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1
filename1.htm

    Unassociated Document

    [On Poker
Magic, Inc. Letterhead]

    October
12, 2009

    Mr. David
R. Humphrey, Branch Chief

    Ms.
Beverly A. Singleton, Staff Accountant

    United
States Securities and Exchange Commission

    Division
of Corporation Finance

    100 F
Street NE

    Mail Stop
3561

    Washington,
D.C.  20549-7010

              Re:

              Poker
      Magic, Inc.

              Form
      10-K for the year ended December 31,
2008

              Filed
      March 27, 2009

              File
      No. 0-53045

    Dear Mr.
Humphrey and Ms. Singleton:

    On behalf
of Poker Magic, Inc. (the “Company”), this letter responds to your letter dated
September 22, 2009.  The numbered paragraphs in this response letter
correspond to the numbered paragraphs of your letter of September 22,
2009.  For ease of reference, the Staff’s comments appear in italics
immediately preceding the Company’s responses.  In addition, under
separate cover we are providing you, for your review prior to filing, with
copies of our proposed amendments to each of the reports you have reviewed
(i.e., Annual Report on Form 10-K for the year ended December 31, 2008, and
Quarterly Reports on Form 10-Q for the periods ended March 31 and June 30,
2009).

    Form 10-K for the Year Ended
December 31, 2008

    Report of Independent
Registered Public Accounting Firm, page 18

              1.

              We note your independent
      accountants, Virchow, Krause & Company, LLP, (“Virchow”) do not appear
      to be registered with the Public Company Accounting Oversight Board
      (“PCAOB”) nor does it appear Virchow has applied for registration with the
      PCAOB.  Section 102 of the Sarbanes-Oxley Act of 2002 makes it
      unlawful after October 22, 2003 for any person that is not a registered
      public accounting firm (i.e. registered with the PCAOB) to prepare or
      issue, or to participate in the preparation or issuance of, any audit
      report (or review report) with respect to any issuer.  You must
      engage a new accountant that is a publicly registered accounting firm to
      perform review or audit work for the
  company.

    Mr. David
R. Humphrey, Branch Chief

    Ms.
Beverly A. Singleton, Staff Accountant

    Page
2

    October
12, 2009

    Response:  Our
independent accountants, Baker Tilly Virchow Krause, LLP (formerly known as
Virchow, Krause & Company, LLP at the time of the filing of the Form 10-K
for Poker Magic, Inc.) is registered with the PCAOB.  The firm changed
their name effective June 1, 2009 with the name listing on the PCAOB website for
registered firms updated on June 25, 2009.  The PCAOB’s recognition of
the name change can be found on the PCAOB website under “Name Changes of
Registered Public Accounting Firms” which shows the “Current Name” as Baker
Tilly Virchow Krause, LLP with the corresponding “Previous Name” of Virchow,
Krause & Company, LLP.  The firm’s inspection report, issued June
14, 2007, from the 2006 PCAOB inspection, is also available on the PCAOB
website.

              2.

              To the extent Virchow is
      registered with the PCAOB (or registered under a different name), please
      advise and have them provide us with supporting documentation as to their
      registration with the PCAOB.  To the extent Virchow is not
      registered with the PCAOB or were not registered at the time you filed
      your December 31, 2008 Annual Report on Form 10-K and March 31, 2009 and
      June 30, 2009 Quarterly Reports on Form 10-Q, such financial statements
      are not acceptable in filings with us and are considered to be materially
      deficient.  The financial statements in these filings will need
      to be re-audited (with respect to the Form 10-K) and re-reviewed (with
      respect to the Forms 10-Q) by a PCAOB-registered independent public
      accounting firm and re-filed in amendments to the December 31, 2008 Annual
      Report on Form 10-K and March 31, 2009 and June 30, 2009 Quarterly Reports
      on Form 10-Q.  Please advise and file the requested amendments
      as soon as practicable.  We may have further comment after
      review of your response.

    Response:  Please
see the Company’s response to Comment 1.

              3.

              Please file an Item 4.01 Form
      8-K after you have engaged new accountants that are registered with the
      PCAOB.  Provide all of the disclosures required by Item
      304(a)(1) of Regulation S-K regarding the period of engagement of Virchow,
      Krause & Company, LLP which should include an Exhibit 16 letter from
      Virchow, Krause & Company,
LLP.

    Response:  Please
see the Company’s response to Comment 1.

              4.

              Also, if and when you engage
      new accountants, please report the engagement in an Item 4.01 Form 8-K and
      comply with the requirements of Regulation S-K Item
      304(a)(2).  In making any disclosures about consultations with
      your new accountants, please ensure you disclose any consultations up
      through the date of
engagement.

    Response:  Please
see the Company’s response to Comment 1.

        2

    Mr. David
R. Humphrey, Branch Chief

    Ms.
Beverly A. Singleton, Staff Accountant

    Page
3

    October
12, 2009

    Management’s Discussion and
Analysis, page 13

    Results of Operations, page
13

              5.

              See the paragraph discussion
      that begins with “Shares issued to our executive management
      personnel…”  For the aggregated amounts listed in the first and
      second sentences for the years ended December 31, 2008 and 2007, please
      tell us how each of these amounts reconcile with the individual line item
      amounts for the line items “Consulting Expenses” and “Executive Management
      Compensation” shown in the table on page 13.  For the amounts
      listed in the third sentence, please disclose and also tell us where the
      expense is reflected in the table on page
  13.

    Response:  The
expense related to executive management personnel and consultants of $69,879 and
$105,171 for the years ended December 31, 2008 and 2007 are included in the
various expense categories noted in the table along with other expenses not
considered material to specifically disclose and will not reconcile to an exact
line in the table.  The detail of the amounts in this MD&A
paragraph does reconcile to the Company’s cash flow
statement.  Management disclosed this information separately for
transparency to the investors.  Executive management compensation for
2008 in the amount of $56,000 includes $10,000 for value of shares issued for
services, $8,000 of cash paid, and $38,000 of contributed capital for value of
services rendered.  All expenses described in this paragraph are
included in operating expenses on the statement of operations.

    Going Concern, page
16

              6.

              Please revise the third
      sentence to clarify that your independent registered public accountants,
      because of the factors disclosed, among others, have issued a going
      concern opinion that raises substantial doubt about your ability to
      continue as a going concern.

    Response:  We note
your comment and, because (i) the existing disclosure already indicates that
there is substantial doubt about our ability to continue as a going concern and
(ii) the report of the auditor contained in the same report plainly contains a
going concern opinion, we would like to incorporate your suggested revision in
future annual report filings.

    Critical Accounting Policies
and Estimates, page 17

              7.

              Please expand the disclosure
      under this heading to further identify and describe those policies,
      included within your significant accounting policies at Note 1 to the
      audited financial statements, that are critical accounting policies
      according to your definition in the second paragraph under this heading
      where you indicate those are ‘policies that represent the more significant
      judgments and estimates used in the preparation of the Company’s financial
      statements…’  The MD&A should disclose those accounting
      policies that are critical policies where estimates and judgments are used
      that could have material impact.  For example, but not limited
      to, your more critical accounting policies and estimates could be revenue
      recognition, impairment of intangible and long-lived assets, and income
      taxes.

        3

    Mr. David
R. Humphrey, Branch Chief

    Ms.
Beverly A. Singleton, Staff Accountant

    Page
4

    October
12, 2009

    Response:  We note
your comment and we would like to incorporate your suggestions in future
filings.  In particular, we would like to include disclosure in
substantially the following form:

    Our
policy for the recognition of revenue is a critical accounting
policy.  The Company recognizes revenue from sales under a license
agreement when the following four criteria are met:  (1) there exists
persuasive evidence of an arrangement (e.g., a fully executed license
agreement); (2) delivery of the Winner’s Pot Poker game, felt and instructions
has been made and the licensee thereafter becomes responsible to replace such
materials in the event of damage or normal wear and tear; (3) the price is fixed
or determinable; and (4) the ability of the Company to collect amounts owed is
reasonably assured.

    Our
policy regarding the determination of impairment of long-lived and intangible
assets is another critical accounting policy.  In this regard, our
management reviews the Company’s long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying amount of a
long-lived or intangible asset may not be recoverable.  If indications
of impairment are present and the estimated future undiscounted cash flows are
less than the carrying value of the asset under scrutiny, the value of that
asset will be adjusted appropriately.  No impairment indicators were
present as of December 31, 2008 or December 31, 2007.

    Financial
Statements

    Note 4, Shareholders’
Equity, page 29

              8.

              Refer to the May 28, 2008
      transaction of the warrant issuance.  Disclose the value
      assigned to the warrants and how you determined the value.  If
      the warrants were determined to have minimal or no value, please so state;
      other it is unclear why the value of the warrant has not been reflected in
      the financial statements.  Please advise or
      revise.

    Response:  Determination
of the value of the warrants is not considered necessary because the warrants
were issued to an investor in connection with that investor’s purchase of common
stock.  The warrants are properly classified as permanent equity and
do not have any terms which would require a classification as a liability, nor
do they possess any embedded derivative features.

        4

    Mr. David
R. Humphrey, Branch Chief

    Ms.
Beverly A. Singleton, Staff Accountant

    Page
5

    October
12, 2009

      Controls and
Procedures

      Report of Management on
Internal Control over Financial Reporting, page 32

                9.

                Refer to the paragraph that
      begins “Based on this assessment…”  Please revise the second
      sentence with respect to the use of the accounting firm, Virchow, Krause
      & Company, LLP, as such firm does not appear to be registered with the
      PCAOB, as noted in our comments above.  In this regard, upon the
      engagement of new registered independent public accountants, you may
      choose to revise to state: ‘This annual report does not include an
      attestation report of the company’s registered public accounting firm
      regarding internal control over financial
      reporting.  Management’s report was not subject to attestation
      by the company’s registered public accounting firm pursuant to temporary
      rules of the Securities and Exchange Commission that permit the company to
      provide only management’s report in this annual report.’  See
      Item 308T(a)(4) of Regulation
S-K.

    Response:  Please
see the Company’s response to Comment 1.  In addition, we believe our
current disclosure about the absence of an attestation report is in a form
substantially similar to that required by Item 308T(a)(4), and is neither
misleading nor inaccurate.  As such, we would prefer not to amend the
Annual Report to more closely adhere to the language in the Regulation S-K
reporting Item.

    Executive and Director
Compensation, page 34

              10.

              See note 2 to the table on
      page 34 regarding the stock awards received in fiscal year
      2007.  Please clarify whether each officer received 250,000
      common shares (for an aggregate of 500,000 common shares valued at
      $48,000) as shown in the statements of shareholders’ equity and Note 4 to
      the audited financial statements pertaining to this January 2007
      transaction.  Your current disclosure indicates each officer
      received 125,000 valued at $24,000 (for an aggregate of 250,000 common
      shares valued at $48,000).  Please revise or
      advise.

    Response:  The
figures in footnote 2 of the table appear to have been in error since each
executive received 250,000 shares having an aggregate value of $24,000 in
January 2007.   We have corrected the disclosure in the amended
filing.

    Exhibit 31.1 and Exhibit
31.2 Certifications

              11.

              See paragraph number four
      where it appears certain disclosure has been inadvertently
      omitted.  Please revise this paragraph to disclose “The
      registrant’s other certifying officer(s) and I are responsible…(as defined
      in Exchange Act Rules 13a-15(c) and 15d-15(e)) and internal control over
      financial reporting (as defined in Exchange Act Rules 13a-15(f) and
      15d-15(f) for the registrant and have:”  This comment is also
      applicable to your March 31, 2009 and June 30, 2009 Quarterly Reports on
      Form 10-Q.

        5

    Mr. David
R. Humphrey, Branch Chief

    Ms.
Beverly A. Singleton, Staff Accountant

    Page
6

    October
12, 2009

    Response:  We note
the inadvertent omission you cite to and have corrected the certifications in
all of the amended filings.

    Forms 10-Q (Quarters Ended
March 31, 2009 and June 30, 2009)

    Note 1, Summary of
Significant Accounting Policies, page 4

    Interim financial
information

              12.

              Please expand this paragraph
      to disclose that the interim financial statements “include all adjustments
      that, in the opinion of management, are necessary in order to make the
      financial statements not misleading.”  See Instruction 2 to Rule
      8-03 of Regulation S-X.

    Response:  We will
undertake to include the following under the heading “Interim financial
information” in our next Quarterly Report on Form 10-Q, and will update this
disclosure as appropriate in future filings:

    Interim
financial information

    The
accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States and pursuant
to the rules and regulations of the Securities and Exchange Commission (the
“SEC”) for interim financial information. Accordingly, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States
have been omitted pursuant to such rules and regulations. Operating results for
the three and nine months ended September 30, 2009 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2009 or any other period. The ac