Document:

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                                                                    EXHIBIT 10.5

                          REGISTRATION RIGHTS AGREEMENT

                  THIS REGISTRATION RIGHTS AGREEMENT, dated as of December 1,
2000 (this "AGREEMENT"), by and between Innovative Gaming Corporation of
America, a Minnesota corporation, with principal executive offices located at
4725 Aircenter Circle, Reno, Nevada 89502 (the "COMPANY"), and the investor
indicated on Schedule A (the "INVESTOR").

                  WHEREAS, upon the terms and subject to the conditions of the
Securities Purchase Agreement dated even with the date hereof, between the
Investor and the Company (the "SECURITIES PURCHASE AGREEMENT"), the Company has
agreed to issue and sell to the Investor (i) the number of shares of its Series
F 6% Convertible Preferred Stock, par value $0.01 per share (the "PREFERRED
SHARES") indicated on Schedule A, which upon the terms of and subject to the
conditions of the Company's Certificate of Designation of Series F 6%
Convertible Preferred Stock (the "CERTIFICATE OF DESIGNATION") are convertible
into shares of the Company's common stock, par value $0.01 per share (the
"COMMON STOCK"); and (ii) Common Stock Purchase Warrants (the "WARRANTS") to
purchase shares of Common Stock; and

                  WHEREAS, to induce the Investor to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide with respect to
the Common Stock issued or issuable in lieu of cash dividend payments on the
Preferred Shares, upon conversion of the Preferred Shares and exercise of the
Warrants certain registration rights under the Securities Act;

                  NOW, Therefore, in consideration of the premises and the
mutual covenants contained herein, the parties hereto, intending to be legally
bound, hereby agree as follows:

                  1.       DEFINITIONS

                  (a)      As used in this Agreement, the following terms shall
                           have the meanings:

                           (i) "AFFILIATE," of any specified Person means any
         other Person who directly, or indirectly through one or more
         intermediaries, is in control of, is controlled by, or is under common
         control with, such specified Person. For purposes of this definition,
         control of a Person means the power, directly or indirectly, to direct
         or cause the direction of the management and policies of such Person
         whether by contract, securities, ownership or otherwise; and the terms
         "CONTROLLING" and "CONTROLLED" have the respective meanings correlative
         to the foregoing.

                           (ii) "ASSIGNMENT AGREEMENT" means that certain
         Series B Convertible Preferred Stock Assignment Agreement, dated as of
         June 1, 1999, by and between the Company and Shaar, as the same may be
         amended and in effect from time to time.

                           (ii) "CLOSING DATE" means the date and time of the
         issuance and sale of the Preferred Shares and the Warrants.

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                           (iii) "COMMISSION" means the Securities and Exchange
         Commission.

                           (iv) "EXCHANGE ACT" means the Securities Exchange Act
         of 1934, as amended, and the rules and regulations of the Commission
         thereunder, or any similar successor statute.

                           (v) "INVESTOR" means each of the Investor and any
         transferee or assignee of Registrable Securities which agrees to become
         bound by all of the terms and provisions of this Agreement in
         accordance with Section 8 hereof.

                           (vi) "PERSON" means any individual, partnership,
         corporation, limited liability company, joint stock company,
         association, trust, unincorporated organization, or a government or
         agency or political subdivision thereof.

                           (vii) "PROSPECTUS" means the prospectus (including,
         without limitation, any preliminary prospectus and any final prospectus
         filed pursuant to Rule 424(b) under the Securities Act, including any
         prospectus that discloses information previously omitted from a
         prospectus filed as part of an effective registration statement in
         reliance on Rule 430A under the Securities Act) included in the
         Registration Statement, 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 the Registration Statement and by
         all other amendments and supplements to such prospectus, including all
         material incorporated by reference in such prospectus and all documents
         filed after the date of such prospectus by the Company under the
         Exchange Act and incorporated by reference therein.

                           (viii) "PUBLIC OFFERING" means an offer registered
         with the Commission and the appropriate state securities commissions by
         the Company of its Common Stock and made pursuant to the Securities
         Act.

                           (ix) "REGISTRABLE SECURITIES" means the Common Stock
         issued or issuable (i) in lieu of cash dividend payments on the
         Preferred Shares, (ii) upon conversion or redemption of the Preferred
         Shares or (iii) upon exercise of the Warrants; provided, however, a
         share of Common Stock shall cease to be a Registrable Security for
         purposes of this Agreement when it no longer is a Restricted Security.

                           (x) "REGISTRATION STATEMENT" means a registration
         statement of the Company filed on an appropriate form under the
         Securities Act providing for the registration of, and the sale on a
         continuous or delayed basis by the holders of, all of the Registrable
         Securities pursuant to Rule 415 under the Securities Act, including the
         Prospectus contained therein and forming a part thereof, any amendments
         to such registration statement and supplements to such Prospectus, and
         all exhibits and other material incorporated by reference in such
         registration statement and Prospectus.

                           (xi) "RESTRICTED SECURITY" means any share of Common
         Stock issued or issuable in lieu of cash dividend payments on the
         Preferred Shares, upon conversion or redemption of the Preferred Shares
         or exercise of the Warrants except any such share that (i) has been
         registered pursuant to an effective registration statement

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         under the Securities Act and sold in a manner contemplated by the
         prospectus included in such registration statement, (ii) has been
         transferred in compliance with the resale provisions of Rule 144 under
         the Securities Act (or any successor provision thereto) or is
         transferable pursuant to paragraph (k) of Rule 144 under the Securities
         Act (or any successor provision thereto), or (iii) otherwise has been
         transferred and a new share of Common Stock not subject to transfer
         restrictions under the Securities Act has been delivered by or on
         behalf of the Company.

                           (xii) "SECURITIES ACT" means the Securities Act of
         1933, as amended, and the rules and regulations of the Commission
         thereunder, or any similar successor statute.

                           (xiii) "SERIES B INVESTOR" means an "Investor" as
         defined in the Assignment Agreement.

                            (xiv) "SERIES C INVESTOR" means an "Investor" as
         defined in the Series C Registration Rights Agreement.

                           (xv) "SERIES D INVESTOR" means an "Investor" as
         defined in the Series D Registration Rights Agreement.

                           (xvi) "SERIES E INVESTOR" means an "Investor" as
         defined in the Series E Registration Rights Agreement.

                  (b) All capitalized terms used and not defined herein have the
respective meaning assigned to them in the Securities Purchase Agreement.

                  2.       REGISTRATION

                  (a) FILING AND EFFECTIVENESS OF REGISTRATION STATEMENT. The
Company shall prepare and file with the Commission not later than 90 days after
the Closing Date, a Registration Statement on Form S-3 relating to the offer and
resale of the Registrable Securities by the holders thereof and shall use its
best efforts to cause the Commission to declare such Registration Statement
effective under the Securities Act as promptly as practicable but not later than
180 days after the Closing Date, assuming for purposes hereof a Conversion Price
under the Certificate of Designation of $.50 per share. The Company shall
promptly (and, in any event, no more than 24 hours after it receives comments
from the Commission), notify the Buyer when and if it receives any comments from
the Commission on the Registration Statement and promptly forward a copy of such
comments, if they are in writing, to the Buyer. At such time after the filing of
the Registration Statement pursuant to this Section 2(a) as (i) the Commission
indicates, either orally or in writing, that it has no further comments with
respect to such Registration Statement or that it is willing to entertain
appropriate requests for acceleration of effectiveness of such Registration
Statement and (ii) the Company shall have received all necessary Nevada gaming
regulatory approvals, the Company shall promptly, and in no event later than two
business days after receipt of such indication from the Commission, request that
the effectiveness of such Registration Statement be accelerated within 48 hours
of the Commission's receipt of such request. The Company shall not include any
other securities in the Registration Statement relating to the offer and sale of
the Registrable Securities. The Company shall notify the

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Investor by written notice that such Registration Statement has been declared
effective by the Commission within 24 hours of such declaration by the
Commission.

                  (b) REGISTRATION DEFAULT. If the Registration Statement
covering the Registrable Securities required to be filed by the Company pursuant
to Section 2(a) is not (i) filed with the Commission within 90 days after the
Closing Date or (ii) declared effective by the Commission within 180 days after
the Closing Date (either of which, without duplication, an "INITIAL DATE"), then
the Company shall make the payments to the Initial Investor as provided in the
next sentence as liquidated damages and not as a penalty. The amount to be paid
by the Company to the Initial Investor shall be determined as of each
Computation Date (as defined below), and such amount shall be equal to 2% (the
"LIQUIDATED DAMAGE RATE") of the Purchase Price (as defined in the Securities
Purchase Agreement) from the Initial Date to the first Computation Date and 3.5%
for each Computation Date thereafter, calculated on a pro rata basis to the date
on which the Registration Statement is filed with (in the event of an Initial
Date pursuant to clause (i) above) or declared effective by (in the event of an
Initial Date pursuant to clause (ii) above) the Commission (the "PERIODIC
AMOUNT").

                  At the option of the Company, the full Periodic Amount shall
be paid by the Company to the Initial Investor within three days after each
Computation Date either (x) by wire transfer of immediately available funds
within three days after each Computation Date, or (y) through the issuance of
duly and validly authorized and issued, fully paid and nonassessable shares of
Common Stock valued at the Market Price (as such term is defined in the
Company's Certificate of Designation of Series F 6% Convertible Preferred
Stock), provided, however, that to the extent that funds are not available for
the payment of the Periodic Amount by wire transfer of immediately available
funds, the Periodic Amount shall be paid as provided in clause (y) above. The
Common Stock to be issued in lieu of cash payments shall be registered for
resale in the Registration Statement.

                  As used in this Section 2(b), "COMPUTATION DATE" means the
date which is 30 days after the Initial Date and, if the Registration Statement
required to be filed by the Company pursuant to Section 2(a) has not theretofore
been declared effective by the Commission, each date which is 30 days after the
previous Computation Date until such Registration Statement is so declared
effective.

                  Notwithstanding the above, if the Registration Statement
covering the Registrable Securities required to be filed by the Company pursuant
to Section 2(a) is not filed with the Commission by the 90th day after the
Closing Date, the Company shall be in default of this Registration Rights
Agreement."

                   (c) ELIGIBILITY FOR USE OF FORM S-3. The Company agrees that
at such time as it meets all the requirements for the use of Securities Act
Registration Statement on Form S-3 it shall file all reports and information
required to be filed by it with the Commission in a timely manner and take all
such other action so as to maintain such eligibility for the use of such form.

                  (d) ADDITIONAL REGISTRATION STATEMENT. In the event the
Current Market Price declines to $.75 per share or less and each time thereafter
that the Current Market Price declines by 20% (each such date, a "DECLINE
DATE"), the Company shall, to the extent required

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by the Securities Act (because the additional shares were not covered by the
Registration Statement filed pursuant to Section 2(a)), as reasonably determined
by the Investor, file an additional Registration Statement with the Commission
for such additional number of Registrable Securities as would be issuable upon
conversion of the Preferred Shares and exercise of the Warrants (the "ADDITIONAL
REGISTRABLE SECURITIES") in addition to those previously registered, assuming
(x) with respect to the first Additional Registration Statement, a Conversion
Price of $.25 per share and (y) with respect to each succeeding Additional
Registration Statement, a Conversion Price of 20% less than the Conversion Price
assumed with respect to the immediately preceding Additional Registration
Statement. The Company shall, to the extent required by the Securities Act, as
reasonably determined by the Investor, prepare and file with the Commission not
later than the 30th day thereafter, a Registration Statement relating to the
offer and sale of such Additional Registrable Securities and shall use its best
efforts to cause the Commission to declare such Registration Statement effective
under the Securities Act as promptly as practicable but not later than 60 days
thereafter. The Company shall not include any other securities in the
Registration Statement relating to the offer and sale of such Additional
Registrable Securities.

                  If the Additional Registration Statement is not (i) filed with
the Commission within 30 days after the Decline Date or (ii) declared effective
by the Commission within 90 days after the Decline Date (either of which,
without duplication, an "ADDITIONAL REGISTRATION DATE"), then the Company shall
make the payments to the Investor at the Liquidated Damage Rate from the
Additional Registration Date to the first Additional Computation Date and 3.5%
for each Additional Computation Date thereafter, calculated on a pro rata basis
to the date on which the Additional Registration Statement is filed with (in the
event of an Additional Registration Date pursuant to clause (i) above) or
declared effective by (in the event of an Additional Registration Date pursuant
to clause (ii) above) the Commission (the "ADDITIONAL PERIODIC AMOUNT"). The
full Additional Periodic Amount shall be paid by the Company to the Investor by
wire transfer of immediately available funds within three days after each
Additional Computation Date.

                  As used in this Section 2(d), "ADDITIONAL COMPUTATION DATE"
means the date which is 30 days after the Additional Registration Date and, if
the Additional Registration Statement required to be filed by the Company
pursuant to this Section 2(d) has not theretofore been declared effective by the
Commission, each date which is 30 days after the previous Additional Computation
Date until such Additional Registration Statement is so declared effective.

                  (e) (i) If the Company proposes to register any of its
         warrants, Common Stock or any other shares of common stock of the
         Company under the Securities Act (other than a registration (A) on Form
         S-8 or S-4 or any successor or similar forms, (B) relating to Common
         Stock or any other shares of common stock of the Company issuable upon
         exercise of employee share options or in connection with any employee
         benefit or similar plan of the Company or (C) in connection with a
         direct or indirect acquisition by the Company of another Person or any
         transaction with respect to which Rule 145 (or any successor provision)
         under the Securities Act applies), whether or not for sale for its own
         account, it will each such time, give prompt written notice at least 20
         days prior to the anticipated filing date of the registration statement
         relating to such registration to each

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         Investor, which notice shall set forth such Investor's rights under
         this Section 2(e) and shall offer such Investor the opportunity to
         include in such registration statement such number of Registrable
         Securities as such Investor may request. Upon the written request of
         any Investor made within 10 days after the receipt of notice from the
         Company (which request shall specify the number of Registrable
         Securities intended to be disposed of by such Investor), the Company
         will use its best efforts to effect the registration under the
         Securities Act of all Registrable Securities that the Company has been
         so requested to register by such Investor, to the extent requisite to
         permit the disposition of the Registrable Securities so to be
         registered; provided, however, that (x) if such registration involves a
         Public Offering, the Investors must sell their Registrable Securities
         to the underwriters selected by the Company with the consent of each
         Investor on the same terms and conditions as apply to the Company and
         (y) if, at any time after giving written notice of its intention to
         register any Registrable Securities pursuant to this Section 2 and
         prior to the effective date of the registration statement filed in
         connection with such registration, the Company shall determine for any
         reason not to register such Registrable Securities, the Company shall
         give written notice to each Investor and, thereupon, shall be relieved
         of its obligation to register any Registrable Securities in connection
         with such registration. The Company's obligations under this Section
         2(e) shall terminate on the date that the registration statement to be
         filed in accordance with Section 2(a) is declared effective by the
         Commission.

                           (ii) If a registration pursuant to this Section 2(e)
         involves a Public Offering and the managing underwriter thereof advises
         the Company that, in its view, the number of shares of Common Stock,
         Warrants or other shares of Common Stock that the Company, each
         Investor and all other sellers (the "THIRD-PARTY SELLERS") intend to
         include in such registration exceeds the largest number of shares of
         Common Stock or Warrants (including any other shares of Common Stock or
         Warrants of the Company) that can be sold without having an adverse
         effect on such Public Offering (the "MAXIMUM OFFERING SIZE"), the
         Company will include in such registration, only that number of shares
         of Common Stock or Warrants, as applicable, such that the number of
         shares of Registrable Securities registered does not exceed the Maximum
         Offering Size, with the difference between the number of shares in the
         Maximum Offering Size and the number of shares to be issued by the
         Company to be allocated (after including all shares to be issued and
         sold by the Company, the Investors and any Third-Party Sellers) first,
         among the Company and the Investors pro rata on the basis of the
         relative number of shares of Common Stock or Warrants offered for sale
         under such registration by each of the Company and the Investors and,
         second, to any Third-Party Sellers. If as a result of the proration
         provisions of this Section 2(e)(ii), any Investor is not entitled to
         include all such Registrable Securities in such registration, such
         Investor may elect to withdraw its request to include any Registrable
         Securities in such registration. With respect to registrations pursuant
         to this Section 2(e), the number of securities required to satisfy any
         underwriters' over-allotment option shall be allocated pro rata among
         the Company, the Investors and any Third-Party Sellers on the basis of
         proration as set forth in the second sentence preceding.

                  Notwithstanding anything contained in this Section 2(e) to the
contrary, the rights of any Investor under this Section 2(e) to include
Registrable Securities in any registration

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statement shall be junior and subordinate in all respects to (i) the rights
granted by the Company in the Series E Registration Statement to the Series E
Investors (ii) the rights granted by the Company in the Series D Registration
Statement to the Series D Investors, (iii) the rights granted by the Company in
the Series C Registration Statement to the Series C Investors and (iv) the
rights assigned to the Series B Investors in the Assignment Agreement.

                  3.       OBLIGATIONS OF THE COMPANY

                  In connection with the registration of the Registrable
Securities, the Company shall:

                  (a) Promptly (i) prepare and file with the Commission such
amendments (including post-effective amendments) to the Registration Statement
and supplements to the Prospectus as may be necessary to keep the Registration
Statement continuously effective and in compliance with the provisions of the
Securities Act applicable thereto so as to permit the Prospectus forming part
thereof to be current and useable by Investors for resales of the Registrable
Securities for a period of two years from the date on which the Registration
Statement is first declared effective by the Commission (the "EFFECTIVE TIME")
or such shorter period that will terminate when all the Registrable Securities
covered by the Registration Statement have been sold pursuant thereto in
accordance with the plan of distribution provided in the Prospectus, transferred
pursuant to Rule 144 under the Securities Act or otherwise transferred in a
manner that results in the delivery of new securities not subject to transfer
restrictions under the Securities Act (the "REGISTRATION Period") and (ii) take
all lawful action such that each of (A) the Registration Statement and any
amendment thereto does not, when it becomes effective, 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, not misleading and
(B) the Prospectus forming part of the Registration Statement, and any amendment
or supplement thereto, does not at any time during the Registration Period
include 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.
Notwithstanding the foregoing provisions of this Section 3(a), any Series B
Investor, Series C Investor, Series D Investor or Series E Investor may, by
written notice to the Company and each Investor during the Registration Period,
require the Company to suspend the use of the Prospectus for a period not to
exceed 90 days (whether or not consecutive) in any 12-month period, and if so
notified the Company shall suspend the use of the Prospectus as required by such
Series B Investor, Series C Investor, Series D Investor or Series E Investor. At
the end of any such suspension period, the Company shall provide the Investors
with written notice of the termination of such suspension;

                  (b) During the Registration Period, comply with the provisions
of the Securities Act with respect to the Registrable Securities of the Company
covered by the Registration Statement until such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of
disposition by the Investors as set forth in the Prospectus forming part of the
Registration Statement;

                  (c) (i) Prior to the filing with the Commission of any
Registration Statement (including any amendments thereto) and the distribution
or delivery of any Prospectus (including any supplements thereto), provide (A)
draft copies thereof to the Investors and reflect in such

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documents all such comments as the Investors (and their counsel) reasonably may
propose and (B) to the Investors a copy of the accountant's consent letter to be
included in the filing and (ii) furnish to each Investor whose Registrable
Securities are included in the Registration Statement and its legal counsel
identified to the Company, (A) promptly after the same is prepared and publicly
distributed, filed with the Commission, or received by the Company, one copy of
the Registration Statement, each Prospectus, and each amendment or supplement
thereto, and (B) such number of copies of the Prospectus and all amendments and
supplements thereto and such other documents, as such Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor;

                  (d) (i) Register or qualify the Registrable Securities covered
by the Registration Statement under such securities or "blue sky" laws of such
jurisdictions as the Investors who hold a majority-in-interest of the
Registrable Securities being offered reasonably request, (ii) prepare and file
in such jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof at all times during the Registration Period,
(iii) take all such other lawful actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the Registration
Period, and (iv) take all such other lawful actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (A) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (B) subject itself to general taxation in any such jurisdiction or
(C) file a general consent to service of process in any such jurisdiction;

                  (e) As promptly as practicable after becoming aware of such
event, notify each Investor of the occurrence of any event, as a result of which
the Prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits 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, and
promptly prepare an amendment to the Registration Statement and supplement to
the Prospectus to correct such untrue statement or omission, and deliver a
number of copies of such supplement and amendment to each Investor as such
Investor may reasonably request;

                  (f) As promptly as practicable after becoming aware of such
event, notify each Investor who holds Registrable Securities being sold (or, in
the event of an underwritten offering, the managing underwriters) of the
issuance by the Commission of any stop order or other suspension of the
effectiveness of the Registration Statement at the earliest possible time and
take all lawful action to effect the withdrawal, recession or removal of such
stop order or other suspension;

                  (g) Cause all the Registrable Securities covered by the
Registration Statement to be listed on the principal national securities
exchange, and included in an inter-dealer quotation system of a registered
national securities association, on or in which securities of the same class or
series issued by the Company are then listed or included;

                  (h) Maintain a transfer agent and registrar, which may be a
single entity, for the Registrable Securities not later than the effective date
of the Registration Statement;

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                  (i) Cooperate with the Investors who hold Registrable
Securities being offered to facilitate the timely preparation and delivery of
certificates for the Registrable Securities to be offered pursuant to the
registration statement and enable such certificates for the Registrable
Securities to be in such denominations or amounts, as the case may be, as the
Investors reasonably may request and registered in such names as the Investor
may request; and, within three business days after a registration statement
which includes Registrable Securities is declared effective by the Commission,
deliver and cause legal counsel selected by the Company to deliver to the
transfer agent for the Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such registration statement) an
appropriate instruction and, to the extent necessary, an opinion of such
counsel;

                  (j) Take all such other lawful actions reasonably necessary to
expedite and facilitate the disposition by the Investors of their Registrable
Securities in accordance with the intended methods therefor provided in the
Prospectus which are customary under the circumstances;

                  (k) Make generally available to its security holders as soon
as practicable, but in any event not later than three (3) months after (i) the
effective date (as defined in Rule 158(c) under the Securities Act) of the
Registration Statement, and (ii) the effective date of each post-effective
amendment to the Registration Statement, as the case may be, an earnings
statement of the Company and its subsidiaries complying with Section 11(a) of
the Securities Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);

                  (l) In the event of an underwritten offering, promptly include
or incorporate in a Prospectus supplement or post-effective amendment to the
Registration Statement such information as the managers reasonably agree should
be included therein and to which the Company does not reasonably object and make
all required filings of such Prospectus supplement or post-effective amendment
as soon as practicable after it is notified of the matters to be included or
incorporated in such Prospectus supplement or post-effective amendment;

                  (m) (i) Make reasonably available for inspection by Investors,
any underwriter participating in any disposition pursuant to the Registration
Statement, and any attorney, accountant or other agent retained by such
Investors or any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries, and (ii) cause the Company's officers, directors and employees to
supply all information reasonably requested by such Investors or any such
underwriter, attorney, accountant or agent in connection with the Registration
Statement, in each case, as is customary for similar due diligence examinations;
provided, however, that all records, information and documents that are
designated in writing by the Company, in good faith, as confidential,
proprietary or containing any material nonpublic information shall be kept
confidential by such Investors and any such underwriter, attorney, accountant or
agent (pursuant to an appropriate confidentiality agreement in the case of any
such holder or agent), unless such disclosure is made pursuant to judicial
process in a court proceeding (after first giving the Company an opportunity
promptly to seek a protective order or otherwise limit the scope of the
information sought to be disclosed) or is required by law, or such records,
information or documents become available to the public generally or through a
third party not in violation of an accompanying obligation of

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confidentiality; and provided, further, that, if the foregoing inspection and
information gathering would otherwise disrupt the Company's conduct of its
business, such inspection and information gathering shall, to the maximum extent
possible, be coordinated on behalf of the Investors and the other parties
entitled thereto by one firm of counsel designed by and on behalf of the
majority in interest of Investors and other parties;

                  (n) In connection with any underwritten offering, make such
representations and warranties to the Investors participating in such
underwritten offering and to the managers, in form, substance and scope as are
customarily made by the Company to underwriters in secondary underwritten
offerings;

                  (o) In connection with any underwritten offering, obtain
opinions of counsel to the Company (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to the managers) addressed to
the underwriters, covering such matters as are customarily covered in opinions
requested in secondary underwritten offerings (it being agreed that the matters
to be covered by such opinions shall include, without limitation, as of the date
of the opinion and as of the Effective Time of the Registration Statement or
most recent post-effective amendment thereto, as the case may be, the absence
from the Registration Statement and the Prospectus, including any documents
incorporated by reference therein, of an untrue statement of a material fact or
the omission of a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, subject to customary
limitations);

                  (p) In connection with any underwritten offering, obtain "cold
comfort" letters and updates thereof from the independent public accountants of
the Company (and, if necessary, from the independent public accountants of any
subsidiary of the Company or of any business acquired by the Company, in each
case for which financial statements and financial data are, or are required to
be, included in the Registration Statement), addressed to each underwriter
participating in such underwritten offering (if such underwriter has provided
such letter, representations or documentation, if any, required for such cold
comfort letter to be so addressed), in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
secondary underwritten offerings;

                  (q) In connection with any underwritten offering, deliver
such documents and certificates as may be reasonably required by the managers,
if any; and

                  (r) In the event that any broker-dealer registered under the
Exchange Act shall be an "AFFILIATE" (as defined in Rule 2729(b)(1) of the rules
and regulations of the National Association of Securities Dealers, Inc. (the
"NASD RULES") (or any successor provision thereto)) of the Company or has a
"CONFLICT OF INTEREST" (as defined in Rule 2720(b)(7) of the NASD Rules (or any
successor provision thereto)) and such broker-dealer shall underwrite,
participate as a member of an underwriting syndicate or selling group or assist
in the distribution of any Registrable Securities covered by the Registration
Statement, whether as a holder of such Registrable Securities or as an
underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise, the Company shall assist such broker-dealer in complying
with the requirements of the NASD Rules, including, without limitation, by (A)
engaging a "QUALIFIED INDEPENDENT UNDERWRITER" (as defined in Rule 2720(b)(15)
of the NASD Rules (or any

                                       10

<PAGE>   11

successor provision thereto)) to participate in the preparation of the
Registration Statement relating to such Registrable Securities, to exercise
usual standards of due diligence in respect thereof and to recommend the public
offering price of such Registrable Securities, (B) indemnifying such qualified
independent underwriter to the extent of the indemnification of underwriters
provided in Section 6 hereof, and (C) providing such information to such
broker-dealer as may be required in order for such broker-dealer to comply with
the requirements of the NASD Rules.

                  4.       OBLIGATIONS OF THE INVESTORS

                  In connection with the registration of the Registrable
Securities, the Investors shall have the following obligations:

                  (a) It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. As least seven
days prior to the first anticipated filing date of the Registration Statement,
the Company shall notify each Investor of the information the Company requires
from each such Investor (the "REQUESTED INFORMATION") if such Investor elects to
have any of its Registrable Securities included in the Registration Statement.
If at least two business days prior to the anticipated filing date the Company
has not received the Requested Information from an Investor (a "NON-RESPONSIVE
INVESTOR"), then the Company may file the Registration Statement without
including Registrable Securities of such Non-Responsive Investor and have no
further obligations to the Non-Responsive Investor;

                  (b) Each Investor by its acceptance of the Registrable
Securities agrees to cooperate with the Company in connection with the
preparation and filing of the Registration Statement hereunder, unless such
Investor has notified the Company in writing of its election to exclude all of
its Registrable Securities from the Registration Statement; and

                  (c) Each Investor agrees that, upon receipt of any notice from
the Company of the occurrence of any event of the kind described in Section 3(e)
or 3(f), it shall immediately discontinue its disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(e) and, if so directed by the
Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice.

                  5.       EXPENSES OF REGISTRATION

                  All expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Section 3, but including,

                                       11

<PAGE>   12

without limitation, all registration, listing, and qualifications fees, printing
and engraving fees, accounting fees, and the fees and disbursements of counsel
for the Company.

                  6.       INDEMNIFICATION AND CONTRIBUTION

                  (a) The Company shall indemnify and hold harmless each
Investor and each underwriter, if any, which facilitates the disposition of
Registrable Securities, and each of their respective officers and directors and
each person who controls such Investor or underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act (each such
person being sometimes hereinafter referred to as an "INDEMNIFIED PERSON") from
and against any losses, claims, damages or liabilities, joint or several, to
which such Indemnified Person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement or
an omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, not misleading, or
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Prospectus or an omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and the Company hereby agrees to
reimburse such Indemnified Person for all reasonable legal and other expenses
incurred by them in connection with investigating or defending any such action
or claim as and when such expenses are incurred; provided, however, that the
Company shall not be liable to any such Indemnified Person in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon (i) an untrue statement or alleged untrue statement made in, or an
omission or alleged omission from, such Registration Statement or Prospectus in
reliance upon and in conformity with written information furnished to the
Company by such Indemnified Person expressly for use therein or (ii) in the case
of the occurrence of an event of the type specified in Section 3(e), the use by
the Indemnified Person of an outdated or defective Prospectus after the Company
has provided to such Indemnified Person an updated Prospectus correcting the
untrue statement or alleged untrue statement or omission or alleged omission
giving rise to such loss, claim, damage or liability.

                  (b) INDEMNIFICATION BY THE INVESTORS AND UNDERWRITERS. Each
Investor agrees, as a consequence of the inclusion of any of its Registrable
Securities in a Registration Statement, and each underwriter, if any, which
facilitates the disposition of Registrable Securities shall agree, as a
consequence of facilitating such disposition of Registrable Securities,
severally and not jointly, to (i) indemnify and hold harmless the Company, its
directors (including any person who, with his or her consent, is named in the
Registration Statement as a director nominee of the Company), its officers who
sign any Registration Statement and each person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act, against any losses, claims, damages or liabilities to
which the Company or such other persons may become subject, under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in such Registration
Statement or Prospectus or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in light of the circumstances under
which they were

                                       12

<PAGE>   13

made, in the case of the Prospectus), not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such holder or
underwriter expressly for use therein; provided, however, that no Investor or
underwriter shall be liable under this Section 6(b) for any amount in excess of
the net proceeds paid to such Investor or underwriter in respect of shares sold
by it, and (ii) reimburse the Company for any legal or other expenses incurred
by the Company in connection with investigating or defending any such action or
claim as such expenses are incurred.

                  (c) NOTICE OF CLAIMS, ETC. Promptly after receipt by a party
seeking indemnification pursuant to this Section 6 (an "INDEMNIFIED PARTY") of
written notice of any investigation, claim, proceeding or other action in
respect of which indemnification is being sought (each, a "CLAIM"), the
Indemnified Party promptly shall notify the party against whom indemnification
pursuant to this Section 6 is being sought (the "INDEMNIFYING PARTY") of the
commencement thereof; but the omission to so notify the Indemnifying Party shall
not relieve it from any liability that it otherwise may have to the Indemnified
Party, except to the extent that the Indemnifying Party is materially prejudiced
and forfeits substantive rights and defenses by reason of such failure. In
connection with any Claim as to which both the Indemnifying Party and the
Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if (and
only if): (x) the Indemnifying Party shall have agreed to pay such fees, costs
and expenses, (y) the Indemnified Party and the Indemnifying Party shall
reasonably have concluded that representation of the Indemnified Party by the
Indemnifying Party by the same legal counsel would not be appropriate due to
actual or, as reasonably determined by legal counsel to the Indemnified Party,
potentially differing interests between such parties in the conduct of the
defense of such Claim, or if there may be legal defenses available to the
Indemnified Party that are in addition to or disparate from those available to
the Indemnifying Party, or (z) the Indemnifying Party shall have failed to
employ legal counsel reasonably satisfactory to the Indemnified Party within a
reasonable period of time after notice of the commencement of such Claim. If the
Indemnified Party employs separate legal counsel in circumstances other than as
described in clauses (x), (y) or (z) above, the fees, costs and expenses of such
legal counsel shall be borne exclusively by the Indemnified Party. Except as
provided above, the Indemnifying Party shall not, in connection with any Claim
in the same jurisdiction, be liable for the fees and expenses of more than one
firm of counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnified Party shall not, without the prior written consent of
the Indemnifying Party (which consent shall not unreasonably be withheld),
settle or compromise any Claim or consent to the entry of any judgment that does
not include an unconditional release of the Indemnifying Party from all
liabilities with respect to such Claim or judgment.

                  (d) CONTRIBUTION. If the indemnification provided for in this
Section 6 is unavailable to or insufficient to hold harmless an Indemnified
Person under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein, then
each Indemnifying Party shall contribute to the amount paid or payable

                                       13

<PAGE>   14

by such Indemnified Party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Indemnifying Party and the Indemnified
Party in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), 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 the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by such Indemnifying Party or by such Indemnified Party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 6(d) were determined by pro rata allocation (even if the Investors or
any underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to in this Section 6(d). The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such Indemnified Party in connection
with investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligations of the Investors
and any underwriters in this Section 6(d) to contribute shall be several in
proportion to the percentage of Registrable Securities registered or
underwritten, as the case may be, by them and not joint.

                  (e) Notwithstanding any other provision of this Section 6, in
no event shall any (i) Investor be required to undertake liability to any person
under this Section 6 for any amounts in excess of the dollar amount of the
proceeds to be received by such Investor from the sale of such Investor's
Registrable Securities (after deducting any fees, discounts and commissions
applicable thereto) pursuant to any Registration Statement under which such
Registrable Securities are to be registered under the Securities Act and (ii)
underwriter be required to undertake liability to any Person hereunder for any
amounts in excess of the aggregate discount, commission or other compensation
payable to such underwriter with respect to the Registrable Securities
underwritten by it and distributed pursuant to the Registration Statement.

                  (f) The obligations of the Company under this Section 6 shall
be in addition to any liability which the Company may otherwise have to any
Indemnified Person and the obligations of any Indemnified Person under this
Section 6 shall be in addition to any liability which such Indemnified Person
may otherwise have to the Company. The remedies provided in this Section 6 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to an indemnified party at law or in equity.

                  7.       RULE 144

                  With a view to making available to the Investors the benefits
of Rule 144 under the Securities Act or any other similar rule or regulation of
the Commission that may at any time permit the Investors to sell securities of
the Company to the public without registration ("RULE 144"), the Company agrees
to use its best efforts to:

                                       14

<PAGE>   15

                  (a) comply with the provisions of paragraph (c) (1) of Rule
144; and

                  (b) file with the Commission in a timely manner all reports
and other documents required to be filed by the Company pursuant to Section 13
or 15(d) under the Exchange Act; and, if at any time it is not required to file
such reports but in the past had been required to or did file such reports, it
will, upon the request of any Investor, make available other information as
required by, and so long as necessary to permit sales of, its Registrable
Securities pursuant to Rule 144.

                  8.       ASSIGNMENT

                  The rights to have the Company register Registrable Securities
pursuant to this Agreement shall be automatically assigned by the Investors to
any permitted transferee of all or any portion of such Registrable Securities
(or all or any portion of any Preferred Shares or Warrant of the Company which
is convertible into Registrable Securities) only if: (a) the Investor agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment, (b) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (i) the name and address of such
transferee or assignee and (ii) the securities with respect to which such
registration rights are being transferred or assigned, (c) immediately following
such transfer or assignment, the securities so transferred or assigned to the
transferee or assignee constitute Restricted Securities, and (d) at or before
the time the Company received the written notice contemplated by clause (b) of
this sentence the transferee or assignee agrees in writing with the Company to
be bound by all of the provisions contained herein.

                  9.       AMENDMENT AND WAIVER

                  Any provision of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of the
Company and Investors who hold a majority-in-interest of the Registrable
Securities. Any amendment or waiver effected in accordance with this Section 9
shall be binding upon each Investor and the Company.

                  10.      CHANGES IN COMMON STOCK

                  If, and as often as, there are any changes in the Common Stock
by way of stock split, stock dividend, reverse split, combination or
reclassification, or through merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof, as may be required, so that the rights and privileges
granted hereby shall continue with respect to the Common Stock as so changed.

                  11.      MISCELLANEOUS

                  (a) A person or entity shall be deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.

                                       15

<PAGE>   16

                  (b) If, after the date hereof and prior to the Commission
declaring the Registration Statement to be filed pursuant to Section 2(a)
effective under the Securities Act, the Company grants to any Person any
registration rights with respect to any Company securities which are more
favorable to such other Person than those provided in this Agreement, then the
Company forthwith shall grant (by means of an amendment to this Agreement or
otherwise) identical registration rights to all Investors hereunder.

                  (c) Except as may be otherwise provided herein, any notice or
other communication or delivery required or permitted hereunder shall be in
writing and shall be delivered personally or sent by certified mail, postage
prepaid, or by a nationally recognized overnight courier service, and shall be
deemed given when so delivered personally or by overnight courier service, or,
if mailed, three days after the date of deposit in the United States mails, as
follows:

                           (i)      if to the Company, to:

                                    Innovative Gaming Corporation of America
                                    4725 Aircenter Circle
                                    Reno, Nevada 89502
                                    Attention: Roland M. Thomas, CEO
                                    (775) 823-3000
                                    (775) 823-3030 (Fax)

                                    with a copy to:

                                    Maslon Edelman Borman & Brand, LLP
                                    3300 Norwest Center
                                    90 South Seventh Street
                                    Minneapolis, Minnesota  55402
                                    Attention:  Douglas T. Holod, Esq.
                                    (612) 672-8200
                                    (612) 672-8397 (Fax)

                            (ii)    if to the Investor, to:

                                    The address of Investor as indicted on
                                    Schedule A.

                            (iii) if to any other Investor, at such address as
         such Investor shall have provided in writing to the Company.

The Company, the Investor or any Investor may change the foregoing address by
notice given pursuant to this Section 11(c).

                  (d) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.

                                       16

<PAGE>   17

                  (e) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York. Each of the parties consents
to the jurisdiction of the federal courts whose districts encompass any part of
the City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection including
any objection based on forum non conveniens, to the bringing of any such
proceeding in such jurisdictions.

                  (f) The remedies provided in this Agreement are cumulative and
not exclusive of any remedies provided by law. 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 best 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.

                  (g) The Company shall not enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
holders of Registrable Securities in this Agreement or otherwise conflicts with
the provisions hereof. The Company is not currently a party to any agreement
granting any registration rights with respect to any of its securities to any
person which conflicts with the Company's obligations hereunder or gives any
other party the right to include any securities in any Registration Statement
filed pursuant hereto, except for the Assignment Agreement, the Series C
Registration Rights Agreement, the Series D Registration Rights Agreement and
the Series E Registration Rights Agreement and except for such rights and
conflicts as have been irrevocably waived. Without limiting the generality of
the foregoing, without the written consent of the holders of a majority in
interest of the Registrable Securities, the Company shall not grant to any
person the right to request it to register any of its securities under the
Securities Act unless the rights so granted are subject in all respect to the
prior rights of the holders of Registrable Securities set forth herein, and are
not otherwise in conflict or inconsistent with the provisions of this Agreement.
The restrictions on the Company's rights to grant registration rights under this
paragraph shall terminate on the date the Registration Statement to be filed
pursuant to Section 2(a) is declared effective by the Commission.
Notwithstanding the foregoing, the Company shall be permitted to enter into and
perform one or more registration rights agreements with holders of the Company's
Series F 6% Convertible Preferred Stock, par value $0.01 per share, each
containing provisions substantially similar to the provisions of this Agreement.

                  (h) This Agreement, and the Securities Purchase Agreement,
between the Company, and the Investor, the Preferred Shares and the Warrants
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein. This Agreement
and the Securities Purchase Agreement, the Certificate of Designation and the
Warrants supersede all prior agreements and undertakings among the parties
hereto with respect to the subject matter hereof.

                                       17

<PAGE>   18

                  (i) Subject to the requirements of Section 8 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.

                  (j) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.

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

                  (l) The Company acknowledges that any failure by the Company
to perform its obligations under Section 3, or any delay in such performance
could result in direct damages to the Investors and the Company agrees that, in
addition to any other liability the Company may have by reason of any such
failure or delay, the Company shall be liable for all direct damages caused by
such failure or delay.

                  (m) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. A facsimile transmission of this signed
Agreement shall be legal and binding on all parties hereto.

                                       18

<PAGE>   19

                  IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered as of the date first above written.

                                        INNOVATIVE GAMING CORPORATION OF AMERICA

                                        By: /s/ Roland M. Thomas
                                           -------------------------------------
                                            Name:  Roland Thomas
                                            Title: Chief Executive Officer

                                        INVESTOR:

                                            /s/ Wayne W. Mills
                                           -------------------------------------
                                            Name: Wayne W. Mills

                 Signature Page - Registration Rights Agreement

<PAGE>   20

                                   SCHEDULE A
                                    INVESTOR

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
NAME                           ADDRESS                                           NUMBER OF PREFERRED SHARES
--------------------------------------------------------------------------------------------------------------------
<S>                            <C>                                               <C>
Wayne W. Mills                 5020 Blake Road South                                     306,250
                               Edina, Minnesota  55436

--------------------------------------------------------------------------------------------------------------------
</TABLE><PAGE>   1
                                                                    EXHIBIT 10.6

                          SECURITIES EXCHANGE AGREEMENT

        This SECURITIES EXCHANGE AGREEMENT, dated as of December 1st, 2000, is
by and between Innovative Gaming Corporation of America, a Minnesota corporation
with principal executive offices located at 4725 Aircenter Circle, Reno, Nevada
89502 (the "COMPANY") and the investor set forth on Schedule A ("INVESTOR").

         WHEREAS, Investor has previously entered into that certain Securities
Purchase Agreement pursuant to which Investor purchased shares of Series D 6%
Convertible Preferred Stock of the Company, par value $.01 per share (the
"SERIES D PREFERRED STOCK").

         WHEREAS, Investor currently holds that number of shares of Series D
Preferred Stock set forth on Schedule A (the "SERIES D PREFERRED SHARES").

         WHEREAS, Investor desires to purchase from the Company that number of
shares of the Company's Series G 6% Convertible Preferred Stock, par value $.01
per share (the "SERIES G PREFERRED STOCK") set forth on Schedule A (such shares
as the "SERIES G PREFERRED SHARES"), and the Company desires to issue and sell
the Series G Preferred Shares to Investor, on the terms and conditions contained
herein.

        NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:

               I. PURCHASE AND SALE OF SERIES G PREFERRED SHARES

        A. TRANSACTION. Investor hereby agrees to purchase from the Company, and
the Company has offered and hereby agrees to issue and sell to Investor in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act of 1933, as amended (the "SECURITIES ACT"), the Series G
Preferred Shares.

        B. CONSIDERATION; SURRENDER AND REDEMPTION OF SERIES D PREFERRED SHARES.
In consideration for the Series G Preferred Shares to be purchased by Investor
hereunder, Investor shall surrender all of its interest in and to the Series D
Preferred Shares and the Company hereby agrees to redeem such Series D Preferred
Shares as provided below.

                            II. REGISTRATION RIGHTS

        A. OBLIGATIONS OF THE COMPANY. The Company shall prepare and file with
the Securities and Exchange Commission (the "COMMISSION") no later than January
26, 2001 (the "LATEST FILING DATE"), a Registration Statement (as defined
below), and shall use its best efforts to cause the Commission to declare such
Registration Statement effective under the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder (the "SECURITIES
ACT"), as promptly as practicable but in no event later than 90 days after the
Latest Filing Date,

                                       1

<PAGE>   2

assuming for purposes hereof a Conversion Price under the Certificate of
Designation of $.50 per share. At such time after the filing of the Registration
Statement as (i) the Commission indicates, either orally or in writing, that it
has no further comments with respect to such Registration Statement or that it
is willing to entertain appropriate requests for acceleration of effectiveness
of such Registration Statement and (ii) the Company shall have received all
necessary Nevada gaming regulatory approvals, the Company shall promptly, and in
no event later than two business days after receipt of such indication from the
Commission, request that the effectiveness of such Registration Statement be
accelerated within 48 hours of the Commission's receipt of such request. The
Company shall notify the Investor by written notice that such Registration
Statement has been declared effective by the Commission within 24 hours of such
declaration by the Commission.

        B. DEFINITIONS.

        1. "REGISTRABLE SECURITIES" means the Common Stock of the Company, par
value $.01 per share (the "COMMON STOCK"), issuable (i) in lieu of cash dividend
payments on the Series G Preferred Shares, and (ii) upon conversion or
redemption of the Series G Preferred Shares; provided, however, that a share of
Common Stock shall cease to be a Registrable Security for purposes of this
Agreement when it no longer is a Restricted Security (as defined below).

        2. "REGISTRATION STATEMENT" means a registration statement on Form S-3
relating to the offer and sale of the Registrable Securities by the holders
thereof.

        3. "RESTRICTED SECURITY" means any share of Common Stock issuable in
lieu of cash dividend payments on the Series G Preferred Shares or upon
conversion or redemption of the Series G Preferred Shares except any such share
that (i) has been registered pursuant to an effective registration statement
under the Securities Act and sold in a manner contemplated by the prospectus
included in such registration statement, (ii) has been transferred in compliance
with the resale provisions of Rule 144 under the Securities Act (or any
successor provision thereto) or is transferable pursuant to paragraph (k) of
Rule 144 under the Securities Act (or any successor provision thereto), or (iii)
otherwise has been transferred and a new share of Common Stock not subject to
transfer restrictions under the Securities Act has been delivered by or on
behalf of the Company.

                   III. ACKNOWLEDGMENT OF RESTRICTIVE LEGENDS

                  Investor acknowledges and agrees that, upon issuance pursuant
to this Agreement, the Securities (including without limitation any Dividend
Shares or Conversion Shares) shall have endorsed thereon legends in
substantially the following form (and a stop-transfer order may be placed
against transfer of the Preferred Shares and the Conversion Shares until such
legend has been removed):

                  "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF

                                       2

<PAGE>   3

                  1933 OR THE SECURITIES LAW OF ANY STATE. THE SHARES HAVE BEEN
                  ACQUIRED FOR INVESTMENT AND WITHOUT A VIEW TO THEIR
                  DISTRIBUTION AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF IN
                  THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
                  SHARES UNDER THE SECURITIES ACT OF 1933 OR UNLESS, IN THE
                  OPINION OF COUNSEL SATISFACTORY TO THIS CORPORATION, AN
                  EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER THE SECURITIES
                  LAWS.

                  THE ARTICLES OF INCORPORATION OF THE CORPORATION IMPOSE
                  CERTAIN RESTRICTIONS ON THE OWNERSHIP OF FIVE PERCENT OR MORE
                  OF THE CAPITAL STOCK OF THE CORPORATION AND EMPOWER THE BOARD
                  OF DIRECTORS TO REDEEM CAPITAL STOCK UNDER CERTAIN
                  CIRCUMSTANCES. THE CORPORATION WILL FURNISH ANY SHAREHOLDER
                  UPON REQUEST AND WITHOUT CHARGE, A COPY OF THE ARTICLES OF
                  INCORPORATION AND A FULL STATEMENT OF THE DESIGNATIONS,
                  PREFERENCES, LIMITATIONS, AND RELATIVE RIGHTS OF THE SHARES OF
                  EACH CLASS OR SERIES AUTHORIZED TO BE ISSUED, SO FAR AS THEY
                  HAVE BEEN DETERMINED, AND THE AUTHORITY OF THE BOARD TO
                  DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF SUBSEQUENT
                  CLASSES OR SERIES.

                  THESE SECURITIES ARE SUBJECT TO THE MISSISSIPPI GAMING CONTROL
                  ACT AND THE REGULATIONS OF THE MISSISSIPPI GAMING COMMISSION.

                  THESE SECURITIES ARE SUBJECT TO THE NEVADA GAMING CONTROL ACT
                  AND THE REGULATIONS OF THE NEVADA GAMING COMMISSION.

              IV. CLOSING DATE; DELIVERY OF SERIES D CERTIFICATES

                  The date and time (the "CLOSING DATE") of the issuance and
sale of the Series G Preferred Shares shall be the date hereof or such other
date and time as shall be mutually agreed upon in writing. The issuance and sale
of the Securities shall occur on the Closing Date at the offices of Maslon
Edelman Borman & Brand, LLP. On the Closing Date, The Company shall deliver the
Series G Preferred Stock to Investor pursuant to Section I.B. hereof on a
"delivery-against-payment basis", and Investor shall deliver certificate(s)
representing the Series D Preferred Shares to the Company for cancellation

                                       3

<PAGE>   4

                                V. GOVERNING LAW

                  This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York, without regard to the
conflicts of law principles of such state.

                          VI. COUNTERPARTS; EXECUTION

                  This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which when
so executed and delivered shall be an original, but all the counterparts shall
together constitute one and the same instrument. A facsimile transmission of
this signed Agreement shall be legal and binding on all parties hereto.

                               VII. SEVERABILITY

                  In the event any one or more of the provisions contained in
this Agreement should be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

            VIII. ENTIRE AGREEMENT; REMEDIES, AMENDMENTS AND WAIVERS

                  This Agreement constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. No supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by all parties. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.

                                   IX. NOTICES

                  Except as may be otherwise provided herein, any notice or
other communication or delivery required or permitted hereunder shall be in
writing and shall be delivered personally or sent by certified mail, postage
prepaid, or by a nationally recognized overnight courier service, and shall be
deemed given when so delivered personally or by overnight courier service, or,
if mailed, three (3) days after the date of deposit in the United States mails,
as follows:

                                       4

<PAGE>   5

                  A.       to the Company, to:

                           Innovative Gaming Corporation of America
                           4725 Aircenter Circle
                           Reno, Nevada 89502
                           Attention:  Roland M. Thomas, CEO
                           (775) 823-3000
                           (775) 823-3030 (Fax)

                  B.       if to Buyer, to:

                           The address of Investor as indicated on Schedule A.

The Company or Investor may change the foregoing address by notice given
pursuant to this Article X.

                                 X. ASSIGNMENT

                  This Agreement shall not be assignable by either of the
parties hereto prior to the Closing without the prior written consent of the
other party, and any attempted assignment contrary to the provisions hereby
shall be null and void; provided, however, that Investor may assign its rights
and obligations hereunder, in whole or in part, to any Affiliate of Investor.

                             XI. FURTHER ASSURANCES

                  Each party to this Agreement will, on or any time after the
date hereof, execute such further documents or instruments and take such further
actions as may reasonably be requested by any other party to this Agreement to
effect the purposes of this Agreement.

                            [SIGNATURE PAGE FOLLOWS]

                                       5

<PAGE>   6

                  In Witness Whereof, the parties hereto have duly executed and
delivered this Agreement on the date first above written.

                                        INNOVATIVE GAMING CORPORATION OF AMERICA

                                        By:
                                           -------------------------------------
                                            Name:  Roland M. Thomas
                                            Title: Chief Executive Officer

                                        INVESTOR:

                                           -------------------------------------
                                            Name:

                 Signature Page - Securities Exchange Agreement

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