March 04, 1998

VIA ]EAX - 689-28Q2 =4 =TRZMD

Advanoed G=iing Technology, Inc.                   Sega. Gaming Technology, Inc.
2462 - 650 West Georgia Shftt                      6311 South Industrial Road
Vancouver, B.C.                                    Las Vegas, Xevada
V613 4N13                                          89116 U.S.A.

Dear Sirs

                    Re: Letter of Understanding

     We are the solicitors for Advanced Gaming Technology, Inc. ("AGTr) and have
been instructed to set out the basic tenns ofthe agreement  between AGTI and Sep
G=~ftg Technology, Inc. CSGTI") in regard to the development of a new electroric
bingo game.

I         D-evelonmot of Grame

          SGTI and AGTI  shalljointly  develop a new bingo  game  called  "Sonic
          Bingo" (the 'Troduce) which is intended to be a progresUve finked, Mgh
          stakes,  fast paced,  electronic  bin8o Same.  The Product "t be based
          upon AGTI's May Bingo Systems technology,  Frisms patents and marketed
          under SGTI's proprietary SEGAO tradernask.

2.        Farmati2n I%v AGTI and S.QT1 of

          AGTX and SGTI have agreed to form a corpovate  entity ("Newco') in the
          State of Nevada

          with a name, share muctureand by-laws as mutually agrr:ed between ffie
          parties.  Newco will be the operating  company for the  manufacturing,
          nwke6ng,  distributing and selling of the Pwduct- The sham ebmcbire of
          Newco will be allorted in SUCh amauntS to refle4t the following  share
          structure:

                    class "A" Non-Voting Shares

                    SGTI     51%

                    AGTI     49%



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                    Class "B" Voting shares

                    SGTI 50% 

                    AGTI 506/6

     SGTI and AGTI shall have equal  representation on the Board of Directors of
     Newco.

     In  the  event  that  new   ahardwiders  to  Newco  are   introduced,   the
     shareholdings of each of AGTI and SGTI sball be reduccd propottionatoly, as
     will the Doard of Directors.

     The parties a&= dud the corporate govmmance and operation of Newco shall be
     set  out  in  the  articles  of  Newco  or  in at  unanimous  sbareholders'
     agreement,  as  applicable.  The articles and any  shareholders'  agreement
     shall  include all umal  terms,  conditions.  representations,  wan-antics,
     covenants and  indemnities as is usual and customary in such  doeu=ntation.
     Wiftut  limiting the generality of the foregoing,  the issues to be covered
     in  either  or  both  of  the,   articles  of  Newco  and  the  unanirrious
     shareholden' agreement shEal include;

     (a)  scope and  nAtue of  shareholder  relationships,
     (b) conducE of the affairs of the company:
          (i) directors appointinea / meetings;
          (ii) officens appointment I meetings, and
          (iii) major decisions;

     (c) financing:
          (i) mechanism for additional funding; and
          (b) borrowing from shareholders-,

          (d) restrictions an transfer of sham;

          (e) right of first rofusal on sale of shares;

          (f) voluntary or compulsory buy-ouLs;

          (g) obligation to join in a sale;

          (h) obligation to purchase and sell; and


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          (i) indeninificatii5n and discharge of guarantees.

3. Inibal Capital Contribution

     The initial  capital  contribution  into Newco shall be made by each  party
as follows.


          AGTI               $20,000.00
          SGTI               $20,000.00
          TOTAL              $40,000.00 USD

          The  initial  capital  contribution  by each  party  will be by way of
          shareholder  loans to  Newco.  Further  capital  contribution  will be
          completed   by  the   -parties   pursuant  to  the  Articles  and  the
          shareholders'  agreement.  In  the  absence  ofan  agreernent  to  the
          contrary,  further  capital  contributions  will be made by each party
          proportionate to their intercst in the voting shares of Newco.

4- James Flamme

          The  parties  hereby  acknowledge  and  confirm  that  James  Harnrner
          ("Han=eej is currently  employed by the parties in the  development of
          the Product. ne parties further agree that Hammer shall be an employee
          of Newco,  once it is formed, in a capacity to be determined by mutual
          igreement  between  the  parties.  Harftmer's  reasonable  expenses in
          connection with the mauracturing,  marketing, distributing and selling
          of the Product on behalf of Newco,  commencing Jahuary 21, 1998, shall
          be paid by Newco,

5. Intellectual E=p

          The, parties  acknowledge that the Sonic Bingo software,  based on Max
          Bingo  System/Prisms  Patents, is owned by AGTI. AGn agrees to license
          the  software to Newoo for V .00 per year for an initial  term of five
          (5) years

          The  parties  acknowledges  that the name Sonic  BiingoG is a trademmt
          owned by AGTI.  AGn agrees to license the Untlemark to Newco for $1.00
          per year for in initial term of five (5) yCars.

          The parties  acknowledges  that ft  trademark  SEGA@) is owned by SGn.
          SGTI agrees to licen,so the tvdemark to Newco for $1.00 por ymr for an
          irdtial term of five (5) years.

          Any use of the SEGAC name must have approval from SGTI.



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6. Definitiyo-Amr-men

          All terms and  conditions  concerning  the matters  described  in this
          letter shall be stated in a definitive  agreement or  agreements  that
          will be subject to rhe  approval of the  parties,  acting on advice of
          counsel.  'Mose terms and  conditions  will  include  representations,
          wan-antics,  covenants and indemnities that are usual and customary in
          a  transaction  of this nature.  SGTI and  ACYTI  anticipate  that thB
          definitive  agreement win be executed as soon as possible.  but in any
          event, not later than March 30. 1998.

7, Gener

          ExcepfE as to Section I and terms (a) - (d) below,  which are intended
          to be a binding and enforceable contmet between the parties pertaining
          to tile subject matter of this Letter of  UnderstAndinp,  there are no
          legally  binding and  enforceable  staterneuts  or agreementz and this
          Letter of Understanding  should not be deemed to constitute any offer,
          acceptance or legally binding agreement and do not create:  any rights
          or  obligations  for or M the  part of any  party  to this  Letter  of
          Understanding.

          (a)  Cpnfidenti"

               Any  confidential  or  proprietary   matters  (,~xcept   publicly
               available  or  freely  usable  material  as  otherwise   lawfully
               obtained fromanother source) respecting any party will be kept in
               strict   confidence   by  the  other  party  to  this  Letter  of
               Undzrstanding. If for any reason the subject transaction dois not
               occur, or if this Letter of  Understanding  is terminated for any
               reason,   then  each  party  will  return  all   confidential  or
               proprietary  materi als that it has received from the other party
               to the  disclosing  party,  and (upon  request)  will  certify in
               writing that it has retained no copies of the same.

          (b)  Pubfie

               Neither  party  wiH issue auy  pubhe  awo=cement  concerning  the
               transaction or this Letter of Understanding  without the approval
               of the other  puty,  except as  maybercquiredbylaw.  The  parties
               intend to issue a joint press release  announcing  this Letter of
               Undemanding in a fonn to be matually agreed.

          (c)  Famand Eamms

               Each party  agrees to pay the IcCal and other  fees and  expenses
               incurred by it related to the matters described


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               in this  Letter of  Understanding  whether  or not the  de6rdtive
               agreement is executed.

          (d)  Termination

               Either  party  may   torminAtr,   this  Letter  of   Undent%nding
               irnmediatdy  upon  notice  to the  other  party,  In the event of
               tcm~-aatioa.  SGTI shall have no finiher  rights with  respect to
               AGTI's technology and Sonic 13ingo's trademuk and AGTJ shall have
               no fiiaher rights with respect to the SEGA0 trademark.

8.   The  parties  agree  that if there is a dispute  in regard to the terms and
     conditions contained herein, they shall be resolved by arbitration pursuant
     to the rules and regialations of the United States Federal Arbirrati6n Act.
     The parries  further agree that any  definitive  agreement  will include an
     arbitration clause.

9.   The parties shall do all such other things and do such acts as to carry out
     the intention of this Letter of Undamtanding.

10.  This  Letter of  Understanding  eamot he amended  unless in writing by both
     parties.

11.  This Letter of Understanding  shall be governed end construed in accordance
     with the laws of the State of Nevada

12.  This  Letter  of  Utiderstanding  is  subjW  to  approval  of the  Board Of
     Directors of both SGTI and AGT1.

     Please  acknowledge  your  acceptance  and a8reement in regard to the above
terrns  and  conditions  by  executing  the  mclosed  copy  of  this  Letter  of
Und=tanding and returning the same to our offices as soon as possible.

                                                                Youm very truly.

                                                               HOLMES GREENSLADE
                            


                                                               Stephen D. Holmes

SDWsh                                                                
Enclosure

WE HEREBY AGREE AND ACKNOWLEDGE OUR AGREEMENT TO THE ABOVE TEMWS AND CONDITIONS.

ADVANCED GANaNG TECHNOLOGY, INC. SEGA GAMING TECIffNOLOGY, INC

THIS  9th  DAY OF MARCH, 1998. THM DAY 017 MARCH, 1598,

Per:                                                    Per
       Authorized Signatory                                Authorized Signatory
Per:                                                    Per
       Authorized Signatory                                Authorized Signatory

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