EXHIBIT 10.3

                          REGISTRATION RIGHTS AGREEMENT

      This Registration  Rights Agreement (this "Agreement") is made and entered
into as of October 27, 2005 among Spectre Gaming, Inc., a Minnesota  corporation
(the "Company"),  and the purchasers  signatory hereto (each such purchaser is a
"Purchaser" and collectively, the "Purchasers").

      This  Agreement is made  pursuant to the  Securities  Purchase  Agreement,
dated as of the date hereof among the Company and the Purchasers  (the "Purchase
Agreement").

      The Company and the Purchasers hereby agree as follows:

      1.  Definitions.  Capitalized  terms used and not otherwise defined herein
that are defined in the Purchase  Agreement  shall have the meanings  given such
terms in the Purchase Agreement. As used in this Agreement,  the following terms
shall have the following meanings:

            "Advice" shall have the meaning set forth in Section 6(d).

            "Effectiveness Date" means, with respect to the initial Registration
      Statement required to be filed hereunder,  the 90th calendar day following
      the date hereof (the 120th  calendar day in the case of a "full review" by
      the  Commission)   and,  with  respect  to  any  additional   Registration
      Statements  which may be  required  pursuant  to  Section  3(c),  the 60th
      calendar  day  following  the date on which the Company  first  knows,  or
      reasonably should have known, that such additional  Registration Statement
      is  required  hereunder;  provided,  however,  in the event the Company is
      notified by the Commission that one of the above  Registration  Statements
      will not be  reviewed  or is no  longer  subject  to  further  review  and
      comments,  the Effectiveness Date as to such Registration  Statement shall
      be the fifth  Trading  Day  following  the date on which the Company is so
      notified if such date precedes the dates required above.

            "Effectiveness  Period"  shall have the meaning set forth in Section
      2(a).

            "Event" shall have the meaning set forth in Section 2(b).

            "Event Date" shall have the meaning set forth in Section 2(b).

            "Filing  Date"  means,  with  respect  to the  initial  Registration
      Statement  required  hereunder,  the 45th  calendar day following the date
      hereof and, with respect to any additional  Registration  Statements which
      may be required  pursuant to Section 3(c), the 30th day following the date
      on which the Company  first knows,  or  reasonably  should have known that
      such additional Registration Statement is required hereunder.

            "Holder" or "Holders"  means the holder or holders,  as the case may
      be, from time to time of Registrable Securities.


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            "Indemnified  Party"  shall  have the  meaning  set forth in Section
      5(c).

            "Indemnifying  Party"  shall have the  meaning  set forth in Section
      5(c).

            "Losses" shall have the meaning set forth in Section 5(a).

            "Plan of  Distribution"  shall have the meaning set forth in Section
      2(a).

            "Proceeding"  means  an  action,   claim,  suit,   investigation  or
      proceeding  (including,  without  limitation,  an investigation or partial
      proceeding, such as a deposition), whether commenced or threatened.

            "Prospectus"  means  the  prospectus   included  in  a  Registration
      Statement (including,  without limitation,  a prospectus that includes any
      information  previously  omitted  from a  prospectus  filed  as part of an
      effective  registration  statement in reliance upon Rule 430A  promulgated
      under the Securities  Act), as amended or  supplemented  by any prospectus
      supplement,  with  respect to the terms of the  offering of any portion of
      the Registrable  Securities covered by a Registration  Statement,  and all
      other   amendments   and   supplements   to  the   Prospectus,   including
      post-effective  amendments,  and all material incorporated by reference or
      deemed to be incorporated by reference in such Prospectus.

            "Registrable  Securities" means, as of the date in question, (i) all
      of the shares of Common  Stock  issuable  upon  conversion  in full of the
      shares of Preferred  Stock,  (ii) all shares  issuable as dividends on the
      Preferred  Stock  assuming  all  dividend  payments  are made in shares of
      Common Stock and the Preferred  Stock is held for at least 3 years,  (iii)
      all  Warrant  Shares,  (iv)  shares  underlying  warrants  to  purchase an
      aggregate of 2,060,000 shares of Common Stock, dated on or about September
      30,  2005  issued to  certain  Purchasers,  (v) any  securities  issued or
      issuable   upon  any  stock   split,   dividend  or  other   distribution,
      recapitalization or similar event with respect to the foregoing,  (vi) any
      additional shares issuable in connection with any anti-dilution provisions
      associated  with the Preferred  Stock and Warrants (in each case,  without
      giving  effect  to  any   limitations  on  conversion  set  forth  in  the
      Certificate  of  Designation  or  limitations on exercise set forth in the
      Warrant)  and  (vii)  shares  of  Common  Stock  issuable  in lieu of cash
      payments  of  liquidated  damages  pursuant to Section  2(b).  Registrable
      Securities  shall  include any  Registrable  Securities  issuable upon (i)
      conversion of any Preferred  Stock issued  pursuant to Section 4.17 of the
      Purchase  Agreement and (ii) exercise of any Warrants,  issued pursuant to
      Section  4.17  or 4.18  of the  Purchase  Agreement,  only  following  the
      exercise of such rights pursuant to Section 4.17 of the Purchase Agreement
      or  issuance  of  Warrants  pursuant  to  Section  4.18  of  the  Purchase
      Agreement, as applicable.

            "Registration  Statement" means the registration statements required
      to  be  filed  hereunder  and  any  additional   registration   statements
      contemplated  by Section 3(c),  including  (in each case) the  Prospectus,
      amendments and supplements to such  registration  statement or Prospectus,
      including pre- and post-effective  amendments,  all exhibits thereto,  and
      all material  incorporated  by reference or deemed to be  incorporated  by
      reference in such registration statement.


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            "Rule 415" means Rule 415 promulgated by the Commission  pursuant to
      the Securities  Act, as such Rule may be amended from time to time, or any
      similar rule or  regulation  hereafter  adopted by the  Commission  having
      substantially the same purpose and effect as such Rule.

            "Rule 424" means Rule 424 promulgated by the Commission  pursuant to
      the Securities  Act, as such Rule may be amended from time to time, or any
      similar rule or  regulation  hereafter  adopted by the  Commission  having
      substantially the same purpose and effect as such Rule.

            "Selling Shareholder Questionnaire" shall have the meaning set forth
      in Section 3(a).

      2. Shelf Registration

            (a) On or prior to each Filing Date,  the Company  shall prepare and
      file with the  Commission a "Shelf"  Registration  Statement  covering the
      resale of 130% of the  Registrable  Securities  on such Filing Date for an
      offering  to be made on a  continuous  basis  pursuant  to Rule  415.  The
      Registration  Statement shall be on Form S-3 (except if the Company is not
      then  eligible to register for resale the  Registrable  Securities on Form
      S-3, in which case such registration shall be on another  appropriate form
      in accordance  herewith) and shall contain (unless  otherwise  directed by
      the Holders)  substantially the "Plan of Distribution"  attached hereto as
      Annex A. Subject to the terms of this Agreement, the Company shall use its
      best efforts to cause a  Registration  Statement to be declared  effective
      under the Securities Act as promptly as possible after the filing thereof,
      but in any event prior to the applicable Effectiveness Date, and shall use
      its  best  efforts  to  keep  such  Registration   Statement  continuously
      effective  under  the  Securities  Act until  all  Registrable  Securities
      covered  by such  Registration  Statement  have  been  sold or may be sold
      without volume  restrictions  pursuant to Rule 144(k) as determined by the
      counsel  to the  Company  pursuant  to a  written  opinion  letter to such
      effect,  addressed and  reasonably  acceptable  to the Company's  transfer
      agent and the affected Holders (the "Effectiveness  Period").  The Company
      shall telephonically  request effectiveness of a Registration Statement as
      of 5:00 pm Eastern Time on a Trading Day.  The Company  shall  immediately
      notify  the  Holders  via  facsimile  or email of the  effectiveness  of a
      Registration   Statement   on  the  same  Trading  Day  that  the  Company
      telephonically confirms effectiveness with the Commission,  which shall be
      the date  requested for  effectiveness  of a Registration  Statement.  The
      Company  shall,  by 9:30 am  Eastern  Time on the  Trading  Day  after the
      Effective  Date  (as  defined  in  the  Purchase  Agreement),  file a Form
      424(b)(5)  with the  Commission.  Failure to so notify the Holder within 3
      Trading Days of such  notification  shall be deemed an Event under Section
      2(b).


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            (b) If: (i) a Registration Statement is not filed on or prior to its
      Filing  Date  (if the  Company  files  a  Registration  Statement  without
      affording the Holders the opportunity to review and comment on the same as
      required  by  Section  3(a),  the  Company  shall  not be  deemed  to have
      satisfied  this clause  (i)),  or (ii) the Company  fails to file with the
      Commission  a  request  for  acceleration  in  accordance  with  Rule  461
      promulgated under the Securities Act, within five Trading Days of the date
      that the Company is notified (orally or in writing,  whichever is earlier)
      by the Commission that a Registration Statement will not be "reviewed," or
      not subject to further review, or (iii) prior to its  Effectiveness  Date,
      the Company fails to file a pre-effective  amendment and otherwise respond
      in  writing  to  comments  made  by the  Commission  in  respect  of  such
      Registration  Statement  within 15  calendar  days  after the  receipt  of
      comments by or notice from the Commission  that such amendment is required
      in order for a Registration Statement to be declared effective,  or (iv) a
      Registration  Statement  filed or  required to be filed  hereunder  is not
      declared  effective by the  Commission by its  Effectiveness  Date, or (v)
      after the  Effectiveness  Date, a  Registration  Statement  ceases for any
      reason to remain continuously  effective as to all Registrable  Securities
      for which it is required to be effective, or the Holders are not permitted
      to utilize the Prospectus  therein to resell such  Registrable  Securities
      for 20  consecutive  calendar  days but no more  than an  aggregate  of 30
      calendar days during any 12-month  period  (which need not be  consecutive
      Trading Days) (any such failure or breach being referred to as an "Event",
      and for  purposes  of  clause  (i) or (iv) the date on  which  such  Event
      occurs, or for purposes of clause (ii) the date on which such five Trading
      Day period is  exceeded,  or for  purposes of clause  (iii) the date which
      such 15 calendar day period is exceeded, or for purposes of clause (v) the
      date on  which  such 20 or 30  calendar  day  period,  as  applicable,  is
      exceeded being referred to as "Event Date"), then in addition to any other
      rights the Holders may have  hereunder  or under  applicable  law, on each
      such Event Date and on each  monthly  anniversary  of each such Event Date
      (if the applicable Event shall not have been cured by such date) until the
      applicable  Event is cured, the Company shall pay to each Holder an amount
      in cash or in shares of Common  Stock,  or in a  combination  thereof,  as
      partial liquidated damages and not as a penalty.  Payment in cash shall be
      the  default  method of payment if the  conditions  for  payment in shares
      below are not met.  Payment  in cash or shares  of Common  Stock  shall be
      equal to 1.0% of the aggregate purchase price paid by such Holder pursuant
      to the Purchase Agreement for any Registrable Securities then held by such
      Holder for the first thirty calendar day period following such Event Date,
      increasing to 2% of the aggregate purchase price paid by such Holder after
      the first thirty calendar day period  following the applicable Event Date.
      The  price  at which  shares  of  Common  Stock  issuable  in lieu of cash
      hereunder  shall be equal to the lesser of (x) 85% of the average of the 5
      consecutive  VWAPs immediately prior to the applicable Event Date, (y) 85%
      of the average of the 5 consecutive  VWAPs  immediately  prior to the date
      such  damages  are  due or  (z)  the  then  applicable  Conversion  Price.
      Notwithstanding  anything  herein to the  contrary,  payment  in shares of
      Common Stock may only occur if during the period from the applicable Event
      Date until such issuance is made in full all of the Equity Conditions have
      been met and the Company shall have given the Holder  written  irrevocable
      notice  within 2 Trading Days of the Event Date.  Subject to the terms and
      conditions  herein, the decision whether to pay Partial Liquidated Damages
      hereunder in shares of Common Stock or cash shall be at the  discretion of
      the Company. Subject to the aforementioned  conditions,  failure to timely
      provide such written  notice shall be deemed an election by the Company to
      pay the Partial  Liquidated  Damages on such Event Date in cash. Except as


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      otherwise  provided  herein,  if at any  time  the  Company  pays  partial
      liquidated  damages  partially  in cash and  partially in shares of Common
      Stock,  then such payment shall be  distributed  ratably among the Holders
      based upon the  subscription  amount paid by each  Holder.  If the Company
      fails to pay any partial  liquidated  damages  pursuant to this Section in
      full  within  seven  days after the date  payable,  the  Company  will pay
      interest thereon at a rate of 18% per annum (or such lesser maximum amount
      that is permitted to be paid by  applicable  law) to the Holder,  accruing
      daily from the date such  partial  liquidated  damages  are due until such
      amounts,  plus all such interest  thereon,  are paid in full.  The partial
      liquidated  damages  pursuant to the terms  hereof  shall apply on a daily
      pro-rata basis for any portion of a month prior to the cure of an Event.

      3. Registration Procedures.

      In connection with the Company's registration  obligations hereunder,  the
Company shall:

            (a) Not less  than five  Trading  Days  prior to the  filing of each
      Registration  Statement  or any related  Prospectus  or any  amendment  or
      supplement  thereto  (including any document that would be incorporated or
      deemed to be incorporated  therein by reference),  the Company shall,  (i)
      furnish to each Holder copies of all such documents  proposed to be filed,
      which   documents   (other  than  those   incorporated  or  deemed  to  be
      incorporated  by reference) will be subject to the review of such Holders,
      and (ii)  cause  its  officers  and  directors,  counsel  and  independent
      certified  public  accountants  to respond to such  inquiries  as shall be
      necessary,  in the reasonable  opinion of respective  counsel to conduct a
      reasonable  investigation  within the meaning of the  Securities  Act. The
      Company shall not file a Registration  Statement or any such Prospectus or
      any amendments or  supplements  thereto to which the Holders of a majority
      of the  Registrable  Securities  shall  reasonably  object in good  faith,
      provided  that,  the Company is notified of such  objection  in writing no
      later than 5 Trading Days after the Holders have been so furnished  copies
      of such  documents.  Each  Holder  agrees  to  furnish  to the  Company  a
      completed  Questionnaire in the form attached to this Agreement (with such
      changes as may be required to reasonably  comply with all then  applicable
      federal  and state  securities  laws) as Annex B (a  "Selling  Shareholder
      Questionnaire") not less than two Trading Days prior to the Filing Date or
      by the end of the  fourth  Trading  Day  following  the date on which such
      Holder receives draft materials in accordance with this Section.

            (b) (i)  Prepare  and file  with  the  Commission  such  amendments,
      including post-effective  amendments,  to a Registration Statement and the
      Prospectus  used in  connection  therewith  as may be  necessary to keep a
      Registration   Statement  continuously  effective  as  to  the  applicable
      Registrable  Securities for the Effectiveness  Period and prepare and file
      with the Commission  such additional  Registration  Statements in order to
      register  for  resale  under  the  Securities  Act all of the  Registrable
      Securities;   (ii)  cause  the  related   Prospectus   to  be  amended  or
      supplemented by any required  Prospectus  supplement (subject to the terms
      of this Agreement), and as so supplemented or amended to be filed pursuant
      to Rule 424;  (iii)  respond as  promptly  as  reasonably  possible to any


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<PAGE>

      comments  received  from the  Commission  with  respect to a  Registration
      Statement or any amendment thereto and as promptly as reasonably  possible
      provide the Holders true and complete  copies of all  correspondence  from
      and to the  Commission  relating  to a  Registration  Statement;  and (iv)
      comply in all material  respects with the provisions of the Securities Act
      and the Exchange Act with respect to the  disposition  of all  Registrable
      Securities  covered by a  Registration  Statement  during  the  applicable
      period in  accordance  (subject to the terms of this  Agreement)  with the
      intended  methods of disposition by the Holders  thereof set forth in such
      Registration  Statement  as  so  amended  or  in  such  Prospectus  as  so
      supplemented.

            (c) If during the  Effectiveness  Period,  the number of Registrable
      Securities at any time exceeds 90% of the number of shares of Common Stock
      then registered in a Registration  Statement,  then the Company shall file
      as soon as reasonably  practicable but in any case prior to the applicable
      Filing Date, an additional  Registration  Statement covering the resale by
      the  Holders  of not less  than  130% of the  number  of such  Registrable
      Securities.

            (d) Notify the Holders of  Registrable  Securities to be sold (which
      notice shall, pursuant to clauses (ii) through (vi) hereof, be accompanied
      by an instruction to suspend the use of the Prospectus until the requisite
      changes have been made) as promptly as  reasonably  possible  (and, in the
      case of  (i)(A)  below,  not less  than five  Trading  Days  prior to such
      filing)  and (if  requested  by any such  Person)  confirm  such notice in
      writing no later than one  Trading  Day  following  the day (i)(A)  when a
      Prospectus or any Prospectus  supplement or post-effective  amendment to a
      Registration  Statement is proposed to be filed;  (B) when the  Commission
      notifies the Company whether there will be a "review" of such Registration
      Statement  and  whenever  the  Commission  comments  in  writing  on  such
      Registration Statement (the Company shall provide true and complete copies
      thereof and all written responses thereto to each of the Holders); and (C)
      with respect to a Registration Statement or any post-effective  amendment,
      when the same has become effective;  (ii) of any request by the Commission
      or any other Federal or state  governmental  authority  for  amendments or
      supplements  to a  Registration  Statement or Prospectus or for additional
      information;  (iii) of the issuance by the Commission or any other federal
      or  state  governmental   authority  of  any  stop  order  suspending  the
      effectiveness  of a  Registration  Statement  covering  any  or all of the
      Registrable  Securities  or the  initiation  of any  Proceedings  for that
      purpose;  (iv) of the  receipt  by the  Company of any  notification  with
      respect  to  the  suspension  of  the   qualification  or  exemption  from
      qualification  of  any of  the  Registrable  Securities  for  sale  in any
      jurisdiction,  or the initiation or threatening of any Proceeding for such
      purpose;  (v) of the occurrence of any event or passage of time that makes
      the financial  statements included in a Registration  Statement ineligible
      for inclusion therein or any statement made in a Registration Statement or
      Prospectus  or any  document  incorporated  or deemed  to be  incorporated
      therein by reference  untrue in any material  respect or that requires any
      revisions to a Registration  Statement,  Prospectus or other  documents so
      that, in the case of a Registration  Statement or the  Prospectus,  as the
      case may be, it will not contain any untrue  statement of a material  fact
      or omit to state  any  material  fact  required  to be stated  therein  or
      necessary to make the statements  therein,  in light of the  circumstances
      under which they were made,  not  misleading;  and (vi) the  occurrence or


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      existence of any pending corporate development with respect to the Company
      that the Company  believes may be material and that, in the  determination
      of the Company,  makes it not in the best interest of the Company to allow
      continued availability of a Registration Statement or Prospectus; provided
      that any and all of such  information  shall remain  confidential  to each
      Holder until such information  otherwise becomes public, unless disclosure
      by a Holder is required by law; provided,  further,  notwithstanding  each
      Holder's agreement to keep such information confidential, the Holders make
      no  acknowledgement  that any such  information  is  material,  non-public
      information.

            (e) Use its best  efforts to avoid the  issuance  of, or, if issued,
      obtain the withdrawal of (i) any order  suspending the  effectiveness of a
      Registration  Statement,  or (ii) any suspension of the  qualification (or
      exemption from  qualification)  of any of the  Registrable  Securities for
      sale in any jurisdiction, at the earliest practicable moment.

            (f) Furnish to each Holder,  without charge,  at least one conformed
      copy of each  such  Registration  Statement  and each  amendment  thereto,
      including financial statements and schedules,  all documents  incorporated
      or deemed to be incorporated  therein by reference to the extent requested
      by such Person,  and all  exhibits to the extent  requested by such Person
      (including  those  previously  furnished  or  incorporated  by  reference)
      promptly after the filing of such documents with the Commission.

            (g) Promptly deliver to each Holder,  without charge, as many copies
      of the Prospectus or Prospectuses  (including each form of prospectus) and
      each  amendment  or  supplement  thereto as such  Persons  may  reasonably
      request  in  connection   with  resales  by  the  Holder  of   Registrable
      Securities.  Subject to the terms of this  Agreement,  the Company  hereby
      consents to the use of such  Prospectus  and each  amendment or supplement
      thereto by each of the selling Holders in connection with the offering and
      sale of the  Registrable  Securities  covered by such  Prospectus  and any
      amendment  or  supplement  thereto,  except after the giving on any notice
      pursuant to Section 3(d).

            (h) If NASDR Rule 2710 requires any  broker-dealer  to make a filing
      prior to  executing  a sale by a  Holder,  the  Company  shall (i) make an
      Issuer Filing with the NASDR, Inc. Corporate Financing Department pursuant
      to NASDR Rule  2710(b)(10)(A)(i),  (ii) respond  within 10 Trading Days to
      any comments  received from NASDR in connection  therewith,  and (iii) pay
      the filing fee required in connection therewith.

            (i) Prior to any resale of Registrable  Securities by a Holder,  use
      its  commercially  reasonable  efforts to register or qualify or cooperate
      with  the  selling  Holders  in  connection   with  the   registration  or
      qualification  (or exemption from the  Registration or  qualification)  of
      such  Registrable  Securities  for the  resale  by the  Holder  under  the
      securities or Blue Sky laws of such jurisdictions within the United States
      as any Holder reasonably requests in writing, to keep each registration or
      qualification (or exemption  therefrom) effective during the Effectiveness
      Period and to do any and all other acts or things reasonably  necessary to
      enable the disposition in such jurisdictions of the Registrable Securities


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      covered by each Registration  Statement;  provided, that the Company shall
      not be required to qualify  generally  to do business in any  jurisdiction
      where it is not then so qualified, subject the Company to any material tax
      in any such jurisdiction where it is not then so subject or file a general
      consent to service of process in any such jurisdiction.

            (j) If  requested  by the  Holders,  cooperate  with the  Holders to
      facilitate   the  timely   preparation   and   delivery  of   certificates
      representing  Registrable  Securities  to  be  delivered  to a  transferee
      pursuant to a Registration Statement, which certificates shall be free, to
      the  extent  permitted  by the  Purchase  Agreement,  of  all  restrictive
      legends,  and  to  enable  such  Registrable  Securities  to  be  in  such
      denominations  and  registered  in such  names  as any  such  Holders  may
      request.

            (k) Upon the occurrence of any event contemplated by this Section 3,
      as promptly as reasonably  possible  under the  circumstances  taking into
      account the Company's good faith assessment of any adverse consequences to
      the Company  and its  stockholders  of the  premature  disclosure  of such
      event,  prepare a  supplement  or  amendment,  including a  post-effective
      amendment,  to a  Registration  Statement or a  supplement  to the related
      Prospectus  or any  document  incorporated  or deemed  to be  incorporated
      therein by  reference,  and file any other  required  document so that, as
      thereafter delivered, neither a Registration Statement nor such Prospectus
      will  contain an untrue  statement  of a material  fact or omit to state a
      material  fact  required  to be stated  therein or  necessary  to make the
      statements  therein,  in light of the circumstances  under which they were
      made, not  misleading.  If the Company  notifies the Holders in accordance
      with clauses (ii) through (vi) of Section 3(d) above to suspend the use of
      any Prospectus  until the requisite  changes to such  Prospectus have been
      made, then the Holders shall suspend use of such  Prospectus.  The Company
      will use its best efforts to ensure that the use of the  Prospectus may be
      resumed as promptly as is  practicable.  The Company  shall be entitled to
      exercise its right under this Section 3(k) to suspend the  availability of
      a Registration Statement and Prospectus, subject to the payment of partial
      liquidated damages pursuant to Section 2(b), for a period not to exceed 60
      days (which need not be consecutive days) in any 12 month period.

            (l)  Comply  with  all  applicable  rules  and  regulations  of  the
      Commission.

            (m) The Company may require  each  selling  Holder to furnish to the
      Company a certified  statement  as to the number of shares of Common Stock
      beneficially owned by such Holder and, if required by the Commission,  the
      person  thereof that has voting and  dispositive  control over the Shares.
      During any  periods  that the  Company  is unable to meet its  obligations
      hereunder with respect to the  registration of the Registrable  Securities
      solely because any Holder fails to furnish such  information  within three
      Trading Days of the Company's  request,  any  liquidated  damages that are
      accruing at such time as to such Holder only shall be tolled and any Event
      that may otherwise  occur solely  because of such delay shall be suspended
      as to such  Holder  only,  until  such  information  is  delivered  to the
      Company.


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<PAGE>

      4.  Registration   Expenses.   All  fees  and  expenses  incident  to  the
performance  of or compliance  with this Agreement by the Company shall be borne
by the Company whether or not any Registrable  Securities are sold pursuant to a
Registration  Statement.  The fees and  expenses  referred  to in the  foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including,  without  limitation,  fees and expenses (A) with respect to filings
required  to be made with the Trading  Market on which the Common  Stock is then
listed for trading,  (B) in compliance with applicable  state securities or Blue
Sky laws  reasonably  agreed to by the  Company in writing  (including,  without
limitation, fees and disbursements of counsel for the Company in connection with
Blue  Sky  qualifications  or  exemptions  of  the  Registrable  Securities  and
determination  of the eligibility of the  Registrable  Securities for investment
under the laws of such jurisdictions as requested by the Holders) and (C) if not
previously paid by the Company in connection with an Issuer Filing, with respect
to any filing  that may be  required  to be made by any broker  through  which a
Holder intends to make sales of  Registrable  Securities  with NASD  Regulation,
Inc.  pursuant to the NASD Rule 2710, so long as the broker is receiving no more
than a  customary  brokerage  commission  in  connection  with such  sale,  (ii)
printing  expenses   (including,   without  limitation,   expenses  of  printing
certificates  for  Registrable  Securities and of printing  prospectuses  if the
printing of prospectuses is reasonably requested by the holders of a majority of
the  Registrable  Securities  included  in  a  Registration  Statement),   (iii)
messenger,  telephone  and delivery  expenses,  (iv) fees and  disbursements  of
counsel for the Company, (v) Securities Act liability insurance,  if the Company
so desires  such  insurance,  and (vi) fees and  expenses  of all other  Persons
retained by the Company in connection with the  consummation of the transactions
contemplated  by this Agreement.  In addition,  the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including,  without limitation,
all salaries and expenses of its  officers  and  employees  performing  legal or
accounting  duties),  the expense of any annual  audit and the fees and expenses
incurred in  connection  with the listing of the  Registrable  Securities on any
securities  exchange  as  required  hereunder.  In no event shall the Company be
responsible  for any  broker or  similar  commissions  or,  except to the extent
provided for in the Transaction Documents,  any legal fees or other costs of the
Holders.

      5. Indemnification

            (a)   Indemnification   by   the   Company.   The   Company   shall,
      notwithstanding  any  termination  of this  Agreement,  indemnify and hold
      harmless each Holder, the officers,  directors, agents, brokers (including
      brokers who offer and sell Registrable Securities as principal as a result
      of a pledge  or any  failure  to  perform  under a margin  call of  Common
      Stock), investment advisors and employees of each of them, each Person who
      controls  any  such  Holder  (within  the  meaning  of  Section  15 of the
      Securities  Act or  Section  20 of the  Exchange  Act)  and the  officers,
      directors,  agents and employees of each such controlling  Person,  to the
      fullest extent  permitted by applicable  law, from and against any and all
      losses,   claims,   damages,   liabilities,   costs  (including,   without
      limitation,   reasonable  attorneys'  fees)  and  expenses  (collectively,
      "Losses"),  as  incurred,  arising  out of or  relating  to any  untrue or
      alleged  untrue  statement of a material fact  contained in a Registration
      Statement, any Prospectus or any form of prospectus or in any amendment or
      supplement thereto or in any preliminary prospectus,  or arising out of or
      relating to any omission or alleged  omission of a material  fact required
      to be stated therein or necessary to make the  statements  therein (in the


                                       9
<PAGE>

      case of any  Prospectus or form of prospectus  or supplement  thereto,  in
      light of the  circumstances  under  which they were made) not  misleading,
      except  to the  extent,  but only to the  extent,  that  (i)  such  untrue
      statements or omissions are based solely upon  information  regarding such
      Holder  furnished in writing to the Company by such Holder  expressly  for
      use therein, or to the extent that such information relates to such Holder
      or such Holder's proposed method of distribution of Registrable Securities
      and was  reviewed  and  expressly  approved  in  writing  by  such  Holder
      expressly for use in a  Registration  Statement,  such  Prospectus or such
      form of Prospectus  or in any  amendment or  supplement  thereto (it being
      understood  that the Holder has approved  Annex A hereto for this purpose)
      or (ii) in the case of an occurrence of an event of the type  specified in
      Section 3(d)(ii)-(vi),  the use by such Holder of an outdated or defective
      Prospectus  after the Company has notified such Holder in writing that the
      Prospectus  is  outdated  or  defective  and prior to the  receipt by such
      Holder of the Advice  contemplated  in Section  6(d).  The  Company  shall
      notify the Holders promptly of the institution, threat or assertion of any
      Proceeding   arising  from  or  in   connection   with  the   transactions
      contemplated by this Agreement of which the Company is aware.

            (b) Indemnification by Holders. Each Holder shall, severally and not
      jointly, indemnify and hold harmless the Company, its directors, officers,
      agents and  employees,  each Person who controls  the Company  (within the
      meaning of Section 15 of the Securities Act and Section 20 of the Exchange
      Act), and the directors, officers, agents or employees of such controlling
      Persons,  to the fullest  extent  permitted by  applicable  law,  from and
      against all Losses,  as  incurred,  to the extent  arising out of or based
      solely  upon:  (x) such  Holder's  failure to comply  with the  prospectus
      delivery  requirements  of the Securities Act or (y) any untrue or alleged
      untrue  statement  of  a  material  fact  contained  in  any  Registration
      Statement, any Prospectus,  or any form of prospectus, or in any amendment
      or supplement thereto or in any preliminary prospectus,  or arising out of
      or  relating  to any  omission  or alleged  omission  of a  material  fact
      required to be stated therein or necessary to make the statements  therein
      not misleading (i) to the extent, but only to the extent, that such untrue
      statement  or omission is  contained  in any  information  so furnished in
      writing by such Holder to the Company  specifically  for inclusion in such
      Registration  Statement or such  Prospectus or (ii) to the extent that (1)
      such untrue  statements  or omissions  are based  solely upon  information
      regarding  such Holder  furnished in writing to the Company by such Holder
      expressly for use therein,  or to the extent that such information relates
      to such  Holder  or such  Holder's  proposed  method  of  distribution  of
      Registrable  Securities and was reviewed and expressly approved in writing
      by such Holder  expressly  for use in a  Registration  Statement (it being
      understood  that the Holder has approved Annex A hereto for this purpose),
      such  Prospectus  or  such  form  of  Prospectus  or in any  amendment  or
      supplement  thereto or (2) in the case of an occurrence of an event of the
      type  specified  in Section  3(d)(ii)-(vi),  the use by such  Holder of an
      outdated or  defective  Prospectus  after the Company  has  notified  such
      Holder in writing that the  Prospectus  is outdated or defective and prior
      to the receipt by such Holder of the Advice  contemplated in Section 6(d).
      In no event shall the liability of any selling Holder hereunder be greater
      in amount  than the dollar  amount of the net  proceeds  received  by such
      Holder  upon the sale of the  Registrable  Securities  giving rise to such
      indemnification obligation.


                                       10
<PAGE>

            (c) Conduct of Indemnification  Proceedings. If any Proceeding shall
      be brought or asserted against any Person entitled to indemnity  hereunder
      (an "Indemnified Party"), such Indemnified Party shall promptly notify the
      Person  from  whom  indemnity  is sought  (the  "Indemnifying  Party")  in
      writing,  and the  Indemnifying  Party  shall have the right to assume the
      defense   thereof,   including  the   employment  of  counsel   reasonably
      satisfactory  to the  Indemnified  Party and the  payment  of all fees and
      expenses incurred in connection with defense thereof;  provided,  that the
      failure of any Indemnified Party to give such notice shall not relieve the
      Indemnifying  Party of its  obligations  or  liabilities  pursuant to this
      Agreement,  except  (and  only) to the  extent  that it  shall be  finally
      determined by a court of competent  jurisdiction  (which  determination is
      not  subject to appeal or further  review)  that such  failure  shall have
      prejudiced the Indemnifying Party.

            An Indemnified Party shall have the right to employ separate counsel
      in any such Proceeding and to participate in the defense thereof,  but the
      fees  and  expenses  of  such  counsel  shall  be at the  expense  of such
      Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed
      in writing to pay such fees and expenses; (2) the Indemnifying Party shall
      have  failed  promptly  to assume the  defense of such  Proceeding  and to
      employ counsel  reasonably  satisfactory to such Indemnified  Party in any
      such  Proceeding;  or  (3)  the  named  parties  to  any  such  Proceeding
      (including any impleaded  parties) include both such Indemnified Party and
      the  Indemnifying  Party,  and such  Indemnified  Party  shall  reasonably
      believe  that a material  conflict  of  interest is likely to exist if the
      same counsel were to represent such Indemnified Party and the Indemnifying
      Party (in which case, if such Indemnified  Party notifies the Indemnifying
      Party in writing that it elects to employ separate  counsel at the expense
      of the Indemnifying Party, the Indemnifying Party shall not have the right
      to assume the defense  thereof and the reasonable fees and expenses of one
      separate counsel shall be at the expense of the Indemnifying  Party).  The
      Indemnifying  Party  shall not be liable  for any  settlement  of any such
      Proceeding  effected without its written consent,  which consent shall not
      be unreasonably  withheld.  No Indemnifying Party shall, without the prior
      written  consent of the  Indemnified  Party,  effect any settlement of any
      pending  Proceeding in respect of which any Indemnified  Party is a party,
      unless  such  settlement   includes  an  unconditional   release  of  such
      Indemnified Party from all liability on claims that are the subject matter
      of such Proceeding.

            Subject  to the terms of this  Agreement,  all  reasonable  fees and
      expenses of the Indemnified Party (including  reasonable fees and expenses
      to the extent  incurred in connection with  investigating  or preparing to
      defend such  Proceeding  in a manner not  inconsistent  with this Section)
      shall be paid to the Indemnified  Party,  as incurred,  within ten Trading
      Days of written notice thereof to the Indemnifying Party;  provided,  that
      the Indemnified Party shall promptly  reimburse the Indemnifying Party for
      that  portion of such fees and  expenses  applicable  to such  actions for
      which such Indemnified Party is not entitled to indemnification hereunder,
      determined based upon the relative faults of the parties.


                                       11
<PAGE>

            (d) Contribution.  If the indemnification under Section 5(a) or 5(b)
      is  unavailable  to an  Indemnified  Party  or  insufficient  to  hold  an
      Indemnified Party harmless for any Losses,  then each  Indemnifying  Party
      shall contribute to the amount paid or payable by such Indemnified  Party,
      in such  proportion as is appropriate to reflect the relative fault of the
      Indemnifying  Party and Indemnified  Party in connection with the actions,
      statements or omissions  that resulted in such Losses as well as any other
      relevant equitable considerations. The relative fault of such Indemnifying
      Party and  Indemnified  Party shall be  determined  by reference to, among
      other  things,  whether any action in  question,  including  any untrue or
      alleged  untrue  statement  of a  material  fact or  omission  or  alleged
      omission  of a  material  fact,  has been  taken or made by, or relates to
      information supplied by, such Indemnifying Party or Indemnified Party, and
      the  parties'  relative  intent,  knowledge,  access  to  information  and
      opportunity to correct or prevent such action,  statement or omission. The
      amount  paid or  payable  by a party as a result  of any  Losses  shall be
      deemed to include, subject to the limitations set forth in this Agreement,
      any reasonable attorneys' or other reasonable fees or expenses incurred by
      such party in  connection  with any  Proceeding  to the extent  such party
      would  have  been   indemnified   for  such  fees  or   expenses   if  the
      indemnification  provided for in this Section was  available to such party
      in accordance with its terms.

            The parties  hereto agree that it would not be just and equitable if
      contribution  pursuant to this  Section 5(d) were  determined  by pro rata
      allocation  or by any other method of  allocation  that does not take into
      account  the  equitable  considerations  referred  to in  the  immediately
      preceding paragraph.  Notwithstanding the provisions of this Section 5(d),
      no Holder shall be required to contribute, in the aggregate, any amount in
      excess of the  amount  by which the  proceeds  actually  received  by such
      Holder  from  the  sale  of  the  Registrable  Securities  subject  to the
      Proceeding  exceeds  the  amount  of any  damages  that  such  Holder  has
      otherwise  been required to pay by reason of such untrue or alleged untrue
      statement or omission or alleged omission,  except in the case of fraud by
      such Holder.

            The indemnity and contribution  agreements contained in this Section
      are in addition to any liability that the Indemnifying Parties may have to
      the Indemnified Parties.

      6. Miscellaneous

            (a)  Remedies.  In the  event of a  breach  by the  Company  or by a
      Holder, of any of their  obligations under this Agreement,  each Holder or
      the Company, as the case may be, in addition to being entitled to exercise
      all rights granted by law and under this Agreement,  including recovery of
      damages, will be entitled to specific performance of its rights under this
      Agreement.  The Company and each Holder agree that monetary  damages would
      not provide  adequate  compensation for any losses incurred by reason of a
      breach by it of any of the provisions of this Agreement and hereby further
      agrees  that,  in the event of any  action  for  specific  performance  in
      respect of such  breach,  it shall waive the defense  that a remedy at law
      would be adequate.


                                       12
<PAGE>

            (b) No Piggyback on  Registrations.  Except as set forth on Schedule
      6(b) attached hereto,  neither the Company nor any of its security holders
      (other  than the  Holders in such  capacity  pursuant  hereto) may include
      securities of the Company in the initial Registration Statement other than
      the Registrable  Securities.  No Person has any right to cause the Company
      to effect the  registration  under the Securities Act of any securities of
      the Company. The Company shall not file any other registration  statements
      until the initial  Registration  Statement  required hereunder is declared
      effective  by the  Commission,  provided  that this Section 6(b) shall not
      prohibit the Company from filing  amendments  to  registration  statements
      already filed.

            (c) Compliance. Each Holder covenants and agrees that it will comply
      with  the  prospectus  delivery  requirements  of  the  Securities  Act as
      applicable  to it in  connection  with  sales  of  Registrable  Securities
      pursuant to a Registration Statement.

            (d) Discontinued Disposition.  Each Holder agrees by its acquisition
      of such  Registrable  Securities  that,  upon receipt of a notice from the
      Company of the  occurrence  of any event of the kind  described in Section
      3(d),  such  Holder  will  forthwith   discontinue   disposition  of  such
      Registrable  Securities under a Registration Statement until such Holder's
      receipt  of the  copies  of the  supplemented  Prospectus  and/or  amended
      Registration  Statement,  or until it is advised in writing (the "Advice")
      by the Company that the use of the  applicable  Prospectus may be resumed,
      and, in either case, has received copies of any additional or supplemental
      filings that are incorporated or deemed to be incorporated by reference in
      such Prospectus or Registration  Statement.  The Company will use its best
      efforts  to  ensure  that  the use of the  Prospectus  may be  resumed  as
      promptly as it practicable.  The Company agrees and acknowledges  that any
      periods during which the Holder is required to discontinue the disposition
      of the Registrable Securities hereunder shall be subject to the provisions
      of Section 2(b).

            (e)   Piggy-Back   Registrations.   If  at  any  time   during   the
      Effectiveness  Period  there is not an  effective  Registration  Statement
      covering all of the Registrable Securities and the Company shall determine
      to prepare and file with the Commission a registration  statement relating
      to an  offering  for its own  account or the  account of others  under the
      Securities Act of any of its equity securities,  other than on Form S-4 or
      Form S-8 (each as  promulgated  under the  Securities  Act) or their  then
      equivalents   relating  to  equity  securities  to  be  issued  solely  in
      connection  with any  acquisition  of any  entity  or  business  or equity
      securities  issuable in connection with the stock option or other employee
      benefit plans, then the Company shall send to each Holder a written notice
      of such  determination  and, if within fifteen days after the date of such
      notice,  any such Holder  shall so request in writing,  the Company  shall
      include in such registration statement all or any part of such Registrable
      Securities such Holder requests to be registered; provided, however, that,
      the Company shall not be required to register any  Registrable  Securities
      pursuant to this Section  6(e) that are  eligible  for resale  pursuant to
      Rule 144(k)  promulgated  under the Securities Act or that are the subject
      of a then effective Registration Statement.


                                       13
<PAGE>

            (f)  Amendments  and  Waivers.  The  provisions  of this  Agreement,
      including the provisions of this sentence, may not be amended, modified or
      supplemented,  and waivers or consents to departures  from the  provisions
      hereof may not be given, unless the same shall be in writing and signed by
      the  Company  and  each  Holder  of  the  then   outstanding   Registrable
      Securities.  Notwithstanding the foregoing,  a waiver or consent to depart
      from  the  provisions  hereof  with  respect  to  a  matter  that  relates
      exclusively  to the  rights  of  Holders  and that  does not  directly  or
      indirectly  affect the rights of other  Holders may be given by Holders of
      all of the Registrable Securities to which such waiver or consent relates;
      provided,  however,  that  the  provisions  of  this  sentence  may not be
      amended,   modified,   or  supplemented  except  in  accordance  with  the
      provisions of the immediately preceding sentence.

            (g)  Notices.  Any  and  all  notices  or  other  communications  or
      deliveries  required  or  permitted  to be  provided  hereunder  shall  be
      delivered as set forth in the Purchase Agreement.

            (h)  Successors  and  Assigns.  This  Agreement  shall  inure to the
      benefit of and be binding upon the  successors  and  permitted  assigns of
      each of the parties and shall  inure to the  benefit of each  Holder.  The
      Company  may not assign its rights or  obligations  hereunder  without the
      prior  written  consent  of  all of the  Holders  of the  then-outstanding
      Registrable  Securities.  Each Holder may assign their  respective  rights
      hereunder in the manner and to the Persons as permitted under the Purchase
      Agreement.

            (i) No Inconsistent  Agreements.  Neither the Company nor any of its
      subsidiaries has entered,  as of the date hereof, nor shall the Company or
      any of its  subsidiaries,  on or after the date of this  Agreement,  enter
      into any  agreement  with respect to its  securities,  that would have the
      effect of impairing the rights granted to the Holders in this Agreement or
      otherwise  conflicts  with the provisions  hereof.  Except as set forth on
      Schedule  6(i),  neither  the  Company  nor  any of its  subsidiaries  has
      previously  entered into any agreement  granting any  registration  rights
      with  respect to any of its  securities  to any Person  that have not been
      satisfied in full.

            (j) Execution and  Counterparts.  This  Agreement may be executed in
      any number of counterparts, each of which when so executed shall be deemed
      to be an original and, all of which taken  together  shall  constitute one
      and the same  Agreement.  In the event that any  signature is delivered by
      facsimile  transmission,  such  signature  shall  create  a valid  binding
      obligation of the party  executing  (or on whose behalf such  signature is
      executed)  the same with the same  force and  effect as if such  facsimile
      signature were the original thereof.

            (k)  Governing  Law.  All  questions  concerning  the  construction,
      validity,  enforcement  and  interpretation  of this  Agreement  shall  be
      determined with the provisions of the Purchase Agreement.

            (l) Cumulative Remedies. The remedies provided herein are cumulative
      and not exclusive of any remedies provided by law.


                                       14
<PAGE>

            (m) Severability. If any term, provision, covenant or restriction of
      this Agreement is held by a court of competent jurisdiction to be invalid,
      illegal,  void or unenforceable,  the remainder of the terms,  provisions,
      covenants and restrictions set forth herein shall remain in full force and
      effect and shall in no way be affected,  impaired or invalidated,  and the
      parties hereto shall use their commercially reasonable efforts to find and
      employ an alternative  means to achieve the same or substantially the same
      result  as  that  contemplated  by  such  term,  provision,   covenant  or
      restriction.  It is hereby  stipulated and declared to be the intention of
      the parties that they would have executed the remaining terms, provisions,
      covenants  and  restrictions  without  including  any of such  that may be
      hereafter declared invalid, illegal, void or unenforceable.

            (n) Headings.  The headings in this Agreement are for convenience of
      reference only and shall not limit or otherwise affect the meaning hereof.

            (o)  Independent  Nature of Holders'  Obligations  and  Rights.  The
      obligations  of each Holder  hereunder  are several and not joint with the
      obligations  of any  other  Holder  hereunder,  and  no  Holder  shall  be
      responsible in any way for the performance of the obligations of any other
      Holder  hereunder.  Nothing  contained herein or in any other agreement or
      document  delivered  at any  closing,  and no action  taken by any  Holder
      pursuant hereto or thereto, shall be deemed to constitute the Holders as a
      partnership,  an association, a joint venture or any other kind of entity,
      or create a presumption  that the Holders are in any way acting in concert
      with respect to such obligations or the transactions  contemplated by this
      Agreement.  Each  Holder  shall be  entitled  to protect  and  enforce its
      rights,  including  without  limitation  the  rights  arising  out of this
      Agreement, and it shall not be necessary for any other Holder to be joined
      as an additional party in any proceeding for such purpose.

                              ********************


                                       15
<PAGE>

      IN WITNESS  WHEREOF,  the parties have executed this  Registration  Rights
Agreement as of the date first written above.


                                           SPECTRE GAMING, INC.


                                           By:__________________________________
                                              Name:
                                              Title:



                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]



                                       16
<PAGE>

                     [SIGNATURE PAGE OF HOLDERS TO SGMG RRA]

Name of Holder: __________________________
Signature of Authorized Signatory of Holder: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________



                           [SIGNATURE PAGES CONTINUE]



                                       17
<PAGE>

                                     ANNEX A

                              Plan of Distribution

      Each Selling Stockholder (the "Selling  Stockholders") of the common stock
("Common  Stock")  of  Spectre  Gaming,  Inc.,  a  Minnesota   corporation  (the
"Company") and any of their pledgees,  assignees and successors-in-interest may,
from  time to time,  sell  any or all of their  shares  of  Common  Stock on the
Trading Market or any other stock exchange,  market or trading facility on which
the shares are traded or in private transactions. These sales may be at fixed or
negotiated  prices.  A  Selling  Stockholder  may  use  any  one or  more of the
following methods when selling shares:

      o     ordinary  brokerage  transactions  and  transactions  in  which  the
            broker-dealer solicits purchasers;

      o     block  trades in which the  broker-dealer  will  attempt to sell the
            shares as agent but may  position  and resell a portion of the block
            as principal to facilitate the transaction;

      o     purchases  by  a  broker-dealer  as  principal  and  resale  by  the
            broker-dealer for its account;

      o     an  exchange  distribution  in  accordance  with  the  rules  of the
            applicable exchange;

      o     privately negotiated transactions;

      o     settlement of short sales  entered into after the effective  date of
            the registration statement of which this prospectus is a part;

      o     broker-dealers  may agree with the  Selling  Stockholders  to sell a
            specified number of such shares at a stipulated price per share;

      o     a combination of any such methods of sale;

      o     through  the  writing or  settlement  of  options  or other  hedging
            transactions, whether through an options exchange or otherwise; or

      o     any other method permitted pursuant to applicable law.

      The Selling  Stockholders  may also sell  shares  under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available,  rather
than under this prospectus.

      Broker-dealers  engaged by the Selling  Stockholders may arrange for other
brokers-dealers to participate in sales.  Broker-dealers may receive commissions
or discounts from the Selling  Stockholders  (or, if any  broker-dealer  acts as
agent  for the  purchaser  of  shares,  from the  purchaser)  in  amounts  to be
negotiated,  but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage  commission
in compliance with NASDR Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with NASDR IM-2440.


                                       18
<PAGE>

      In connection with the sale of the Common Stock or interests therein,  the
Selling  Stockholders may enter into hedging transactions with broker-dealers or
other  financial  institutions,  which may in turn  engage in short sales of the
Common Stock in the course of hedging the  positions  they  assume.  The Selling
Stockholders  may also sell shares of the Common  Stock short and deliver  these
securities  to close out their  short  positions,  or loan or pledge  the Common
Stock to  broker-dealers  that in turn may sell these  securities.  The  Selling
Stockholders   may  also  enter   into   option  or  other   transactions   with
broker-dealers  or other  financial  institutions or the creation of one or more
derivative  securities which require the delivery to such broker-dealer or other
financial  institution of shares offered by this  prospectus,  which shares such
broker-dealer  or  other  financial  institution  may  resell  pursuant  to this
prospectus (as supplemented or amended to reflect such transaction).

      The  Selling  Stockholders  and any  broker-dealers  or  agents  that  are
involved  in selling  the shares may be deemed to be  "underwriters"  within the
meaning of the Securities Act in connection with such sales. In such event,  any
commissions  received  by such  broker~dealers  or agents  and any profit on the
resale  of the  shares  purchased  by  them  may be  deemed  to be  underwriting
commissions or discounts under the Securities Act. Each Selling  Stockholder has
informed  the  Company  that it does not have any written or oral  agreement  or
understanding,  directly or indirectly, with any person to distribute the Common
Stock. In no event shall any broker-dealer receive fees, commissions and markups
which, in the aggregate, would exceed eight percent (8%).

      The Company is required to pay certain fees and  expenses  incurred by the
Company  incident to the  registration of the shares.  The Company has agreed to
indemnify the Selling Stockholders against certain losses,  claims,  damages and
liabilities, including liabilities under the Securities Act.

      Because Selling Stockholders may be deemed to be "underwriters" within the
meaning of the Securities  Act, they will be subject to the prospectus  delivery
requirements of the Securities Act. In addition,  any securities covered by this
prospectus  which qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather  than  under  this  prospectus.  Each  Selling
Stockholder  has advised us that they have not entered  into any written or oral
agreements, understandings or arrangements with any underwriter or broker-dealer
regarding the sale of the resale shares. There is no underwriter or coordinating
broker acting in  connection  with the proposed sale of the resale shares by the
Selling Stockholders.

      We agreed to keep this  prospectus  effective until the earlier of (i) the
date on which  the  shares  may be resold by the  Selling  Stockholders  without
registration  and  without  regard to any volume  limitations  by reason of Rule
144(e) under the  Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold  pursuant to the  prospectus  or Rule 144 under the
Securities  Act or any other rule of similar  effect.  The resale shares will be
sold only through  registered or licensed  brokers or dealers if required  under
applicable  state securities  laws. In addition,  in certain states,  the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable  state or an exemption  from the  registration  or  qualification
requirement is available and is complied with.


                                       19
<PAGE>

      Under applicable rules and regulations  under the Exchange Act, any person
engaged in the distribution of the resale shares may not  simultaneously  engage
in market making  activities with respect to the Common Stock for the applicable
restricted  period, as defined in Regulation M, prior to the commencement of the
distribution.   In  addition,  the  Selling  Stockholders  will  be  subject  to
applicable  provisions  of the  Exchange  Act  and  the  rules  and  regulations
thereunder,  including Regulation M, which may limit the timing of purchases and
sales of shares of the Common  Stock by the  Selling  Stockholders  or any other
person.  We  will  make  copies  of this  prospectus  available  to the  Selling
Stockholders  and  have  informed  them of the  need to  deliver  a copy of this
prospectus to each purchaser at or prior to the time of the sale.


                                       20
<PAGE>

                                                                         ANNEX B

                              SPECTRE GAMING, INC.

                 SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

      The undersigned beneficial owner of common stock, par value $.01 per share
(the "Common  Stock"),  of Spectre Gaming,  Inc., a Minnesota  corporation  (the
"Company"),  (the  "Registrable  Securities")  understands  that the Company has
filed or  intends  to file with the  Securities  and  Exchange  Commission  (the
"Commission")   a  registration   statement  on  Form  S-3  (the   "Registration
Statement") for the registration and resale under Rule 415 of the Securities Act
of 1933, as amended (the "Securities  Act"), of the Registrable  Securities,  in
accordance  with the terms of the  Registration  Rights  Agreement,  dated as of
October 27, 2005 (the "Registration  Rights  Agreement"),  among the Company and
the Purchasers  named therein.  A copy of the  Registration  Rights Agreement is
available  from the Company  upon  request at the address set forth  below.  All
capitalized  terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.

      Certain   legal   consequences   arise  from  being  named  as  a  selling
securityholder  in  the  Registration  Statement  and  the  related  prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel  regarding the consequences of being
named  or not  being  named  as a  selling  securityholder  in the  Registration
Statement and the related prospectus.

                                     NOTICE

      The  undersigned  beneficial  owner  (the  "Selling   Securityholder")  of
Registrable Securities hereby elects to include the Registrable Securities owned
by it and listed below in Item 3 (unless otherwise  specified under such Item 3)
in the Registration Statement.


                                       21
<PAGE>

The  undersigned  hereby  provides the following  information to the Company and
represents and warrants that such information is accurate:

                                  QUESTIONNAIRE

1.    NAME.

      (a)   Full Legal Name of Selling Securityholder

            --------------------------------------------------------------------

      (b)   Full Legal Name of Registered  Holder (if not the same as (a) above)
            through  which  Registrable  Securities  Listed  in Item 3 below are
            held:

            --------------------------------------------------------------------

      (c)   Full Legal Name of Natural  Control  Person  (which  means a natural
            person who directly or indirectly  alone or with others has power to
            vote or dispose of the securities covered by the questionnaire):


            --------------------------------------------------------------------

2.    ADDRESS FOR NOTICES TO SELLING SECURITYHOLDER:


--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Telephone:______________________________________________________________________
Fax:____________________________________________________________________________
Contact Person:_________________________________________________________________

3.    BENEFICIAL OWNERSHIP OF REGISTRABLE SECURITIES:

      (a)   Type and Number of Registrable Securities beneficially owned:

            --------------------------------------------------------------------

            --------------------------------------------------------------------

            --------------------------------------------------------------------


                                       22
<PAGE>

4.    BROKER-DEALER STATUS:

      (a)   Are you a broker-dealer?

                                 Yes |_| No |_|

      (b)   If  "yes"  to  Section  4(a),  did  you  receive  your   Registrable
            Securities as compensation  for investment  banking  services to the
            Company.

                                 Yes |_| No |_|

      Note: If no,  the  Commission's  staff has  indicated  that you  should be
            identified as an underwriter in the Registration Statement.

      (c)   Are you an affiliate of a broker-dealer?

                                 Yes |_| No |_|

      (d)   If you are an affiliate of a broker-dealer,  do you certify that you
            bought  the  Registrable   Securities  in  the  ordinary  course  of
            business,  and  at  the  time  of the  purchase  of the  Registrable
            Securities to be resold,  you had no  agreements or  understandings,
            directly  or   indirectly,   with  any  person  to  distribute   the
            Registrable Securities?

                                 Yes |_| No |_|

      Note: If no,  the  Commission's  staff has  indicated  that you  should be
            identified as an underwriter in the Registration Statement.

5.    BENEFICIAL  OWNERSHIP  OF OTHER  SECURITIES  OF THE  COMPANY  OWNED BY THE
      SELLING SECURITYHOLDER.

      Except  as set  forth  below in this  Item 5, the  undersigned  is not the
      beneficial or registered owner of any securities of the Company other than
      the Registrable Securities listed above in Item 3.

      (a)   Type  and  Amount  of  Other  Securities  beneficially  owned by the
            Selling Securityholder:


            --------------------------------------------------------------------

            --------------------------------------------------------------------


                                       23
<PAGE>

6.    RELATIONSHIPS WITH THE COMPANY:

      Except  as  set  forth  below,  neither  the  undersigned  nor  any of its
      affiliates,  officers, directors or principal equity holders (owners of 5%
      of more of the equity securities of the undersigned) has held any position
      or office or has had any other material  relationship with the Company (or
      its predecessors or affiliates) during the past three years.

      State any exceptions here:


      --------------------------------------------------------------------------

      --------------------------------------------------------------------------

      The undersigned  agrees to promptly notify the Company of any inaccuracies
or changes in the information  provided herein that may occur  subsequent to the
date hereof at any time while the Registration Statement remains effective.

      By signing  below,  the  undersigned  consents  to the  disclosure  of the
information  contained  herein  in its  answers  to  Items 1  through  6 and the
inclusion of such  information  in the  Registration  Statement  and the related
prospectus  and  any  amendments  or  supplements   thereto.   The   undersigned
understands  that  such  information  will  be  relied  upon by the  Company  in
connection with the preparation or amendment of the  Registration  Statement and
the related prospectus.

      IN WITNESS WHEREOF the  undersigned,  by authority duly given,  has caused
this Notice and  Questionnaire  to be executed and delivered either in person or
by its duly authorized agent.

Dated:______________________________   Beneficial Owner:________________________


                                       By:______________________________________
                                          Name:
                                          Title:

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED  NOTICE AND  QUESTIONNAIRE,  AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:


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