Exhibit
      10.1

     

    CONFIDENTIAL
      SETTLEMENT AGREEMENT AND GENERAL RELEASE

     

    This
      Confidential Settlement Agreement and General Release (“Agreement”) is entered
      into by and between
      SEAMUS MCGILL (“Employee”)
      and WMS
      GAMING INC.
      (the
“Company” or “Employer.”)

     

    WHEREAS,
      Employee and Employer are parties to that certain amended and restated
      employment agreement, dated February 1, 2001, as amended by those certain letter
      agreements, dated November 1, 2001 and February 24, 2004 (as
      amended, the “Employment Agreement”);

     

    WHEREAS,
      the Company and Employee deem it to be in their respective best interest to
      enter into an agreement providing for the termination of Employee’s employment
      with the Company pursuant to the terms herein stated; 

     

    WHEREAS,
      Employer and Employee, each denying any wrongdoing or liability whatsoever,
      desire to sever their employment relationship in an amicable fashion and to
      settle all actual and potential disputes.

     

    NOW,
      THEREFORE, in consideration of the foregoing, and for other good and valuable
      consideration, the sufficiency of which is hereby acknowledged:

     

    1.
       Termination. Employee’s
      employment with the Company shall terminate August 31, 2006 (the "Termination
      Date").

     

    2. Payment
      to Employee.
      For
      settlement purposes only and provided this Agreement is final and irrevocable
      under paragraph 9 hereof, Employer agrees to pay Employee:

     

    (a)
      as
      severance an amount equal to two years’ of Employee’s base annual salary in
      effect as of June 30, 2006, less usual payroll deductions, payable in normal
      payroll intervals;

     

    (b)
      Employee will be paid .25% of the revenue received by the Company for each
      gaming device purchased by a certain state lottery under an amendment effective
      April 6, 2006 to the agreement between the Company and such lottery;
      and

     

    (c)
      Employee’s annual bonus for the year ended June 30, 2006, in an amount
      determined by the Compensation Committee and Board of Directors based upon
      the
      recommendation of management, payable when annual bonuses are paid to employees
      generally;

     

    provided
      that all terms of the Employment Agreement which are intended to survive
      termination of employment that are to be satisfied by Employee are met. Employee
      acknowledges that the amounts described in paragraph 2 hereof satisfy the terms
      of the Employment Agreement. Payments will be sent to Employee by U.S. Mail
      to
      his home address commencing
      with the first pay period after this Agreement is final and irrevocable under
      paragraph 9 hereof. Employee further acknowledges that he has received
      separately all compensation and other sums to which he is entitled, other than
      (i) regular base salary minus regular deductions for the period from the date
      of
      this Agreement through the Termination Date, (ii) certain open expense reports
      previously submitted by Employee, and (iii) paid time-off accrued through the
      Termination Date, payment of which will be sent to Employee’s home unless
      otherwise agreed. Employee will not accrue any paid time-off, credited service
      under any benefit plan or other benefits during the period of payments
      hereunder. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3. Continuation
      of Health Benefits.
      Employee is advised that he shall be afforded continuation of health insurance
      coverage under COBRA, 29 U.S.C. § 1161 et
      seq.
      and
      Exec-U-Care supplemental medical coverage, provided he elects continuation
      of
      health insurance coverage under and pursuant to COBRA, 29 U.S.C. § 1161
et
      seq.,
      in
      which case he shall be solely responsible for any related premiums to the extent
      that participants in the Exec-U-Care plan generally are required to pay premiums
      for standard medical coverage, except that the Company will pay the difference
      in premium under COBRA
      on
      Employee’s behalf for standard employee medical coverage and Exec-U-Care
      supplemental medical coverage through February 28, 2008, or until Employee
      is
      re-employed elsewhere and any applicable waiting period has expired, whichever
      is earlier, provided all the terms herein and all provisions of the Employment
      Agreement which are intended to survive termination of employment that are
      to be
      satisfied by Employee are met. Coverage provided during this period will count
      toward the maximum of 18 months of coverage provided under COBRA. Employee
      will
      receive information on his opportunity to elect “COBRA” coverage under separate
      cover. Beginning March 1, 2008, if the Employee is not re-employed elsewhere
      and
      eligible for coverage under the new employer’s health insurance plan, the
      Company will pay $1,500 per month towards a separate policy for medical coverage
      to be obtained by Employee through August 31, 2008 or until Employee is
      re-employed elsewhere and any applicable waiting period has expired, whichever
      is earlier, provided all the terms herein and all provisions of the Employment
      Agreement which are intended to survive termination of employment that are
      to be
      satisfied by Employee are met.

     

    4. Non-Competition.
      The
      provisions of Section 7 (“Non-Competition”) of the Employment Agreement and the
      non-competition and forfeiture provisions of the stock option agreements,
      restricted stock agreements and equity-based performance unit agreements between
      the Company and Employee, are hereby amended to provided that Employee may
      not,
      without the Company's prior written consent, for a period of one (1) year
      beginning on the Termination Date, directly or indirectly own, manage, operate,
      join, control, participate in, perform any services for, invest in, or otherwise
      be connected with, in any manner, whether as an officer, director, employee,
      consultant, partner, investor or otherwise, [*].
      Nothing
      herein contained shall be deemed to prohibit Employee from [*]
      investing
      his funds in securities of a company if the securities of such company are
      listed for trading on a national stock exchange or traded in the
      over-the-counter market and 

     

    *
      Information has been omitted from this document and filed separately with the
      Securities and Exchange Commission under a request for confidential treatment
      pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
      amended.

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    Employee's
      holdings therein represent less than five (5) percent of the total number of
      shares or principal amount of other securities of such company
      outstanding.

     

    5. Club
      Membership.
      To the
      extent permitted by the TPC Country Club, the Company will tender the club
      membership to you effective September 1, 2006; provided, you will be responsible
      for any transfer fees and expenses. You will be responsible for monthly dues,
      fees and assessments beginning September 1, 2006. 

     

    6. General
      Release and Covenant Not To Sue. In
      consideration of the promises contained herein, the adequacy of which is hereby
      acknowledged, and other good and valuable consideration, Employee (on behalf
      of
      himself and his heirs, executors, administrators, successors and assigns)
      irrevocably and unconditionally releases and forever discharges and acquits
      the
      Company (and all its agents, officers, employees, directors, shareholders,
      attorneys and any affiliated or related companies, including parent companies,
      subsidiaries, divisions, successors, and assigns) (collectively “Releasees”),
      from any and all claims, charges, liabilities, debts, demands, grievances and
      causes of action of whatsoever kind, at law or in equity, whether known or
      unknown, suspected or unsuspected, or otherwise, including but not limited
      to
      claims relating to or arising out of Employee's employment and termination
      of
      employment, claims for breach of employment contract, claims for attorneys'
      fees, claims under the Age Discrimination in Employment Act, Title VII of the
      Civil Rights Act of 1964 and 1991, as amended, The Fair Labor Standards Act,
      The
      Family and Medical Leave Act, the Americans with Disabilities Act, the Employee
      Retirement Income Security Act (“ERISA”), the Worker Adjustment and Retraining
      Notification Act (“WARN”), the Nevada Wage Payment and Collection Act, the
      Nevada Human Rights Act, claims of retaliation, claims for pain and suffering
      and mental and emotional distress, wrongful discharge claims, severance pay
      claims, accrued paid time-off, bonuses, salary and benefits, or other claims
      under any federal, state or local constitution, statute, or common law, which
      Employee has, had or may have against the Releasees arising from or relating
      to
      acts or omissions through the date hereof, or involving the continuing effects
      of any acts or omissions which occurred through the date hereof. Notwithstanding
      anything to the contrary herein, Employee reserves the right to apply for
      unemployment compensation relating to his termination of employment by the
      Company.

     

    Employee
      acknowledges and agrees that the nature, materiality, extent and results of
      the
      claims compromised and released by this Agreement may not now all be known
      or
      anticipated by him. However, it is the intention of the parties hereto that
      this
      Agreement shall be effective as a bar to each and every claim, charge,
      liability, offset, demand, grievance, debt and cause of action that Employee
      may
      have against the Company. Employee further acknowledges and agrees that he
      may
      hereafter discover facts different from or in addition to those now known,
      suspected or believed to be true with respect to such claims, demands or causes
      of action and agrees that this release will be and remain effective in all
      respects notwithstanding any such differences or additional facts.

     

    Employee
      covenants and agrees not to sue, to make a claim or demand, or to commence
      or
      maintain any action or proceeding of any kind in any court, before any
      government agency or in any other forum, except nothing herein shall preclude
      Employee from exercising rights protected by public policy. Employee shall
      not
      assist or otherwise participate in any court proceeding, except as required
      by
      applicable law. Employee agrees to indemnify the Company against all liability,
      costs and expenses, including reasonable attorneys’ fees, in the event he
      breaches this release and covenant not to sue, whether brought directly by
      Employee or brought by any other person, agency or entity. Employee expressly
      waives his right to any money, benefit or other relief that may be ordered
      by a
      court or administrative agency with respect to a claim within the scope of
      this
      General Release. The
      foregoing or any other provision in this Agreement to the contrary
      notwithstanding, the release provided by Employee under this Agreement shall
      not
      apply to [1] any claim concerning the enforcement or construction of this
      Agreement; or [2] any claim Employee may now or hereafter have for indemnity
      from the Company in respect to any claim asserted by third parties against
      Employee arising from acts or omissions of Employee within the scope of his
      employment by the Company.

    


    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    Effective
      when this Agreement becomes final and irrevocable under paragraph 9 below,
      the
      Company hereby releases and forever discharges Employee, together with
      Employee’s agents, representatives, heirs and assigns, from any and all claims,
      demands, damages, actions, causes of action, suits, debts, liabilities and
      obligations, liens, costs and expenses of any nature, character and description,
      known or unknown, accrued or not yet accrued, whether anticipated or
      unanticipated, arising from or in any way related to Employee’s employment by
      the Company which the Company now holds, or has any time heretofore owned or
      held, or may at any time hereafter own or hold, by reason of any manner, cause
      or thing whatsoever existing as of the date hereof or at any time prior hereto
      other than those arising from willful misconduct, fraud or criminal
      conduct.

     

    7. Return
      of Company Property. 
      On the
      Termination Date, Employee will immediately return all keys, key cards,
      identification badges, records, papers, files, blueprints, documents, computers,
      computer disks, software, data stored on any computer or other storage device,
      cell phones, and other materials or property belonging to Company or its
      employees to the Company. 

     

    8. Counterparts.
      This
      Agreement may be executed in counterparts, each of which may be signed
      separately and may be enforceable as an original, but all of which together
      shall constitute but one agreement.

     

    9. Notice
      of Employee Rights; Effective Date. Employee
      has been advised (a) that he has up to twenty-one (21) days to consider this
      Agreement; (b) that the Agreement does not take effect until seven (7) days
      after signing and may be revoked by him during that time period; (c) to consult
      an attorney before signing this Agreement; and (d) the Employee does not waive
      rights or claims that may arise after the date the waiver is executed. This
      Agreement will be effective 8 days after Employee signs it, provided he has
      not
      revoked his agreement during the 7 day revocation period. If Employee agrees
      to
      the terms of this Agreement, Employee should sign the Agreement and deliver
      it
      to Vice President of Human Resources at WMS Gaming Inc., 800 S. Northpoint
      Boulevard, Waukegan, Illinois 60085 at any time within such twenty-one (21)
      day
      period. If Employee does not sign or if he timely revokes his agreement, this
      Agreement will be null and void. 



    10. Confidentiality.
      Employee agrees that the fact and terms of this Agreement are strictly
      confidential, and therefore, agrees that from the date of presentment to him
      of
      this Agreement forward, Employee shall not disclose, permit or cause the
      disclosure of any information concerning this Agreement, except to his attorney,
      tax preparer and immediate family members, provided they also agree to keep
      this
      Agreement and its terms confidential.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    11. Entire
      Agreement.
      With
      respect to the matters set forth herein, this Agreement, represents the entire
      agreement between Employee and the Company and supersedes all prior agreements
      or understandings, if any, between the parties, except for (a) any Inventions,
      Intellectual Material and Confidentiality Agreement signed by Employee, (b)
      the
      provisions of Sections 7 (“Non-Competition”), as modified in this Agreement, 8
      (“Confidentiality Agreement”), 9 (“Invention Disclosure”) and 10 (“Remedies”) of
      the Employment Agreement and (c) the non-competition and forfeiture provisions
      of the stock option agreements, restricted stock agreements and equity-based
      performance unit agreements between the Company and Employee (as modified by
      this Agreement), all of which provisions of which Employee acknowledges are
      designed to survive the termination of his employment, as expressly modified
      by
      this Agreement. Employee acknowledges that except for the explicit provisions
      of
      this Agreement, no promises or representations of any kind have been made to
      Employee by the Company, its attorneys or any of the Releasees, to induce him
      to
      enter into this Agreement. No modification of this Agreement can be made except
      in writing and signed by Employee and an authorized representative of the
      Company.

     

    12. Choice
      of Law; Savings Provision. This
      Agreement shall be governed, interpreted and construed under the laws of the
      State of Nevada without regard to its conflict of law principles. The parties
      agree that any dispute or litigation arising in whole or in part hereunder
      shall, at the option of Employer, be litigated in any state or federal court
      of
      competent subject matter jurisdiction sitting in Nevada, to the jurisdiction
      of
      which and venue in which Employee irrevocably consents. If any provision of
      this
      Agreement shall be invalidated or refused enforcement by any court of competent
      jurisdiction, the provisions not invalidated or refused enforcement shall remain
      in full force and effect.

     

    13. No
      Attorney's
      Fees.
      Employee waives his right, if any, to attorney’s fees. The Company will pay all
      expenses incurred by it, and Employee will bear all expenses incurred by him,
      in
      the negotiation and preparation of this Agreement.

     

    14. Non-Disparagement
      Pledge. The
      parties agree that it would be counterproductive and undesirable for either
      to
      communicate in a derogatory manner to third parties about one another, and
      each
      party pledges not to do so, unless required by law. The Company will refer
      all
      inquiries from prospective employers concerning Employee to the Company's Human
      Resources Department, which will respond to such inquiries by providing the
      dates of employment, position held and compensation of Employee. Employee will
      not allege or claim that he was mistreated by the Company. The Company will
      provide Employee the opportunity to comment on any public disclosure of this
      Agreement made in accordance with the rules of the Securities Exchange
      Commission and, provided Employee responds in a timely manner will consider
      any
      input in good faith. The Company and Employee will agree on the terms of any
      other public statement, such as a press release, announcing Employee’s departure
      from the Company.

     

    15. For
      Settlement Only. This
      Agreement is entered into for settlement purposes only and represents the
      compromise of disputed claims, actual or potential. Neither this Agreement,
      the
      decision to enter into this Agreement nor anything done pursuant to this
      Agreement shall be construed to be an admission or evidence of any wrongdoing
      or
      liability by any party, such wrongdoing and liability being expressly denied.
      Nor will this Agreement, its existence or its terms be admissible in any
      proceeding other than a proceeding to enforce or construe the terms of this
      Agreement.

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    


    16. Representations
      & Warranties by All Parties.
      Each of
      the parties represents and warrants, as to itself and himself that (a) it/he
      has
      the capacity, full power and authority to enter into this Agreement, (b) the
      individual signing on behalf of the corporate party is authorized to do so,
      (c)
      it/he has not assigned, encumbered or in any manner transferred all or any
      portion of the claims covered by this Agreement, (d) there are no other charges,
      complaints, suits, arbitrations or other claims or proceedings pending between
      the parties in any court, before any agency, or in any forum, and (e) no other
      person, party or corporation has any right, title or interest in any of the
      claims covered by this Agreement.

     

    17. Successors
      & Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their respective personal representatives, agents, attorneys, executors,
      administrators, heirs, successors and assigns.

     

    18. Knowing
      and Voluntary Signing of Binding Contract.
      The
      parties represent and warrant that they have read this Agreement and understand
      all of its terms and execute this Agreement voluntarily and without duress
      or
      undue influence, and with full knowledge of its significance, intending to
      be
      legally bound. Employee acknowledges that by signing this Agreement, subject
      to
      the limited right to revoke in paragraph 9, he is
      GIVING UP ALL CLAIMS AGAINST
      the
      Company and Releasees.

     

    19. Opportunity
      to Consult Advisors.
      Both
      Employee and the Company have had reasonable opportunity to consult with
      attorneys or other advisors of their own choosing before executing this
      Agreement.

     

    20. Variation
      of Pronouns.
      All
      pronouns and variations thereof shall be deemed to refer to masculine, feminine
      or neuter, singular or plural, as the identity of persons may require.


     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    


    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement by affixing
      their signatures and the date of execution where indicated below.

     

    
      	WMS GAMING INC.	 	EMPLOYEE
	 	 	 	 	 
	 	 	 	 	 
	By:	/s/ Kathleen
              J. McJohn	 	
              By:

            	/s/ Seamus
              McGill
	 	
              
Name: Kathleen
              J. McJohn	 	 	
              
Seamus
              McGill
	 	Title: VP,
              General Counsel and Secretary	 	 	 
	 	 	 	 	 
	Dated: August 9, 2006	 	Dated: August 3,
              2006


    

          

     

    
      
         

      

      
        -7-