<PAGE>   1
                                                                    EXHIBIT 10.8


THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND
MAY NOT BE OFFERED OR SOLD EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR (2) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY
OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY,
STATING THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS AVAILABLE


                          CONVERTIBLE PROMISSORY NOTE


$[Insert Purchase Price]                            Dated: [Insert Closing Date]



       FOR VALUE RECEIVED, the undersigned MULTIMEDIA GAMES, INC., a Texas
corporation ("Payor" or the "Company") HEREBY PROMISES TO PAY to the order of
[Insert name of Purchaser] (the "Payee"), the principal sum of [Insert Purchase
Price] ($________).  The principal amount of, and any accrued and unpaid
interest on, this Note shall be due and payable by Payor on the earlier of
[Insert first anniversary of Closing Date], or upon the occurrence of an Event
of Default (defined below)(such earlier date being hereinafter called the
"Maturity Date").

       This Note shall bear interest at a rate of ten and one-half percent
(10.5%) per annum payable on the Maturity Date.

       This Note is issued pursuant to a Subscription Agreement, dated July
___, 1996 (the "Subscription Agreement"), by and between Payor and Payee; and
Payee or any successor holder hereof is entitled to the benefits thereof, may
enforce the agreements of the





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Payor contained therein and may exercise the remedies provided for thereby.

       1.     Prepayment.  This Note may not be prepaid by Payor prior to its
maturity except as provided in this Section 1.  Payor shall be required to
prepay this Note, without premium or penalty, out of the net proceeds of the
Private Placement (defined below) or an underwritten public offering by the
Company of its securities for cash.  Any such payment shall be applied, first,
to any interest accrued but unpaid to the date of such payment and, second, to
the unpaid principal amount of this Note.  Payee agrees to make a notation on
this Note of any such payment, as of the prepayment date, of the prepaid
portion of the principal amount hereof.  All payments of principal and interest
shall be in lawful money of the United States and made to Payee at his address
heretofore provided to Payor.  Any such prepayment shall be subject to the
right of the holder to convert this Note as provided in Section 2 hereof.

       2.  Conversion.

       (a) Upon Private Placement. (i) If prior to the Maturity Date the
Company consummates the Private Placement, the holder of this Note may, at the
time of Closing of the Private Placement:

              (A)    convert all or any part of the principal amount of this
       Note (in integral multiples of not less than such fraction of a unit of
       the Private Placement Securities (defined below) as may be demanded by
       the holder) by surrendering this Note to the Company together with a
       duly executed Notice of Conversion in the form annexed hereto not later
       than five (5) business days prior to the date of closing of the Private
       Placement, and

              (B)    apply such principal amount so converted to the purchase
       price of the Private Placement Securities; provided that, such holder
       shall have satisfied all other terms and





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       conditions applicable to a purchaser of Private Placement Securities.

       The Company shall provide the holder with at least 10 business days
prior written notice of the date of closing of the Private Placement.

       (ii)   At the time of closing of the Private Placement, the Company
shall deliver to the holder:

              (A)    to the extent the holder has duly exercised its right of
       conversion as provided in Section 2(a), certificates evidencing the
       Private Placement Securities so purchased, plus interest to the date of
       such conversion on the principal amount so converted at the rate of
       interest provided in this Note; and

              (B)    to the extent the holder has not exercised for conversion
       the entire principal amount of this Note, a certified or bank cashiers'
       check in an amount equal to the principal amount of this Note that was
       not so converted, plus interest thereon to the date of such payment at
       the rate of interest provided in this Note.

       (b)    Conversion Into Conversion Units.  (i) Prior to the closing of
the Private Placement and at any time after the earlier of:

              (A) the date of any prepayment required under Section 1 hereof by
       reason of the Company having consummated an underwritten public offering
       of its securities for cash, or

              (B) the Maturity Date (whether at the scheduled maturity or
       earlier by reason of an Event of Default) unless the Company defaults in
       the payment of principal and interest on





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       the Maturity Date then until such later date on which payment of the
       principal and interest is made, or

              (C) commencing on and at any time after the 270th day after the
       date of this Note,

the principal amount of this Note may, at the option of the holder, be
converted into units (each a "Conversion Unit" and collectively the "Conversion
Units") at a conversion price (the "Conversion Price") of $3.00 per Conversion
Unit.  Each Conversion Unit shall consist of (x) one (1) share of Common Stock
and (y) one (1) Redeemable Stock Purchase Warrant representing the right to
purchase for a period of five years from the date of issuance thereof one share
of Common Stock at $8.00 per share and otherwise in substantially the same form
as a Warrant (defined below).  The Company shall provide the holder with at
least 10 business days prior written notice of an event described in Section
2(b)(i)(A) and (B) other than the maturity of this Note upon its scheduled
Maturity Date.

       (ii)   In order to exercise such conversion privilege, the holder of
this Note shall surrender this Note to the Company together with a duly
executed Notice of Conversion in the form annexed hereto at least two (2)
business days prior to the date of such conversion. Upon such conversion,
certificates for the Conversion Units shall be issued and delivered to the
registered holder hereof forthwith (and in any event within five business days
thereafter). Such issuance and delivery of certificates shall be made without
charge to the holder for any issuance tax in respect thereto; provided,
however, that in the event such issuance and delivery is to a person other than
the holder the Company shall not be required to (i) pay any tax which may be
payable in respect of any such transfer, and (ii) issue or deliver such
certificates unless and until the person requesting the issuance thereof shall
have paid to the Company the amount of such tax or shall have established to
the satisfaction of the Company that such tax has





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been paid.  No fractional shares of Common Stock or warrants or scrip or cash
in respect of a fraction shall be issued upon conversion of the Notes.
Instead, all fractional interests shall be eliminated by rounding any fraction
up or down to the nearest whole number of shares of Common Stock or of
warrants.

       (iii) In the case of a conversion of less than all of this Note, the
Company shall cancel this Note upon the surrender thereof and shall execute and
deliver a new Note of like tenor for the balance of the principal amount
thereof; provided that, if such conversion is in connection with an event
described in Section 2(b)(i)(A) and (B), to the extent the holder has not
exercised for conversion the entire principal amount of this Note, the Company
shall deliver a certified or bank cashiers' check in an amount equal to the
principal amount of this Note that was not so converted, plus interest thereon
to the date of such payment at the rate of interest provided in this Note.

       3. Transfer of Note. This Note and the Conversion Units issuable upon
the conversion hereof may not be sold, transferred, assigned, hypothecated or
otherwise disposed of unless such transfer would not result in a violation of
the provisions of the Act and the rules and regulations promulgated under the
Act. No such sale or transfer shall be permitted unless a registration
statement with respect thereto is declared effective under the Act or the
Company receives an opinion of counsel satisfactory to the Company that an
exemption from the registration requirements of the Act is available. If
permitted by the foregoing, any such sale, transfer, assignment, hypothecation
or other disposition shall be effected by the holder surrendering this Note for
cancellation at the office or agency of the Company maintained for such
purpose, accompanied by an opinion of counsel satisfactory to the Company and
its counsel, stating that an exemption from the registration requirements is
available and by an annexed Form of Assignment duly executed.





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       Each Note and each certificate for Conversion Units shall bear a legend
substantially similar to the following:

              THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
              REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
              "ACT") AND MAY NOT BE OFFERED OR SOLD EXCEPT (1) PURSUANT TO AN
              EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (2) UPON THE
              DELIVERY BY THE HOLDER TO THE COMPANY OF AN OPINION OF COUNSEL
              REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, STATING THAT
              AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS AVAILABLE

       4.  Adjustments.  (a)  The number and kind of Conversion Units that are
subject to the conversion of this Note, and the Conversion Price, shall be
subject to adjustment as hereinafter set forth.  Upon each adjustment of the
Conversion Price as hereinafter provided herein, the holder of the Note shall
thereafter be entitled to purchase, at the new Conversion Price resulting from
such adjustment, the number of Conversion Units (calculated to the nearest
tenth of a Unit) obtained by multiplying the Conversion Price in effect
immediately prior to such adjustment by the number of Conversion Units
purchasable pursuant hereto immediately prior to such adjustment and dividing
the product thereof by the Conversion Price resulting from such adjustment.  In
addition to any such adjustment in the Conversion Units, appropriate adjustment
shall also be made to the exercise price of warrants comprising a part of the
Conversion Units.

       (b)    In case the Company shall at any time after the date hereof
declare a dividend payable in shares of Common Stock or make a distribution to
its shareholders generally in shares of Common Stock then, upon such dividend
or distribution, the Conversion Price in effect immediately prior to the
declaration of such dividend or distribution shall be reduced to a price
determined by dividing an amount equal to the total number of shares of Common





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Stock outstanding immediately prior to such dividend or distribution multiplied
by the Conversion Price in effect immediately prior to such dividend of
distribution, by the total number of shares of Common Stock outstanding
immediately after such dividend or distribution.

       (c)    In case the Company shall at any time subdivide its outstanding
shares of Common Stock into a greater number of shares of Common Stock, the
Conversion Price in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding shares of
Common Stock of the Company shall be combined into a smaller number of shares
of Common Stock, the Conversion Price in effect immediately prior to such
combination shall be proportionately increased.

       (d)    In case of any consolidation or merger of the Company with
another corporation after the date hereof, or the sale of all or substantially
all of its assets to another corporation shall be effected after the date
hereof or in case of any capital reorganization or reclassification of the
capital stock of the Company, then, as a condition of such consolidation,
merger or sale, reorganization or reclassification, lawful and adequate
provision shall be made whereby the holder of this Note shall thereafter have
the right to purchase and receive upon the basis and upon the terms and
conditions specified herein and in lieu of the Conversion Units immediately
theretofore purchasable and receivable upon the conversion of this Note, such
shares of stock, securities or assets as may be issuable or payable with
respect to or in exchange for a number of outstanding shares of Common Stock of
the Company equal to the number of shares of Common Stock immediately
theretofore receivable upon the conversion of this Note had such consolidation,
merger, sale, reorganization, or reclassification not taken place, and in any
such case appropriate provision shall be made with respect to the rights and
interest of the registered holder of this Note to the end that the provisions
hereof (including without limitation provisions for adjustment of





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the Conversion Price) shall thereafter be applicable, as nearly as may be, in
relation of any shares of stock, securities or assets thereafter deliverable
upon the conversion of this Note.

       5.  Notices to Holders.  If any of the following events shall occur:

       (a) there shall be any adjustment of the Conversion Price or the number
of Conversion Units issuable upon the conversion of this Note;

       (b)    the Company shall declare to the holders of its shares of Common
Stock any dividend or distribution payable otherwise than in cash or if in cash
payable otherwise than out of current or retained earnings;

       (c)    the Company shall declare any dividend upon its shares of Common
Stock payable in Common Stock or in securities convertible into or exchangeable
for Common Stock, or any right or option to subscribe therefore;

       (d)    there shall be any capital reorganization or reclassification of
the capital stock of the Company, or consolidation or merger of the Company
with, or sale of all or substantially all its assets to, another corporation;
or

       (e)    there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;

then, in any one or more of said cases, the Company shall give written notice,
by first class mail, postage prepaid, to the holder hereof, of the date on
which (a) the books of the Company shall close or a record shall be taken for
such dividend, distribution or subscription rights, or (b) such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up shall take place, as the case may be.  Such notice shall also





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specify the date as of which the holders of shares of Common Stock of record
shall participate in such dividend, distribution or subscription rights or
shall be entitled to exchange their shares of Common Stock for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, or winding-up, as the
case may be.  Such written notice shall be given at least 10 days prior to the
action in question and not less than 10 days prior to the record date or the
date on which the Company's transfer books are closed in respect thereto.

       6.  Reservation of Common Stock.  The Company shall at all times reserve
and keep available out of its authorized shares of Common Stock, solely for the
purpose of its issue upon the conversion of this Note, such number of shares of
Common Stock as shall then be issuable upon such conversion.  The Company shall
not take any action which results in any adjustment of the Conversion Price if
the total number of shares of Common Stock issued and issuable after such
action upon the conversion of this Note would exceed the total number of shares
of Common Stock then authorized by the Certificate of Incorporation of the
Company.

       7.  Events of Default.  If any of the following events shall occur and
be continuing (herein called "Events of Default"):

       (a)    if the Company defaults in the payment of the principal of, and
interest on, the Note when the same shall become due, either by the terms
thereof or otherwise as herein provided;

       (b)    if for more than 30 days the Company or any majority owned
subsidiary defaults in any other obligation for borrowed money beyond any
period of grace provided with respect thereto or in the performance of any
other agreement, term or condition contained in any agreement under which any
such obligation is created if the effect of such default is to cause, or permit
the holder or holders of such obligation (or a trustee on behalf of





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such holder or holders) to cause such obligation to become due prior to its
stated maturity;

       (c)    if any material representation or warranty made by the Company
herein or in any writing furnished by the Company to the Purchaser in
connection with this Note and the Subscription Agreement shall he false in any
material respect;

       (d)    if the Company defaults in the performance or observance of any
other agreement, term or condition contained herein and such default shall not
have been remedied within 30 days after written notice thereof shall have been
received by the Company from the Purchaser;

       (e)    if the Company or any majority owned subsidiary makes an
assignment for the benefit of creditors, or admits in writing its inability to
pay its debts in the ordinary course of business or is adjudicated bankrupt or
insolvent;

       (f)    if the Company or any majority owned subsidiary petitions or
applies to any tribunal for the appointment of a trustee or receiver of the
Company or any subsidiary, or of any substantial part of the assets of the
Company or any subsidiary, or commences any proceedings relating to the Company
or any subsidiary under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect; or if any such petition or
application is filed, or any such proceedings are commenced, against the
Company or any subsidiary, and the Company or such subsidiary by any act
indicates its approval thereof, consent thereto, or acquiescence therein, or an
order is entered appointing any such trustee or receiver, or approving the
petition in any such proceedings, and such order remains in effect for more
than 60 days; or





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       (g) if any order is entered in any proceedings against the Company
decreeing the dissolution or liquidation of the Company, and such order remains
in effect for more than 60 days;

then the holder may, at its option, by notice in writing to the Company declare
the Note to be, and the Note shall (subject to the right of the holder to
convert the Note as provided in Section 2(b)) thereupon be and become,
forthwith due and payable together with all accrued but unpaid interest
thereon.

       8.  Definitions.  As used in this Note, the following terms have the
meanings indicated:

       "Placement Agent" shall mean as such term is defined in the Subscription
Agreement.

       "Private Placement" shall mean the proposed private offering by the
Company of a minimum of 50 and a maximum of 70 units, each unit consisting of
16,667 shares of Common Stock and warrants to purchase and additional 16,667
shares of Common Stock, at a purchase price of $50,000 per unit.

       "Private Placement Securities" shall mean the securities of the Company
issued pursuant to the Private Placement.

       "Warrant" shall mean the warrant issued to the holder as part of a unit
that includes this Note.

       9.     Miscellaneous.  (a)  The rights and obligations of Payor may not
be assigned to any other person without the express written consent of Payee.

       (b) Upon receipt of evidence satisfactory to Payor of the loss, theft,
destruction or mutilation of the Note and, in the case of any such loss, theft,
or destruction, upon delivery of a bond of indemnity satisfactory to Payor, or
in the case of any such





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mutilation, upon surrender and cancellation of the Note, Payor will issue a new
Note in lieu of such lost, stolen, destroyed or mutilated Note.

       (c)    The person in whose name this Note is registered shall be deemed
the owner hereof for all purposes.  The registered holder of this Note shall
not be entitled to any rights whatsoever as a stockholder of the Company except
as herein provided.

       (d)    No course of dealing between Payor and the holder hereof or any
delay or failure on the part of the holder of this Note in exercising any
rights hereunder shall operate as a waiver of any rights hereunder, except to
the extent expressly waived in writing by the holder hereof.

       (e)    Should any dispute arise between Payor and Payee with respect to
this Note, the party prevailing in such dispute as determined by a court of
competent jurisdiction shall be entitled to recover the reasonable fees and
expenses of his legal counsel.

       (f)    All the covenants, stipulations, promises and agreements in this
Note contained by or on behalf of Payor shall bind his successors and assigns,
whether so expressed or not.

       (g)    This Note shall be governed by the laws of the State of New York.



                                      MULTIMEDIA GAMES, INC.


                                      By:                                       
                                         ---------------------------------------





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                              NOTICE OF CONVERSION

TO MULTIMEDIA GAMES, INC.

       The undersigned owner of this Note hereby irrevocably exercises the
option to convert this Note, or portion hereof as designated below, into:

     CHECK ONE

       [ ]    If the Private Placement has been consummated, Units consisting
              of shares of Common Stock and Redeemable Stock Purchase Warrants
              issued pursuant to the Private Placement

       [ ]    Conversion Units

in each case in accordance with the terms of this Note, and directs that the
securities issuable and deliverable upon the conversion and any Notes
representing any unconverted principal amount hereof, be issued and delivered
to the undersigned unless a different name has been indicated below.  If
securities or Notes are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto.


Dated _________, 19___


                                                                                
                                         ---------------------------------------
                                         Signature

       Fill in for registration of securities or Notes if different from
registered owner.


                                                                                
------------------------------           ---------------------------------------
        (Name)                             SS or Tax ID No.

                              
------------------------------
      (Address)

                                                                                
------------------------------           ---------------------------------------
Please Print Name and                      Principal Amount Converted
Address
<PAGE>   14
                               FORM OF ASSIGNMENT

       (To be executed by the registered holder if such
       holder desires to transfer the Note)


       FOR VALUE RECEIVED, _________________ hereby sells, assigns and
transfers unto


              (Please print name and address of transferee)


this Note, together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint __________________, Attorney, to transfer
this Note on the books of the within named Company, with full power of
substitution.


Dated:                                Signature:



                                      (Signature must conform in all respects to
                                      name of the holder as specified in the
                                      face of the Note)


                                                                                
                                      ------------------------------------------
                                      Social Security or Tax I.D. No.