**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
        10-Q**





**x** **** **QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**




**For
      the Quarterly Period Ended March 31, 2008**





**OR**





** ̈** **** **TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**




**For
      the transition period from
      _____________________to______________________**





Commission
      File Number: 000-51572











**PokerTek,
      Inc.**





*(Exact
      name of registrant as specified in its charter)*





**North
                Carolina**
            
            **61-1455265**(State
                or other jurisdiction of incorporation or organization)
            
            (I.R.S.
                Employer Identification No.)





**1150
      Crews Road, Suite F, Matthews, North Carolina 28105**





(Address
      of principal executive offices) (Zip Code)




**(704)
      849-0860**





(Registrant’s
      telephone number, including area code)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.  Yes x No  ̈





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      definitions of “large accelerated filer,” “accelerated filer,” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act (check one):


 ̈
              Large
                  accelerated filer
              
               ̈
              Accelerated
                  filer ̈
              Non-accelerated
                  filer (do not check if a smaller reporting company)
              
              x
              Smaller
                  reporting company





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes No





As
      of May
      7, 2008, there were 10,934,464 shares outstanding of the registrant’s common
      stock.







**POKERTEK,
      INC.**




**TABLE
      OF CONTENTS**





**Page****PART
                I - FINANCIAL INFORMATION**Item 1.
            Financial
                Statements
            1Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            11Item
                3.
            Quantitative
                and Qualitative Disclosures about Market Risk
            15Item
                4T.
            Controls
                and Procedures
            15**PART
                II - OTHER INFORMATION**Item
                1.
            Legal
                Proceedings
            17Item
                6.
            Exhibits
            17Signatures
            
            18Exhibit
                Index
            
            19





**PART
      I - FINANCIAL INFORMATION**




**Item
      1.**  **Financial
      Statements.**




**POKERTEK,
      INC.**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**(unaudited)**








**Three Months Ended March 31,****2008**
            
            **2007**Revenues:License
                and service fees
            
            $
            1,521,676
            
            $
            508,111Product
                sales
            
            
            1,679,820
            
            
            83,465**Total
                revenues**
            
            
            3,201,496
            
            
            591,576Costs
                and operating expenses:Cost
                of product sales
            
            
            1,228,933
            
            
            73,587Selling,
                general and administrative
            
            
            2,581,972
            
            
            1,862,703Research
                and development
            
            
            975,312
            
            
            1,007,288Depreciation
            
            
            617,458
            
            
            365,808**Total
                costs and operating expenses**
            
            
            5,403,675
            
            
            3,309,386**Operating
                loss**
            
            
            (2,202,179
            )
            
            (2,717,810
            )Other
                income:Interest
                income, net
            
            
            65,855
            
            
            90,832**Net
                loss**
            
            $
            (2,136,324
            )
            $
            (2,626,978
            )Net
                loss per common share - basic and diluted
            
            $
            (0.20
            )
            $
            (0.28
            )Weighted
                average common shares outstanding - basic and diluted
            
            
            10,934,464
            
            
            9,472,020





*The
      accompanying notes are an integral part of these consolidated financial
      statements.*


1





**POKERTEK,
      INC.**


**CONSOLIDATED
      BALANCE SHEETS**




**March 31, 2008**
              **(unaudited)**
            
            **December 31,**
              **2007****Assets**Current
                assets:Cash
                and cash equivalents
            
            $
            4,496,169
            
            $
            1,229,980Short-term
                investments, at fair value
            
            
            -
            
            
            5,950,000Accounts
                receivable, net
            
            
            1,872,867
            
            
            968,536Inventory
            
            
            2,879,223
            
            
            2,642,481Prepaid
                expenses and other assets
            
            
            264,684
            
            
            331,199**Total
                current assets**
            
            
            9,512,943
            
            
            11,122,196Other
                assets:PokerPro
                systems, net
            
            
            4,619,377
            
            
            4,991,634Property
                and equipment, net
            
            
            598,322
            
            
            605,046Long-term
                investments, at fair value
            
            
            3,723,044
            
            
            -Other
                assets
            
            
            358,814
            
            
            377,029**Total
                assets**
            
            $
            18,812,500
            
            $
            17,095,905**Liabilities
                and Shareholders' Equity**Current
                liabilities:Accounts
                payable
            
            $
            2,149,325
            
            $
            1,465,202Accrued
                liabilities
            
            
            1,014,097
            
            
            964,173Short-term
                debt
            
            
            1,000,000
            
            
            -**Total
                current liabilities**
            
            
            4,163,422
            
            
            2,429,375Long-term
                debt
            
            
            2,000,000
            
            
            -Commitments
                and contingenciesShareholders'
                equity:Preferred
                stock, no par value per share; authorized 5,000,000, none issued
                and
                outstanding
            
            
            -
            
            
            -Common
                stock, no par value per share; authorized 100,000,000 shares, issued
                and
                outstanding 10,934,464 shares at March 31, 2008 and December 31,
                2007
            
            
            -
            
            
            -Additional
                paid-in capital
            
            
            41,649,048
            
            
            41,353,220Accumulated
                deficit
            
            
            (28,823,014
            )
            
            (26,686,690
            )Accumulated
                other comprehensive loss
            
            
            (176,956
            )
            
            -**Total
                shareholders' equity**
            
            
            12,649,078
            
            
            14,666,530**Total
                liabilities and shareholders' equity**
            
            $
            18,812,500
            
            $
            17,095,905





*The
      accompanying notes are an integral part of these consolidated financial
      statements.*


2





**POKERTEK,
      INC.**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(unaudited)**





**Three Months Ended March 31,****2008**
            
            **2007****Cash
                flows from operating activities:**Net
                loss
            
            $
            (2,136,324
            )
            $
            (2,626,978
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
            
            
            617,458
            
            
            365,808Share-based
                compensation expense
            
            
            295,828
            
            
            202,499Changes
                in assets and liabilities:Accounts
                and other receivables
            
            
            (904,331
            )
            
            (90,227
            )Prepaid
                expenses and other assets
            
            
            84,730
            
            
            25,855Inventory
            
            
            (236,742
            )
            
            (464,847
            )PokerPro
                systems
            
            
            (195,738
            )
            
            (973,270
            )Accounts
                payable and accrued expenses
            
            
            734,047
            
            
            (213,769
            )**Net
                cash used in operating activities**
            
            
            (1,741,072
            )
            
            (3,774,929
            )**Cash
                flows from investing activities:**Purchases
                of property and equipment
            
            
            (42,739
            )
            
            (34,769
            )Sale
                of investments
            
            
            2,050,000
            
            
            4,600,000Purchase
                of investments
            
            
            -
            
            
            (1,800,000
            )**Net
                cash provided by investing activities**
            
            
            2,007,261
            
            
            2,765,231**Cash
                flows from financing activities:**Proceeds
                from long-term debt
            
            
            2,000,000
            
            
            -Proceeds
                from short-term debt
            
            
            1,000,000
            
            
            -**Net
                cash provided by financing activities**
            
            
            3,000,000
            
            
            -**Net
                increase (decrease) in cash and cash equivalents**
            
            
            3,266,189
            
            
            (1,009,698
            )**Cash
                and cash equivalents, beginning of year**
            
            
            1,229,980
            
            
            1,803,501**Cash
                and cash equivalents, end of year**
            
            $
            4,496,169
            
            $
            793,803


*The
        accompanying notes are an integral part of these consolidated financial
        statements.*


3


**POKERTEK,
      INC.**


**NOTES
      TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**





**Note
      1.**  **Nature
      of Business and Basis of Presentation**





**Nature
      of Business**





PokerTek,
      Inc. (“PokerTek” or the “Company”) is engaged in the development, manufacture
      and marketing of electronic poker-related products for use in the gaming and
      amusement markets.





The
      Company currently has two product lines, PokerPro® gaming products and Heads-Up
      ChallengeTM amusement products. The PokerPro system is an electronic poker table
      that provides a fully-automated poker-room environment to tribal casinos,
      commercial casinos, cruise ships and card clubs. The Heads-Up Challenge World
      Series of Poker® edition is an innovative heads-up amusement poker table that
      enables two players to compete against each other in a game of Texas Hold’em
      poker for entertainment purposes in non-gambling venues such as bars and
      restaurants.





**Basis
      of Presentation and Principles of Consolidation**





The
      accompanying consolidated financial statements include the accounts of PokerTek,
      Inc. and its consolidated subsidiary. All significant intercompany transactions
      and accounts have been eliminated.





Certain
      reclassifications have been made to prior period’s financial information to
      conform to the current period presentation.





These
      consolidated financial statements should be read in conjunction with the
      consolidated financial statements and related footnotes included in the
      Company’s Annual Report on Form 10-K for the year ended December 31, 2007.
      There were no material changes during the most recent fiscal quarter in the
      Company’s significant accounting policies as described
      in the Annual Report.





The accompanying consolidated
      financial statements have been prepared without audit and are presented in
      accordance with Article 8-03 of Regulation S-X. Accordingly, they do not include
      all of the information and footnotes required by generally accepted accounting
      principles in the United States (“U.S. GAAP”) for annual financial statements.
      In the opinion of management, these consolidated financial
      statements  include
      all adjustments, which consist only of normal recurring adjustments, necessary
      for a fair statement of the Company’s results of operations for the periods
      presented.





The
      results of operations for the three months ended March 31, 2008 are not
      necessarily indicative of the results to be expected for the entire year.





**Recent
      Accounting Pronouncements**





In
      September 2006, the FASB issued statement No. 157, "Fair Value Measurements"
      (FAS 157). FAS 157
      defines fair value, establishes a framework for measuring fair value in
      accordance with accounting principles generally accepted in the United States,
      and expands disclosures about fair value measurements. The Company has adopted
      the provisions of FAS 157 as of January 1, 2008, for financial instruments
      measured at fair value on a recurring and nonrecurring basis. Although the
      adoption of FAS 157 did not materially impact its financial condition, results
      of operations, or cash flow, the Company is now required to provide additional
      disclosures as part of its financial statements.





FAS
      157
      established a three-tier fair value hierarchy, which prioritizes the inputs
      used
      in measuring fair value. These tiers include: Level 1, defined as observable
      inputs such as quoted prices in active markets; Level 2, defined as inputs
      other
      than quoted prices in active markets that are either directly or indirectly
      observable; and Level 3, defined as unobservable inputs in which little or
      no
      market data exists, therefore requiring an entity to develop its own
      assumptions. As of March 31, 2008, the Company held investments in auction
      rate
      securities that are required to be measured at fair value on a recurring basis.
      The Company estimated the fair value of its auction rate securities based on
      estimates contained in the broker statements that were compiled utilizing Level
      3 inputs including, but not limited to, factors such as tax status, credit
      quality, duration, insurance wraps and the portfolio composition of The Federal
      Family Education Loan Program loans. Refer to Note 2, “Investments in Auction
      Rate Securities.”


4


In
      March
      2008, the Financial Accounting Standards Board (“FASB”) issued Statement of
      Financial Accounting Standard No. 161 (“FAS 161”), *Disclosures
      about Derivative Instruments and Hedging Activities.* FAS 161 improves financial reporting on derivative instruments and hedging
      activities by requiring enhanced disclosures to enable investors to better
      understand their effects on an entity’s financial position, financial
      performance and cash flows. The new standard is effective for financial
      statements issued for fiscal years and interim periods beginning after
      November 15, 2008. The Company is not currently the holder of any
      derivative instruments; thus, adoption of FAS 161 would not currently have
      any
      effect on the Company's results of operations, financial condition, or cash
      flows.





In
      December 2007, the FASB issued Statement of Financial Accounting Standard
      No. 160 (“FAS 160”), *Noncontrolling
      Interest in Consolidated Financial Statements - an amendment of ARB
      No. 51* .
      FAS 160
      changes reporting standards for noncontrolling interests in a subsidiary. The
      standard is effective for fiscal years beginning on or after December 15,
      2008. The Company does not expect the adoption of FAS No. 160 to have a material
      impact on Company's
      results of operations, financial condition, or cash flows.





In
      December 2007, the FASB issued Statement of Financial Accounting Standard
      No. 141 (Revised 2007) (“FAS 141R”), *Business
      Combinations* .
      FAS
      141R establishes requirements for how the acquirer should recognize and measure
      identifiable assets acquired, liabilities assumed, and any noncontrolling
      interest in the acquired entity. FAS 141R also clarifies the recognition and
      measurement of goodwill acquired in a business combination and a gain from
      a
      bargain purchase. Additionally, FAS 141R clarifies the required disclosures
      in a
      business combination. The standard is effective for fiscal years beginning
      on or
      after December 15, 2008. The Company has not been involved in any business
      combinations; thus, adoption
      of FAS 141R would not c urrently
      have any effect on the Company's results of operations, financial condition,
      or
      cash flows.





**Note
      2.** ***Investments
      in Auction Rate Securities (“ARS”)***





The
      Company accounts for its ARS in accordance with Statement
      of Financial Accounting Standards No. 115 (“FAS
      115”), *Accounting
      for Certain Investments in Debt and Equity Securities* ,
      and
      classifies them as “available for sale.” Investments in available-for-sale
      securities are recorded at fair value, and unrealized gains or losses (that
      are
      deemed to be temporary) are recognized, net of tax, through shareholders’
equity, as a component of other comprehensive income in the Company’s
      consolidated balance sheet. The Company records an impairment charge to earnings
      when an investment has experienced a decline in value that is deemed to be
      other-than-temporary.





The
      ARS
      held by the Company are securities with long-term nominal maturities for which
      the interest rates have historically been reset through a dutch auction each
      month. The monthly auctions historically have provided a liquid market for
      these
      securities. The Company’s investments in ARS represent interests in
      collateralized debt obligations supported by pools of federally backed student
      loans. Consistent with the Company’s investment policy, the ARS investments held
      by the Company all have AAA/Aaa credit ratings and are backed by The Federal
      Family Education Loan Program. With the liquidity issues experienced in global
      credit and capital markets, the ARS held by the Company have experienced failed
      auctions as the amount of securities submitted for sale has exceeded the amount
      of purchase orders during early 2008.





Historically,
      given the liquidity created by the auctions, ARS were presented as current
      assets. However, given the recently failed auctions, the Company’s ARS have
      become illiquid until there is a successful auction or a secondary market
      develops. Based on the long-term maturities of the underlying student loans,
      the
      Company determined that the carrying value of the investment in ARS should
      be
      reclassified to long-term assets on the accompanying consolidated balance sheet
      as of March 31, 2008.


5


As
      of
      March 31, 2008, the Company also concluded that the cost exceeded fair value
      for
      its investment in ARS and that this decline in fair value was temporary. Based
      on the information currently available, management believes that the underlying
      investments in the student loan portfolios remain sound and that this impairment
      is the result of the failure of the auction mechanisms to provide current
      liquidity. In addition, the Company continues to receive interest on its ARS
      on
      a timely basis, there have been no defaults on the ARS, and the ARS are insured
      by The Federal Family Education Loan Program. Therefore, the Company has
      recorded an unrealized loss of $176,956 (original cost and par value was $3.9
      million) to accumulated other comprehensive income during the
      period.





Any
      future fluctuation in fair value related to this ARS that the Company deems
      to
      be temporary, including any recoveries of previous write-downs, would be
      recorded to accumulated other comprehensive income. If the Company determines
      that any future valuation adjustment is other than temporary, it will record
      an
      impairment charge to earnings.





The
      Company's assets measured at fair value on a recurring basis subject to the
      disclosure requirements of FAS 157 at March 31, 2008, were as
      follows:





**Fair Value Measurements at Reporting Date Using****Quoted Prices**
              **in Active**
              **Markets for**
              **Identical Assets**
            
            **Significant**
              **Other**
              **Observable**
              **Inputs**
            
            **Significant**
              **Unobservable**
              **Inputs**Investment
                in auction rate securities
            
            $
            -
            
            $
            -
            
            $
            3,723,044Total
                assets measured at fair value
            
            $
            -
            
            $
            -
            
            $
            3,723,044








The
      following table presents the Company's financial assets measured at fair value
      on a recurring basis using significant unobservable inputs (Level 3) as defined
      in FAS 157 at March 31, 2008:





**Fair Value Measurements using Significant Unobservable Inputs (Level 3)****Auction Rate**
              **Securities**Balance
                at December 31, 2007
            
            $
            -Purchases
                and (sales), net
            
            
            -Transfers
                to Level 3
            
            
            3,900,000Included
                in accumulated other comprehensive loss
            
            
            (176,956
            )Balance
                at March 31, 2008
            
            $
            3,723,044


6


**Note
      3.**  **Inventory**




Inventory
      at March 31, 2008 and December 31, 2007 consists of the following:





**March 31,**
              **2008**
            
            **December 31,**
              **2007**Raw
                materials and components
            
            $
            1,111,256
            
            $
            1,398,752PokerPro
                systems in process
            
            
            556,852
            
            
            620,224Finished
                goods
            
            
            1,211,115
            
            
            623,505Inventory
            
            $
            2,879,223
            
            $
            2,642,481





**Note
      4.**  **Prepaid
      Expenses and Other Assets**





Prepaid
      expenses and other assets at March 31, 2008 and December 31, 2007 consist of
      the
      following:





**March 31,**
              **2008**
            
            **December 31,**
              **2007**Prepaid
                expenses
            
            $
            257,168
            
            $
            252,418Other
            
            
            7,516
            
            
            78,781Prepaid
                expenses and other assets
            
            $
            264,684
            
            $
            331,199Deferred
                licensing fees, net
            
            $
            309,964
            
            $
            329,229Other
            
            
            48,850
            
            
            47,800Other
                assets
            
            $
            358,814
            
            $
            377,029





**Note
      5.**  **PokerPro
      Systems**





PokerPro
      systems at March 31, 2008 and December 31, 2007 consist of the
      following:




**March 31,**
                **2008**
              
              **December 31,**
                **2007**PokerPro
                  systems
              
              $
              7,193,959
              
              $
              6,837,941Temporarily
                  idle PokerPro systems(a)
              
              
              341,421
              
              
              501,7017,535,380
              
              
              7,339,642Less:
                  accumulated depreciation(a)
              
              
              (2,916,003
              )
              
              (2,348,008
              )PokerPro
                  systems, net
              
              $
              4,619,377
              
              $
              4,991,634





*(a)
      The systems will be redeployed as scheduling allows. Included in the March
      31,
      2008 and December 31, 2007 accumulated depreciation is $114,801 and $206,178,
      respectively, related to the temporarily idle PokerPro
      systems.*


7


**Note
      6.**  **Property
      and Equipment**





Property
      and equipment at March 31, 2008 and December 31, 2007 consists of the
      following:


**March
                  31,**
                **2008**
              
              **December
                  31,**
                **2007**Equipment
              
              $
              715,926
              
              $
              673,188Leasehold
                  improvements
              
              
              189,157
              
              
              189,157905,083
              
              
              862,345Less:
                  accumulated depreciation
              
              
              (306,761
              )
              
              (257,299
              )Property
                  and equipment, net
              
              $
              598,322
              
              $
              605,046




**Note
      7.**  **Accrued
      Liabilities**





Accrued
      liabilities at March 31, 2008 and December 31, 2007 consist of the
      following:





**March 31,**
              **2008**
            
            **December 31,**
              **2007**Deferred
                revenue
            
            $
            386,421
            
            $
            399,900Accrued
                professional fees
            
            
            191,334
            
            
            334,731Other
            
            
            436,342
            
            
            229,542Accrued
                liabilities
            
            $
            1,014,097
            
            $
            964,173





**Note
      8.**  **Comprehensive
      Loss**





Comprehensive
      loss at March 31, 2008 and March 31, 2007 consists of the
      following:





**March 31,**
              **2008**
            
            **March 31,**
              **2007**Net
                loss
            
            $
            (2,136,324
            )
            $
            (2,626,978
            )Unrealized
                loss on investments
            
            
            (176,956
            )
            
            -Comprehensive
                loss
            
            $
            (2,313,280
            )
            $
            (2,626,978
            )


8


**Note
      9.**  **Debt**





The
      Company’s short-term and long-term debt at March 31, 2008 and December 31, 2007
      consists of the following:





**March 31,**
              **2008**
            
            **December 31,**
              **2007**Short-term
                debt
            
            $
            1,000,000
            
            $
            -Long-term
                debt
            
            
            2,000,000
            
            
            -Total
                debt
            
            $
            3,000,000
            
            $
            -




***Short-term
      Debt:*** On March
      19, 2008, the Company received an extension of credit from UBS Financial
      Services Inc., resulting in the creation of a direct financial obligation.
      The
      Company received $1.0 million from UBS Financial Services Inc. bearing interest
      payable monthly at 30-day LIBOR plus 0.25%. This extension of credit is
      collateralized by the Company’s portfolio of $3.9 million of ARS held at
      UBS.





***Long-term
      Debt:*** On
      March
      24, 2008, the Company entered into a loan agreement with Lyle A. Berman, James
      T. Crawford III, Arthur Lee Lomax and Gehrig H. “Lou” White. Messrs. Crawford,
      Lomax and White are the founders of the Company. Each of the lenders are also
      members of our Board of Directors, with Mr. Berman serving as Chairman and
      Mr.
      White serving as Vice Chairman. Upon closing, the lenders loaned the Company
      $2.0 million and the Company issued the lenders a promissory note in the
      principal amount of $2.0 million. The loan bears interest at 13% with all unpaid
      principal and interest payable on March 24, 2010. The Company intends to pay
      interest on a monthly basis and the loan principal may be repaid prior to
      maturity without penalty. The loan contains no restrictive covenants and is
      collateralized by security interests in the Company’s PokerPro systems deployed
      in North America and on cruise ships as of December 31, 2007.





**Note
      10.**  **Employee
      Benefit Plan**




The
      Company has established a salary deferral plan under Section 401(k) of the
      Internal Revenue Code covering substantially all employees. The plan allows
      eligible employees to defer 3% to 5% of their annual compensation. The Company
      matches the contributions equal to 100% on the first 3% of the deferral and
      50%
      on the deferral from 3% to 5%. For the three months ended March 31, 2008
      and March 31, 2007, the Company recorded contribution expense of $36,656 and
      $28,113, respectively.





**Note
      11.**  **Commitments
      and Contingencies**





**Indemnifications**





The
      Company maintains directors’ and officers’ liability insurance for the benefit
      of its directors and certain of its officers. The Company has entered into
      a
      separate indemnification agreement with Lyle Berman, the Chairman of the Board
      of Directors, which provides for indemnification for related expenses including
      attorneys’ fees, judgments, fines and settlement amounts incurred by Mr. Berman
      in any action or proceeding arising from his service as a director of the
      Company.





The
      Company also indemnifies its casino customers from any claims or suits brought
      by a third party alleging infringement of a United States patent, copyright
      or
      mask work right. The Company typically agrees to pay all costs and damages,
      provided the customer provides prompt written notice of any
      claim.


9


**Legal
      Proceedings**





***Lightning
      PokerTM:*** On
      March
      17, 2008, the Company was served with a complaint filed on March 6, 2008 in
      the
      United States District Court for the District of New Jersey, by Lightning
      Gaming, Inc. and Lightning Poker, Inc. The complaint alleges that the Company
      infringes United States Patent No. 7,306,516, owned by Lightning Poker. The
      complaint is seeking unspecified monetary damages from the Company as well
      as a
      permanent injunction enjoining the Company from infringing the patent or
      unfairly competing with the plaintiffs. The Company believes that either its
      products do not violate the patent that forms the basis of the lawsuit, that
      the
      patent is invalid, or both.




**Note
      12.**  **Shareholders’
      Equity**





**Stock
      Incentive Plan**





Option
      activity under the Company’s stock incentive plan for the three months ended
      March 31, 2008 was as follows:





**Weighted Average****Shares**
            
            **Exercise**
              **Price**
            
            **Remaining**
              **Contractual**
              **Term**
            
            **Aggregate**
              **Intrinsic**
              **Value**Outstanding
                at December 31, 2007
            
            
            2,034,825
            
            $
            8.42Granted
            
            
            40,000
            
            
            3.81Exercised
            
            
            -
            
            
            -Forfeited
            
            
            (66,225
            )
            
            10.16Expired
            
            
            -
            
            
            -Outstanding
                at March 31, 2008
            
            
            2,008,600
            
            $
            8.27
            
            
            8.1
            
            $
            (8,965,287
            )Exercisable
                at March 31, 2008
            
            
            950,308
            
            $
            6.82
            
            
            7.4
            
            $
            (2,858,562
            )





The
      Company recorded share based compensation expense of $295,828 and $202,499
      as of
      March 31, 2008 and March 31, 2007, respectively.





**Note
      13.**  **Related
      Party Transactions**





**Transactions
      with Aristocrat**





License
      fees and equipment sales from Aristocrat of $147,043 and $808,488, respectively,
      were recorded in the three months ended March 31, 2008, while $81,276 and
      $71,383, respectively, were recorded during the three months ended March 31,
      2007. As
      of
      March 31, 2008, Aristocrat owed the Company $97,997.





**Office
      Lease**





The
      Company currently leases its office and manufacturing facility from an entity
      owned and controlled by the Company’s President and Vice Chairman of the Board
      of Directors. Rent expense recorded for the leased space for the three months
      ended March 31, 2008 and March 31, 2007 was $54,900 and $34,389,
      respectively.


10


**Item
      2.**  **Management’s
      Discussion and Analysis of Financial Condition and Results of Operations.**




**Forward-Looking
      Statements**




This
      Quarterly Report on Form 10-Q contains forward-looking statements within the
      meaning of Section 27A of the Securities Act of 1933, as amended, and Section
      21E of the Securities Exchange Act of 1934, as amended. Statements expressing
      expectations regarding our future (including pending gaming and patent
      approvals) and projections relating to products, sales, revenues and earnings
      are typical of such statements and are made under the Private Securities
      Litigation Reform Act of 1995. These forward-looking statements include, but
      are
      not limited to, statements about our plans, objectives, representations and
      contentions and are not historical facts and typically are identified by use
      of
      terms such as "may," "will," "should," "could," "expect," "plan," "anticipate,"
      "believe," "estimate," "predict," "potential," "continue" and similar words,
      although some forward-looking statements are expressed differently.




All
      forward-looking statements are subject to the risks and uncertainties inherent
      in predicting the future. Our actual results may differ materially from those
      projected, stated or implied in these forward-looking statements as a result
      of
      many factors, including our critical accounting policies and risks and
      uncertainties related, but not limited to, overall industry environment,
      customer acceptance of our products, delay in the introduction of new products,
      the further approvals of regulatory authorities, adverse court rulings,
      production and/or quality control problems, the denial, suspension or revocation
      of permits or licenses by governmental authorities, termination or non-renewal
      of customer contracts, cancellation of orders or failure to convert perceived
      customer interest to orders, competitive pressures and general economic
      conditions, and our financial condition. These and other risks and uncertainties
      are described in more detail in our most recent Annual Report on Form 10-K,
      as
      well as other reports that we file with the Securities and Exchange Commission.





Forward-looking
      statements speak only as of the date they are made and should not be relied
      upon
      as representing our views as of any subsequent date. We undertake no obligation
      to update or revise such statements to reflect new circumstances or
      unanticipated events as they occur, except as required by applicable laws,
      and
      you are urged to review and consider disclosures that we make in this and other
      reports that we file with the Securities and Exchange Commission that discuss
      factors germane to our business.





**Overview**




PokerTek,
      Inc. is engaged in the development, manufacture and marketing of electronic
      poker-related products for use in the gaming and amusement markets.





We
      currently have two product lines, PokerPro gaming products and Heads-Up
      Challenge amusement products. The PokerPro system is an electronic poker table
      that provides a fully-automated poker-room environment to tribal casinos,
      commercial casinos, cruise ships and card clubs. The Heads-Up Challenge World
      Series of Poker edition is an innovative heads-up amusement device that enables
      two players to compete against each other in a game of Texas Hold’em poker for
      entertainment purposes in non-gambling venues such as bars and
      restaurants.





**Results
      of Operations for the Three Months Ended March 31, 2008 Compared to the Three
      Months Ended March 31, 2007**





***Revenues.*** Revenues
      increased by $2.6 million (441%) to $3.2 million for the three months ended
      March 31, 2008 as compared to $591,576 for the three months ended March 31,
      2007
      due to increases in both license and service fees and product sales.





License
      and service fees increased by $1.0 million (199%) to $1.5 million for the three
      months ended March 31, 2008 as compared to $508,111 for the three months ended
      March 31, 2007. The increase in license and service fees was primarily driven
      by
      the impact of casino placements in late 2007 that were in operation and produced
      a full quarter of recurring revenue during the three months ended March 31,
      2008.


11


Product
      sales fees increased by $1.6 million (1,913%) to $1.7 million for the three
      months ended March 31, 2008 as compared to $83,465 for the three months ended
      March 31, 2007. Product sales consist of casino products, primarily PokerPro
      systems sold to Aristocrat for deployment in international casinos, as well
      as
      sales of our Heads-Up Challenge amusement product. The growth in product sales
      was primarily attributable to the successful launch of the new Heads-Up
      Challenge amusement product in late 2007 and availability of production units
      for shipment in the first quarter of 2008. The Company’s new contract
      manufacturer in Taiwan began delivering production units in late January and
      237
      units contributing over $1.0 million in revenue were sold during the first
      quarter. Sales of casino products amounted to $634,069 for the first quarter,
      an
      increase of $550,594 from $83,465 during the first quarter of 2007. Sales of
      casino products increased largely due to Aristocrat’s increasing penetration in
      several European markets, notably Bulgaria.





***Selling,
      General and Administrative Expenses.*** Selling,
      general and administrative expenses (“SG&A”) increased by $719,269 (39%) to
      $2.6 million for the three months ended March 31, 2008 as compared to $1.9
      million for the three months ended March 31, 2007. This increase was primarily
      due to higher salaries and related personnel cost in support of our growth
      strategy and higher legal and professional fees, primarily due to increased
      spending on patent filings to protect our intellectual property. As a percentage
      of total revenues, SG&A expenses improved to 81% of total revenues for the
      three months ended March 31, 2008, compared with 315% of total revenues for
      the
      three months ended March 31, 2007.





***Research
      and Development Expenses.*** **** Research
      and development expenses (“R&D”) decreased by $31,976 (3%) to $975,312 for
      the three months ended March 31, 2008 as compared to $1.0 million for the three
      months ended March 31, 2007. We continue to invest in software and hardware
      development to improve our gaming and amusement products through the addition
      of
      new games and features.





***Depreciation*** **.** Depreciation
      increased by $251,650 (69%) for the three months ended March 31, 2008 to
      $617,458 from $365,808 for the three months ended March 31, 2007. The change
      in
      depreciation is primarily attributable to the increase in the number of
      depreciable PokerPro tables.





***Net
      Interest Income*** **.** Net
      interest income decreased by $24,977 (27%) for the three months ended March
      31,
      2008 to $65,855 from $90,832 for the three months ended March 31, 2007, due
      primarily to lower average invested balances and lower average interest
      rates.





**Liquidity
      and Capital Resources**





We
      have
      incurred net operating losses since inception and operating expenses may
      continue to exceed revenues through 2008 as we continue to invest in growing
      our
      installed base of PokerPro systems and increasing sales of the Heads-up
      Challenge amusement product. We have typically funded our operating costs,
      research and development activities, working capital investments and capital
      expenditures associated with our growth strategy with proceeds from the
      issuances of our common stock, although during the first quarter of 2008 we
      obtained additional capital through an extension of credit from a financial
      institution and a loan from certain members of our Board of Directors. These
      transactions are described in more detail below.





**Three Months Ended March 31,****2008**
            
            **2007**
            
            **Change**Net
                cash used in operating activities
            
            $
            (1,741,072
            )
            $
            (3,774,929
            )
            $
            2,033,857Net
                cash provided by investing activities
            
            
            2,007,261
            
            
            2,765,231
            
            
            (757,970
            )Net
                cash provided by financing activities
            
            
            3,000,000
            
            
            -
            
            
            3,000,000Net
                increase (decrease) in cash and cash equivalents
            
            
            3,266,189
            
            
            (1,009,698
            )
            
            4,275,887Cash
                and cash equivalents, beginning of period
            
            
            1,229,980
            
            
            1,803,501Cash
                and cash equivalents, end of period
            
            $
            4,496,169
            
            $
            793,803


12





For
      the
      three months ended March 31, 2008, net cash used in operating activities was
      $1.7 million, as compared to $3.8 million for the three months ended March
      31,
      2007, a decrease of $2.0 million. The decrease in cash used in operating
      activities was due to reduced net losses combined with a reduction in cash
      used
      for working capital, primarily inventory and PokerPro systems. We have recently
      focused increased attention on managing the level of working capital employed
      in
      the business, particularly with regard to reducing the level of inventory
      carried in our gaming operations.





Net
      cash
      provided by investing activities decreased $0.8 million to $2.0 million for
      the
      three months ended March 31, 2008 from $2.8 million for the three months ended
      March 31, 2007. Cash provided by investing activities is primarily a function
      of
      investments and redemptions of our auction rate securities portfolio, and to
      a
      smaller degree, capital expenditures for assets used in our
      operations.





Net
      cash
      provided by financing activities was $3.0 million for the three months ended
      March 31, 2008, comprised of a $2.0 million loan from certain members of our
      Board of Directors and a $1.0 million loan from UBS Financial Services Inc.
      See
“Extension of Credit” and “Loan Agreement” below for further
      information.





Our
      need
      for cash to fund our operations is determined primarily by four factors: (i)
      the
      pace of growth in our casino business and the related investments we may make
      in
      inventory and PokerPro systems, (ii) the pace of growth in sales of our Heads-Up
      Challenge amusement product, (iii) our ability to generate positive operating
      leverage as we grow and (iv) our ability to manage working capital and negotiate
      favorable payment terms with our customers and vendors. We have the ability
      to
      impact the timing and extent of our cash needs primarily by managing the pace
      of
      growth in both our PokerPro and Heads-Up-Challenge products and managing our
      operating expenses. Our ability to control the cash needs of the business is
      not
      unlimited, however, and any reduction in the pace of investment may also impact
      our ability to grow revenues. Our management intends to maximize revenues while
      carefully monitoring the impact on the Company’s cash needs and cash balances.
      If we are unable to execute our operating plan, manage our working capital
      effectively or are impacted by other events, however, we may need to liquidate
      our auction rate securities, perhaps at a loss, or raise additional funds
      through additional public or private offerings of our securities, a
      sale/leaseback arrangement, a credit facility or other available
      sources.




***Auction
      rate securities (“ARS”).*** At
      March 31, 2008, we had $3.7 million ($3.9 million par value) invested in
      ARS. The ARS held by us are securities with long-term nominal maturities for
      which the interest rates historically have been reset through a dutch auction
      each month. The monthly auctions historically have provided a liquid market
      for
      these securities. Our investments in ARS represent interests in collateralized
      debt obligations supported by pools of student loans. Consistent with our
      investment policy, the ARS investments held by us all have AAA/Aaa credit
      ratings and are backed by The Federal Family Education Loan Program. With the
      liquidity issues experienced in global credit and capital markets, the ARS
      held
      by us have experienced failed auctions as the amount of securities submitted
      for
      sale has exceeded the amount of purchase orders during early 2008. If
      uncertainties in these credit and capital markets continue, the market for
      ARS
      could deteriorate further, which could negatively affect our financial
      condition, cash flows and reported earnings.





Historically,
      given the liquidity created by the auctions, ARS were presented as current
      assets. However, given the recently failed auctions, our ARS have become
      illiquid until there is a successful auction or a secondary market develops.
      Based on the long-term maturities of the underlying student loans, we determined
      that the carrying value of the investment in ARS should be reclassified to
      long-term assets on the accompanying consolidated balance sheet as of March
      31,
      2008.




As
      of
      March 31, 2008, we also concluded that the cost exceeded fair value for our
      investment in ARS and that this decline in fair value was temporary. Based
      on
      the information currently available, we believe that the underlying investments
      in the student loan portfolios remain sound and that this impairment is the
      result of the failure of the auction mechanisms to provide current liquidity.
      In
      addition, we continue to receive interest on our ARS on a timely basis, there
      have been no defaults on the ARS, and the ARS are insured by The Federal Family
      Education Loan Program. Therefore, we recorded an unrealized loss of $176,956
      (original cost and par value was $3.9 million) to accumulated other
      comprehensive income during the period.





Any
      future fluctuation in fair value related to this ARS that we deem to be
      temporary, including any recoveries of previous write-downs, would be recorded
      to accumulated other comprehensive income. If we determine that any future
      valuation adjustment is other than temporary, we will record an impairment
      charge to earnings.


13


***Extension
      of credit.*** On
      March
      19, 2008, we received a $1.0 million extension of credit from UBS Financial
      Services Inc. bearing interest payable monthly at 30-day LIBOR plus 0.25%.
      This
      extension of credit is collateralized by our portfolio of $3.9 million of ARS
      held at UBS.





***Loan
      agreement.*** On
      March
      24, 2008, we entered into a loan agreement with Lyle A. Berman, James T.
      Crawford III, Arthur Lee Lomax and Gehrig H. “Lou” White. Messrs. Crawford,
      Lomax and White are the founders of the Company. Each of the lenders are also
      members of our Board of Directors, with Mr. Berman serving as Chairman and
      Mr.
      White serving as Vice Chairman. Upon closing, the lenders loaned the Company
      $2.0 million and the Company issued the lenders a promissory note in the
      principal amount of $2.0 million. The loan bears interest at 13% with all unpaid
      principal and interest payable on March 24, 2010. We intend to pay interest
      on a
      monthly basis. The loan principal may be repaid prior to maturity without
      penalty. The loan contains no restrictive covenants and is collateralized by
      a
      security interest in our PokerPro systems deployed in North America and on
      cruise ships as of December 31, 2007.





**Contractual
      Obligations**





Contractual
      obligations associated with our ongoing business and financing activities are
      expected to result in cash payments in future periods. A table summarizing
      the
      amounts and estimated timing of these future cash payments was provided in
      our
      Annual Report on Form 10-K for the year ended December 31, 2007.  As
      of
      March 31, 2008, our non-cancelable purchase obligations increased from
      approximately $1.2 million to approximately $2.2 million. During the first
      three
      months of fiscal 2008, there were no other material changes outside the ordinary
      course of business in our contractual obligations or the estimated timing of
      the
      future cash payments related to those obligations.





**Customer
      Dependence**





As
      of
      March 31, 2008, three of our customers made up approximately 63% of our total
      revenues. The loss of any of these customers would have a material adverse
      effect on our business.





**Critical
      Accounting Policies**





We
      follow
      accounting principles generally accepted in the United States in preparing
      our
      financial statements, which require us to make certain estimates and apply
      judgments that affect our financial position and results of operations. We
      continually review our accounting policies and financial information
      disclosures. A summary of our significant accounting policies that require
      the
      use of estimates and judgments in preparing the financial statements was
      provided in our Annual Report on Form 10-K for the year ended December 31,
      2007.
      During the first three months of fiscal 2008, there were no material changes
      to
      the accounting policies and assumptions previously disclosed.





**Recent
      Accounting Pronouncements**





In
      September 2006, the FASB issued statement No. 157, "Fair Value Measurements"
      (FAS 157). FAS 157
      defines fair value, establishes a framework for measuring fair value in
      accordance with accounting principles generally accepted in the United States,
      and expands disclosures about fair value measurements. We adopted the provisions
      of FAS 157 as of January 1, 2008, for financial instruments measured at fair
      value on a recurring and nonrecurring basis. Although the adoption of FAS 157
      did not materially impact our financial condition, results of operations, or
      cash flow, we are now required to provide additional disclosures as part of
      its
      financial statements.





FAS
      157
      established a three-tier fair value hierarchy, which prioritizes the inputs
      used
      in measuring fair value. These tiers include: Level 1, defined as observable
      inputs such as quoted prices in active markets; Level 2, defined as inputs
      other
      than quoted prices in active markets that are either directly or indirectly
      observable; and Level 3, defined as unobservable inputs in which little or
      no
      market data exists, therefore requiring an entity to develop its own
      assumptions. As of March 31, 2008, we held investments in ARS that are required
      to be measured at fair value on a recurring basis. We estimated the fair value
      of our ARS utilizing Level 3 inputs as of March 31, 2008 that considered, among
      other items, the credit risk of the collateral underlying the ARS, the credit
      risk of the bond insurer, interest rates, and the amount and timing of expected
      future cash flows. See Note 2 to our Consolidated Financial Statements in Item
      1.


14


In
      March
      2008, the Financial Accounting Standards Board (“FASB”) issued Statement of
      Financial Accounting Standard No. 161 (“FAS 161”), *Disclosures
      about Derivative Instruments and Hedging Activities.* FAS 161 improves financial reporting on derivative instruments and hedging
      activities by requiring enhanced disclosures to enable investors to better
      understand their effects on an entity’s financial position, financial
      performance and cash flows. The new standard is effective for financial
      statements issued for fiscal years and interim periods beginning after
      November 15, 2008. We are not currently the holder of any derivative
      instruments; thus, adoption of FAS 161 would not currently have any effect
      on
      our results of operations, financial condition, or cash flows.





In
      December 2007, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standard No. 160 (“FAS 160”), *Noncontrolling
      Interest in Consolidated Financial Statements - an amendment of ARB
      No. 51* .
      FAS 160
      changes reporting standards for noncontrolling interests in a subsidiary. The
      standard is effective for fiscal years beginning on or after December 15,
      2008. We do not expect the adoption of FAS 160 to have a material impact on
      our results
      of operations, financial condition, or cash flows.





In
      December 2007, the FASB issued Statement of Financial Accounting Standard
      No. 141 (Revised 2007) (“FAS 141R”), *Business
      Combinations* .
      FAS
      141R establishes requirements for how the acquirer should recognize and measure
      identifiable assets acquired, liabilities assumed, and any noncontrolling
      interest in the acquired entity. FAS 141R also clarifies the recognition and
      measurement of goodwill acquired in a business combination and a gain from
      a
      bargain purchase. Additionally, FAS 141R clarifies the required disclosures
      in a
      business combination. The standard is effective for fiscal years beginning
      on or
      after December 15, 2008. We have not been involved in any business
      combinations; thus, adoption
      of FAS 141R would not c urrently
      have any effect on our results of operations, financial condition, or cash
      flows.





**Off-Balance
      Sheet Arrangements**





We
      have
      no off-balance sheet arrangements.





**Item
      3.**  **Quantitative
      and Qualitative Disclosures About Market Risk.**





Reference
      is made to "Part II, Item 7A, Quantitative and Qualitative Disclosures about
      Market Risk," in our Annual Report on Form 10-K for the fiscal year ended
      December 31, 2007. There have not been significant changes in our exposure
      to
      market risk since December 31, 2007, except as identified below:





We
      have
      investments in auction rate securities. Due to liquidity issues in global credit
      and capital market conditions, these auction rate securities have experienced
      multiple failed auctions. As of March 31, 2008, we recorded a temporary
      impairment charge of $176,956 within accumulated other comprehensive loss based
      upon our assessment of the fair value of our auction-rate securities. A 100
      basis point decrease in the average interest rate on our investments at March
      31, 2008, would not have a material effect on our operating results. For a
      complete discussion on auction rate securities, see Note 2 to the Company's
      Consolidated Financial Statements in Item 1 and Management's Discussion and
      Analysis of Financial Condition and Results of Operations in Item
      2.





**Item
      4T.**  **Controls
      and Procedures.**




**Disclosure
      Controls and Procedures**





The
      Company maintains disclosure controls and procedures (as defined in Rule
      13a-15(e) under the Exchange Act), which are designed to ensure that information
      required to be disclosed by the Company in the reports it files or submits
      under
      the Exchange Act is recorded, processed, summarized and reported within the
      time
      periods specified in the Securities and Exchange Commission’s rules and forms,
      and that such information is accumulated and communicated to the Company’s
      management, including its Chief Executive Officer and Chief Financial Officer,
      as appropriate to allow timely decisions regarding required disclosure.


15


As
      of
      March 31, 2008, an evaluation of the effectiveness of the Company’s disclosure
      controls and procedures was conducted under the supervision of, and reviewed
      by,
      the Company’s Chief Executive Officer and Chief Financial Officer. Based on that
      evaluation, the Company’s Chief Executive Officer and Chief Financial Officer
      have concluded that the Company’s disclosure controls and procedures were
      effective as of March 31, 2008, in all material respects, to enable the Company
      to record, process, summarize and report in a timely manner the information
      that
      the Company is required to disclose in its Exchange Act reports, and that such
      information is accumulated and communicated to the Company’s management,
      including its Chief Executive Officer and Chief Financial Officer, as
      appropriate, to allow timely decisions regarding required disclosure.





**Changes
      in Internal Control Over Financial Reporting**





The
      following systems-related significant deficiencies were previously identified
      and remain unremediated as of March 31, 2008:





·
            The
                systems used in tracking and valuing inventory and PokerPro systems
                did
                not provide effective automated controls and were not integrated
                with each
                other or with the general ledger. The lack of integration required
                manual
                reconciliations between the applications that were not always performed
                or
                reviewed on a timely basis, which previously resulted in an adjustment
                to
                the consolidated financial statements.





·
            The
                Company utilized a software package for its general ledger that did
                not
                provide certain automated general controls, such as the presence
                of edit
                reports and workflow approvals.





These
      significant deficiencies were previously reported to the Company’s Audit
      Committee by our management and to our independent registered public accounting
      firm. Our management continues to believe that these significant deficiencies
      are not indicative of a material weakness in the Company’s internal control over
      financial reporting.





During
      the three months ended March 31, 2008, we continued to evaluate our system
      needs
      and we intend to implement new fixed asset and inventory systems to further
      strengthen our internal controls, although we can provide no assurance that
      new
      systems will be deployed or that the implementation of new systems will fully
      resolve all significant deficiencies. As reported in our Annual Report on Form
      10-K for the year ended December 31, 2007, we also implemented a number of
      compensating controls as of December 31, 2007, including more timely
      reconciliations, enhanced review and approval procedures, and more robust
      physical inventory counting and valuation procedures. These compensating
      controls continued to operate as of March 31, 2008. Although we are in the
      process of remediating the significant deficiencies identified above, there
      were
      no changes in our internal control over financial reporting during the quarter
      ended March 31, 2008 that materially affected, or are reasonably likely to
      materially affect, our internal control over financial
      reporting.


16


**PART
      II - OTHER INFORMATION**





**Item
      1. Legal Proceedings.**





***Lightning
      PokerTM:*** On
      March
      17, 2008, PokerTek was served with a complaint filed on March 6, 2008 in the
      United States District Court for the District of New Jersey, by Lightning
      Gaming, Inc. and Lightning Poker, Inc. The complaint alleges that PokerTek
      infringes United States Patent No. 7,306,516, owned by Lightning Poker. The
      complaint is seeking unspecified monetary damages from PokerTek as well as
      a
      permanent injunction enjoining the Company from infringing the patent or
      unfairly competing with the plaintiffs. PokerTek believes that either its
      products do not violate the patent that forms the basis of the lawsuit, that
      the
      patent is invalid, or both.





**Item
      6.**  **Exhibits.**





Exhibit
                No.
            
            Description10.1
            
            Employment
                Agreement by and between PokerTek, Inc. and Christopher J.C. Halligan,
                dated January 17, 2008 (incorporated by reference to Exhibit 10.18
                to our
                Form 10-K for the fiscal year ended December 31, 2007 filed on March
                31,
                2008).*10.2
            
            Employment
                Agreement by and between PokerTek, Inc. and Mark D. Roberson, dated
                January 17, 2008 (incorporated by reference to Exhibit 10.19 to our
                Form
                10-K for the fiscal year ended December 31, 2007 filed on March 31,
                2008).*10.3
            
            Client’s
                Agreement by and between PokerTek, Inc. and UBS Financial Services,
                Inc.,
                entered into on March 19, 2008.10.4
            
            Note
                Purchase Agreement by and between PokerTek, Inc. and Lyle A. Berman,
                James
                T. Crawford, III, Arthur Lee Lomax, and Gehrig H. “Lou” White, dated March
                24, 2008.31.1
            
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.31.2
            
            Certification
                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.32.1
            
            Certification
                of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.32.2
            
            Certification
                of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.





***
      Compensatory plan or arrangement or management
      contract**


17


**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.





POKERTEK,
                INC.Date:
                May 15, 2008By:
            /s/
                Christopher
                J.C. HalliganChristopher
                J.C. HalliganChief
                Executive Officer(Principal
                Executive Officer)/s/
                Mark
                D. RobersonMark
                D. RobersonChief
                Financial Officer(Principal
                Financial Officer and Principal Accounting
                Officer)


18


**POKERTEK,
      INC.**


**EXHIBIT
      INDEX**





Exhibit
                No.
            
            Description10.1
            
            Employment
                Agreement by and between PokerTek, Inc. and Christopher J.C. Halligan,
                dated January 17, 2008 (incorporated by reference to Exhibit 10.18
                to our
                Form 10-K for the fiscal year ended December 31, 2007 filed on March
                31,
                2008).*10.2
            
            Employment
                Agreement by and between PokerTek, Inc. and Mark D. Roberson, dated
                January 17, 2008 (incorporated by reference to Exhibit 10.19 to our
                Form
                10-K for the fiscal year ended December 31, 2007 filed on March 31,
                2008).*10.3
            
            Client’s
                Agreement by and between PokerTek, Inc. and UBS Financial Services,
                Inc.,
                entered into on March 19, 2008.10.4
            
            Note
                Purchase Agreement by and between PokerTek, Inc. and Lyle A. Berman,
                James
                T. Crawford, III, Arthur Lee Lomax, and Gehrig H. “Lou” White, dated March
                24, 2008.31.1
            
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.31.2
            
            Certification
                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.32.1
            
            Certification
                of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.32.2
            
            Certification
                of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.





***
      Compensatory plan or arrangement or management
      contract**


19