SecProbe.io

CORRESP
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acheng@gibsondunn.com

September 8, 2005

VIA EDGAR

  (213)
  229-7684

  C 41731-00005

(213) 229-6684

Linda Cvrkel

Branch Chief

Division of Corporation Finance

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C. 20549-0510

Re:                              Herbst
Gaming, Inc.

Form 10-K for the year ended December 31, 2004

Form 10-QSB for the periods ended March 31, 2005 and June 30,
2005

Form 8-K/A dated April 15, 2005

Commission File Number: 333-71094

Dear Ms. Cvrkel:

On behalf of Herbst Gaming, Inc. (the “Company”), this letter responds to your
letter dated August 29, 2005, regarding the above-referenced filings (the “Comment Letter”).  This letter sets forth the Company’s proposed
responses to each of your comments, which we are forwarding to you for your
consideration prior to any additional filing by the Company.

Each of your comments from the Comment Letter
is set forth below, followed by the Company’s related response.  For the Staff’s convenience, the Company has
also taken the liberty of including as Exhibit A a copy of the pro
forma financial statements which reflect revisions made in response to the
Staff’s comments.  These pro forma financial
statements are marked to show sections that have changed from the previous response
letter sent to the Staff.

Form 8-K/A
dated April 15, 2005

Unaudited
Pro Forma Condensed Combined Statement of Operations

1.                                      We
note from your revised disclosures to the pro forma statement of operations
that you have adjusted interest expense and loan fee amortization for both the
interest expense and loan fee amortization on the additional debt related to
the financing of the acquisition and the net change in interest expense as a
result of debt refinancing in 2004.
Please revise the pro forma adjustments to exclude any amounts that are
based on debt refinanced in 2004 that was not a direct part of the funding for
the Grace acquisition.  Note that the pro
forma adjustments should include only those that are directly attributable to
the acquisition transaction as required by Rule 11-02(b)(6) of

Regulation S-X.

The Company notes the Staff’s comment and has
revised the pro forma statement of operations to remove the column entitled “Refinancing
Adjustments”, the result of which is to exclude any adjustments made as a result
of the Company’s debt refinancing in 2004.
Please see the Company’s revised pro forma statement of operations included
in the attached Exhibit A.

2.                                      Additionally,
we believe that the current disclosures in both the Form 10-KSB and Form 8-K
are unclear as to the sources of the debt that make up the disclosed amount of
$276,800 total debt incurred in the Grace acquisition.  For example, although Note 2 to the Form 10-KSB
states that the company used proceeds from a $170.0 million 7% senior
subordinated notes offering along with borrowings under its amended and
restated credit facility to fund the purchase price of the Grace acquisition, page 30
of the MD&A section states that during the first two months of 2005,
the company utilized the proceeds of the $100.0 million term loan and a draw
down on its revolving credit facility to pay the purchase price for the Grace
Acquisition.  Also, adjustment 3 to the
pro forma balance sheet in the Form 8-K states that the funding for the
acquisition consisted of $90,800 of debt incurred prior to December 31,
2004 and $186,000 of debt incurred subsequent to December 31.  For each amount of debt that was used to fund
the Grace acquisition, please tell us the amount and issue date of the
debt.  In future filings, please revise
your disclosures to clarify each source of debt that provided the funds for the
Grace acquisition.

On November 24, 2004, the Company
received net proceeds of approximately $165.0 million from its issuance of
$170.0 million 7% senior subordinated notes due 2014.  As the Grace Acquisition did not close in
fiscal 2004, the Company used approximately $74.2 million from the proceeds of
its 7% senior subordinated note offering to repay all borrowings under its
revolving credit facility, leaving it with $90.8 million in remaining cash
proceeds at December 31, 2004.  On February 2,
2005, the Company used this $90.8 million in cash, and drew down a $100.0
million term loan and $86.0 million in revolving loans under its credit
facility to consummate the Grace Acquisition.
Of the $86.0 million revolving borrowing, $74.2 million was used to
reborrow revolving credit facility borrowings repaid with the proceeds of the
7% senior subordinated note offering and $11.8 million was used in connection
with the Grace Acquisition.  As a result,
the $276.8 million of total debt incurred by the Company pursuant to

2

the Grace Acquisition consisted of $165.0 million in proceeds from its
7% senior subordinated notes, a $100.0 million term loan and a borrowing of
$11.8 million under its revolving credit facility.

In response to your comment, the Company has
revised footnote 3 of the pro forma balance sheet.  Please see the attached Exhibit A.  In future filings, the Company will clarify
each source of debt that provided funds for the Grace Acquisition.

Quarterly Report on Form 10-Q
for the quarter ended June 30, 2005

Condensed
Consolidated Balance Sheets

3.                                      In
future filings, please revise to provide separate disclosure of goodwill
recognized in your consolidated balance sheets.
Refer to the requirements of paragraph 43 of SFAS No. 142.

The Company notes the Staff’s comment and
will provide separate disclosure of goodwill in its consolidated balance sheets
in its future filings.

Note 7. Commitment
and Contingencies

4.                                      We
note the disclosure in Note 7 indicating that the Company assumed two lease
agreements in connection with the Grace acquisition.  Please tell us and clarify in the notes to
the financial statements in future filings, whether any portion of the purchase
price paid in connection with the acquisition was allocated to the lease
arrangements acquired.  If no lease
related assets or liabilities were recognized, please explain why.  In addition, if assets or liabilities were
recognized in connection with the acquired leasing arrangements, please
indicate the periods over which these items are being amortized.  Your response and your revised disclosure
should clearly indicate whether any expected renewal or extension periods were
considered in determining the amortization period used.  Additionally, if renewal or extension periods
were included in determining the appropriate amortization period, explain why
you believe this treatment is appropriate.
We may have further comment upon receipt of your response.

A third-party valuation firm has been engaged
by the Company to value the assets acquired in the Grace Acquisition in February 2005
and to assist in the allocation of the purchase price paid.  As the Company disclosed in Note 2 of its Form 10-Q
for each of the periods ended March 31, 2005 and June 30, 2005, this
valuation and allocation process is not yet complete.  These tasks include the identification and
valuation of any intangible assets acquired.
The Company expects this valuation and allocation process to be
completed before the end of the year.
Because this valuation process has not been completed, no portion of the
purchase price paid in connection with the Grace Acquisition has been allocated
to the acquired leases.  As the
determination of the values of the leases acquired pursuant to the Grace
Acquisition is not yet complete, the Company has not amortized the value of
such leases and will not begin to do so until the valuation of such leases is
complete and to the extent that such leases have value.  Moreover, the leases in question are not
significant and it is unlikely that such leases will significantly impact the
results of the purchase price allocation.

The Company will make all disclosures in its annual
financial statements pursuant to paragraph 51 of SFAS No. 141.

3

In connection with these comments, attached
to this letter as Exhibit B is an acknowledgment of the Company.

We appreciate the Staff’s responsiveness with
respect to the Company’s proposals and look forward to resolving any concerns
the Staff may have.  If you have any
questions, please contact me at (213) 229-7684.

  Sincerely,

  /s/ Andrew
  W. Cheng

  Andrew W.
  Cheng

AWC/dt

cc:                                 Claire Erlanger,
Securities and Exchange Commission (copy contained herewith)

Mary E.
Higgins, Herbst Gaming, Inc. (via electronic mail)

Michael Clark,
Herbst Gaming, Inc. (via electronic mail)

Wade C.
McKnight, Deloitte & Touche LLP (via electronic mail)

Ryan T.
Miller, Deloitte & Touche LLP (via electronic mail)

Peter Ziegler,
Gibson, Dunn & Crutcher LLP (via electronic mail)

4

EXHIBIT A

Revised pro forma financial
statements

UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS

The unaudited pro forma condensed combined financial data presented
below is derived from the historical consolidated financial statements of the
Company and the historical financial statements of Mark Twain Casino, L.L.C.,
St. Joseph Riverboat Partners and Southern Iowa Gaming Company and its
subsidiary (the former owners of Mark Twain, St. Jo and Lakeside Iowa,
respectively), which are included in this report. The unaudited pro forma
condensed combined balance sheet information is presented on an as adjusted
basis as if the borrowings under the Company’s amended credit facility in
respect of the Grace Acquisition and the Grace Acquisition had occurred on
December 31, 2004. The unaudited pro forma condensed combined statements of
operations information is presented on an as adjusted basis as if the
borrowings under the Company’s amended credit facility in respect of the Grace
Acquisition and Grace Acquisition had occurred on January 1, 2004. The Company
believes this information is important in evaluating the future operations and
impact of the Grace Acquisition and the borrowings under the amended credit
facility in respect of the Grace Acquisition.

The unaudited pro forma condensed combined financial statements contained
in this report use the purchase method of accounting, with the Company treated
as the acquirer. The amended purchase price for the Grace Acquisition was
approximately $266.8 million. The pro forma adjustments are based on currently
available information and upon assumptions that the Company believes are
reasonable under the circumstances. A final determination of the allocation of
the purchase price to the assets acquired and the liabilities assumed has not
been made, and the allocation reflected in the unaudited pro forma condensed
combined financial statements should be considered preliminary and is subject
to the completion of a more comprehensive valuation of the assets acquired and
liabilities assumed. The final allocation of purchase price could differ from
the pro forma allocation included herein. Amounts preliminarily allocated to
intangible assets may change significantly, and amortization methods and useful
lives may differ from the assumptions that we used in this unaudited pro forma
condensed combined financial information, any of which could result in a
material change in depreciation and amortization expense.

You should read the following pro forma statements in conjunction with “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” and
the financial statements and related notes contained in the Company’s annual
report on Form 10-K filed with the Securities and Exchange Commission on March
30, 2004.

The Company has elected to be taxed under the provisions of Subchapter
S of the Internal Revenue Code of 1986. Under those provisions, the owners of
the Company pay income taxes on its taxable income. Accordingly, a provision
for income taxes is not included in the Company’s financial data.

The unaudited pro forma condensed combined financial statements are
provided for illustrative purposes only. They do not purport to represent what
the results of operations and financial position of the Company would have been
had the Grace Acquisition and related transactions actually occurred as of the
dates indicated, and they do not purport to project or predict the future
results of operations or financial position of the Company.

UNAUDITED PRO
FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

YEAR ENDED
DECEMBER 31, 2004

  Herbst

  Gaming, Inc.

  Historical

  Mark Twain

  Casino, L.L.C.

  Historical

  St. Joseph

  Riverboat

  Partners

  Historical

  Southern Iowa

  Gaming

  Company

  Historical

  Grace

  Acquisition

  Adjustments

  Pro Forma

  As Adjusted

  (in
  thousands)

  Revenues

  Route operations

  $

  293,244

  $

  —

  $

  —

  $

  —

  $

  —

  $

  293,244

  Casino operations

  91,254

  28,525

  25,689

  63,293

  —

  208,761

  Other

  3,628

  43

  335

  300

  —

  4,306

  Total revenues

  388,126

  28,568

  26,024

  63,593

  —

  506,311

  Less promotional
  allowances

  (12,514

  )

  (634

  )

  (466

  )

  (1,433

  )

  —

  (15,047

  )

  Net revenues

  375,612

  27,934

  25,558

  62,160

  —

  491,264

  Costs and
  expenses

  Route operations

  227,929

  —

  —

  —

  —

  227,929

  Casino operations

  56,331

  16,729

  (5)

  16,525

  (5)

  38,622

  (5)

  —

  128,207

  General and
  administrative

  14,366

  2,495

  2,068

  1,628

  (2,327

  )(1)

  18,230

  Depreciation and
  amortization

  26,667

  1,788

  1,492

  2,822

  320

  (2)

  33,089

  Loss on lease
  termination

  600

  —

  —

  —

  —

  600

  Total costs and
  expenses

  325,893

  21,012

  20,085

  43,072

  (2,007

  )

  408,055

  Income from
  operations

  49,719

  6,922

  5,473

  19,088

  2,007

  83,209

  Other income
  (expenses)

  Interest expense,
  net of capitalized interest

  (20,849

  )

  (455

  )

  (82

  )

  (957

  )

  (15,630

  )(3)

  (37,973

  )

  Interest income

  353

  22

  28

  98

  (148

  )(4)

  353

  Use tax
  settlement

  —

  —

  —

  300

  (300

  )(6)

  —

  Loss on early
  retirement of debt

  (37,991

  )

  —

  —

  —

  —

  (37,991

  )

  Total other
  income (expense)

  (58,487

  )

  (433

  )

  (54

  )

  (559

  )

  (16,078

  )

  75,611

  Net income (loss)

  $

  (8,768

  )

  $

  6,489

  $

  5,419

  $

  18,529

  $

  (14,071

  )

  $

  7,598

(1)          Represents the
elimination of $1,628 in management fees expensed at Southern Iowa Gaming
Company and $699 in management fees expensed at Mark Twain Casino, L.L.C. Since
the acquisition is an asset purchase, Herbst Gaming, Inc. will not be assuming
any of the overhead costs of the parent and does not believe there will be
material additional corporate overhead costs incurred in connection with the
acquired assets.

(2)          Represents the
elimination of $89 in amortization that was included in the expenses of
Southern Iowa Gaming Company, $362 included in amortization of Mark Twain
Casino, L.L.C. and $9 included in amortization of St. Joseph Riverboat
Partners. None of these loan amortization costs will be assumed by Herbst
Gaming, Inc. Reflects estimated amortization of $780 on loan fees related to
the acquisition. Loan fees were amortized over the life of the corresponding
loan, which is not materially different from the effective interest method. The
estimated aggregate loan fees were $5,600 with an average life of the loans of
7.2 years.

(3)          Represents the
elimination of $957 in interest expense that was included in the expenses of
Southern Iowa Gaming Company, $455 included in the interest expenses of Mark
Twain Casino, L.L.C. and $82 included in the interest expenses of St. Joseph
Riverboat Partner