
Directors.

               6. Section 4.3 (b) of the Restated Plan is hereby amended and
restated in its entirety to read as follows:

               (b) Full payment (in cash or check) for the shares with respect
to which such Option or portion thereof is exercised. The Committee (or the
Board, in the case of Options granted to Independent Directors), however, may in
its discretion:

                       (i) allow a delay in payment of not more than thirty (30)
                days following the date the Option, or portion thereof, is
                exercised;

                       (ii) allow payment, in whole or in part, through the
                delivery of shares of the Company's Common Stock which have been
                owned by the Optionee for at least six months, duly endorsed for
                transfer to the Company with a fair market value (as determined
                pursuant to the provisions of Section 4.2(b))on the date of
                delivery equal to the aggregate exercise price of the Option or
                exercised portion thereof;

                       (iii) allow payment, in whole or in part, through the
                surrender of shares of the Company's Common Stock then issuable
                upon exercise of the Option having a


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               fair market value (as determined pursuant to the provisions of
               Section 4.2(b)) on the date of Option exercise equal to the
               aggregate exercise price of the Option or exercised portion
               thereof;

                       (iv) allow payment, in whole or in part, through the
               delivery of a full recourse promissory note bearing interest (at
               no less than such rate as shall then preclude the imputation of
               interest under the Code) and payable upon such terms as may be
               prescribed by the Committee (or the Board, in the case of Options
               granted to Independent Directors);

                       (v) allow payment, in whole or in part, through the
               delivery of a notice that the Optionee has placed a market sell
               order with a broker with respect to shares of Common Stock then
               issuable upon exercise of the Option, and that the broker has
               been directed to pay a sufficient portion of the net proceeds of
               the sale to the Company in satisfaction of the aggregate exercise
               price of the Option or exercised portion thereof; or

                       (vi) allow payment through any combination of the
               consideration provided in the foregoing subparagraphs (i), (ii),
               (iii), (iv) and (v).

               In the case of a promissory note, the Committee (or the Board, in
the case of Options granted to Independent Directors) may also prescribe the
form of such note and the security to be given for such note. The Option may not
be exercised, however, by delivery of a promissory note or by a loan from the
Company when or where such loan or other extension of credit is prohibited by
law.


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               7. Section 5.4 (d) of the Restated Plan is hereby amended and
restated in its entirety to read as follows:

               (d) The payment to the Company of all amounts which it is
required to withhold under federal, state or local laws in connection with the
exercise of the Option, which in the discretion of the Committee (or the Board,
in the case of Options granted to Independent Directors) may be in the form of
consideration used by the Optionee to pay for such shares under Section 5.3(b).

               I hereby certify that the foregoing Third Amendment to the
Amended and Restated Stock Option Plan for Executive and Key Employees of The
Sands Regent was duly adopted by the Board of Directors of the Company as of
August 17, 1998 and approved by the shareholders of the Company on November 2,
1998.

               Executed this 2nd day of November 1998.



                                          /s/ Pete Cladianos III
                                          --------------------------------------
                                          Pete Cladianos III,
                                          Executive Vice President and Secretary



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