**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**





**FORM
      10-Q**





x
      QUARTERLY REPORT UNDER
      SECTION 13 OR 15(d)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934


For
      the
      quarterly period ended March 31, 2008





OR





o
      TRANSITION REPORT UNDER
      SECTION 13 OR 15(d)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934


For
      the
      transition period from _______ to _______





Commission
      File Number 0-16686





**POKER
      MAGIC, INC.**





(Exact
      name of registrant as specified in its charter)





Minnesota
            20-4709758(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)





130
      West
      Lake Street, Suite 300, Wayzata, MN


(Address
      of Principal Executive Offices)





(952)
      473-3442


(Registrant’s
      telephone number, including area code)





(Former
      name, former address and former fiscal year, if changed from last
      report)





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 o  No
x





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
      the definitions of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.


Large
                  accelerated filer o
              Accelerated
                  filer oNon-accelerated
                  filer o (Do not check if
                  a
                  smaller reporting company)
              Smaller
                  reporting company x


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





As
      of
      August 13, 2008 there were 8,814,991 shares of the issuer’s common stock, $0.001
      par value, outstanding.







**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
              9Item
                  4T.
              Controls
                  and Procedures
              17**PART
                  II – OTHER INFORMATION**Item
                  1A.
              Risk
                  Factors
              17Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              18Item
                  6.
              Exhibits
              18**SIGNATURES**
              18**EXHIBIT
                  INDEX**
              19








**PART
      I – FINANCIAL INFORMATION**





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




Poker
        Magic, Inc.
 (A
        Development Stage Company)
 Balance
        Sheet
 
 March 31, 2008
              
              December 31, 2007(unaudited)
              
              (audited)ASSETSCurrent
                  AssetsCash
              
              $
              12,578
              
              $
              37,003Inventory
              
              
              750
              
              
              750Prepaid
                  Expense
              
              
              11,762
              
              
              22,296Total
                  Current Assets
              
              
              25,090
              
              
              60,049Intangible
                  Assets, Net of Amortization
              
              
              24,814
              
              
              26,882Total
                  Assets
              
              $
              49,904
              
              $
              86,931LIABILITIES
                  AND SHAREHOLDERS' EQUITYCurrent
                  LiabilitiesAccounts
                  Payable
              
              $
              4,317
              
              $
              20,100Total
                  Current Liabilities
              
              
              4,317
              
              
              20,100Total
                  Liabilities
              
              
              4,317
              
              
              20,100Shareholders'
                  EquityCommon
                  Stock, $.001 par value: Authorized 250,000,000 shares:Issued
                  and outstanding 7,764,991 and 7,664,991 shares.
              
              
              7,765
              
              
              7,665Additional
                  Paid-in Capital
              
              
              336,767
              
              
              301,867Deficit
                  Accumulated during the Development Stage
              
              
              (298,945
              )
              
              (242,701
              )Total
                  Shareholders' Equity
              
              
              45,587
              
              
              66,831Total
                  Liabilities and Shareholders' Equity
              
              $
              49,904
              
              $
              86,931
 
 The
        accompanying notes are an integral part of these financial
        statements.
  1
  Poker
        Magic, Inc.
 (A
        Development Stage Company)
 Statement
        of Operations
 (unaudited)
 
 Three months ended
              
              Three months ended
              
              Period from January10, 2006 (inception)March 31, 2008
              
              March 31, 2007
              
              to March 31, 2008Operating
                  ExpensesSelling,
                  General & Administrative
              
              $
              (56,244
              )
              $
              (35,033
              )
              $
              (298,945
              )Operating
                  Loss
              
              
              (56,244
              )
              
              (35,033
              )
              
              (298,945
              )Net
                  Loss
              
              $
              (56,244
              )
              $
              (35,033
              )
              $
              (298,945
              )Basic
                  and diluted net loss per common share
              
              $
              (0.01
              )
              $
              (0.00
              )
              $
              (0.05
              )Weighted-average
                  number of common
              
              
              7,755,101
              
              
              7,033,880
              
              
              6,479,963shares
                  outstanding
  The
        accompanying notes are an integral part of these financial
        statements.
  2




Poker
        Magic, Inc.
 (A
        Development Stage Company)
 Statement
        of Cash Flows
 (unaudited)




For the three
              
              For the three
              
              For the period frommonths ended
              
              months ended
              
              January 10, 2006March
              
              March
              
              (inception) to31, 2008
              
              31, 2007
              
              March 31, 2008Cash
                  flows from operating activities:Net
                  loss
              
              $
              (56,244
              )
              $
              (35,033
              )
              $
              (298,945
              )Adjustments
                  to reconcile netloss
                  to net cash providedby
                  operating activities:Amortization
                  of intangible asset
              
              
              2,068
              
              
              2,068
              
              
              16,543Common
                  stock issued from services
              
              
              -
              
              
              -
              
              
              6,500Consulting
                  service expense paid in stock
              
              
              8,534
              
              
              10,147
              
              
              67,705Officers
                  compensation expense paid in stock
              
              
              2,000
              
              
              10,000
              
              
              48,000Officers
                  compensation expense as contributed capital
              
              
              10,000
              
              
              -
              
              
              10,000Changes
                  in operating assets and liabilities:Prepaid
                  expense
              
              
              -
              
              
              1,270
              
              
              333Accounts
                  payable
              
              
              (15,783
              )
              
              -
              
              
              4,317Net
                  Cash used in operating activities
              
              
              (49,425
              )
              
              (11,548
              )
              
              (145,547
              )Cash
                  Flows from investing activities:Acquisition
                  of Select Video assets
              
              
              -
              
              
              -
              
              
              (17,000
              )Net
                  cash used in investing activities
              
              
              -
              
              
              -
              
              
              (17,000
              )Cash
                  Flows from financing activities:Proceeds
                  from subscription receivable
              
              
              -
              
              
              -
              
              
              14,000Proceeds
                  from issuance of common stock
              
              
              25,000
              
              
              -
              
              
              163,500Payment
                  of short-term debt
              
              
              -
              
              
              -
              
              
              (2,375
              )Net
                  cash provided by financing activities
              
              
              25,000
              
              
              -
              
              
              175,125Net
                  increase (decrease) in cash
              
              
              (24,425
              )
              
              (11,548
              )
              
              12,578Cash,
                  beginning of the period
              
              
              37,003
              
              
              41,345
              
              
              -Cash,
                  end of the period
              
              $
              12,578
              
              $
              29,797
              
              $
              12,578Non-cash
                  investing and financing activities:Acquisition
                  of certain assets and liabilities of Select Video inexchange
                  for common stockInventory
              
              $
              -
              
              $
              -
              
              $
              750Intangible
                  Asset
              
              
              -
              
              
              -
              
              
              24,357Accounts
                  Payable
              
              
              -
              
              
              -
              
              
              (32,000
              )Note
                  Payable
              
              
              -
              
              
              -
              
              
              (7,084
              )Stock
                  issued in lieu of cash for note payable
              
              
              -
              
              
              -
              
              
              19,709Stock
                  issued in lieu of cash for prepaid services
              
              
              -
              
              
              98,000
              
              
              127,800Stock
                  subscriptions received for common stock
              
              
              -
              
              
              -
              
              
              14,000
 
 The
        accompanying notes are an integral part of these financial
        statements.


3




Poker
        Magic, Inc.
 (A
        Development Stage Company)
 Notes
        to
        Financial Statements
 March
        31,
        2008
  **NOTE
        1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
  ***Description
        of operations and basis of presentation***
  Poker
        Magic, Inc. (the “Company”) is a development stage company that was incorporated
        in the State of Minnesota on January 10, 2006. Our business consists primarily
        of marketing and licensing a new form of poker-based table game to casinos
        and
        online gaming facilities in the United States.
  ***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 month period ended March 31, 2008 are not necessarily indicative
        of
        the results that may be expected for the year ending December 31, 2008 or
        any
        other period. The accompanying financial statements and related notes should
        be
        read in conjunction with the audited Financial Statements of the Company,
        and
        notes thereto, contained in this filing for the year ended December 31, 2007.
  ***Liquidity***
  The
        accompanying financial statements have been prepared assuming the Company will
        continue as a going concern that contemplates the realization of assets and
        satisfaction of liabilities in the normal course of business. For the period
        from January 10, 2006 (inception) to March 31, 2008, the Company incurred
        a net
        loss of $298,945. The Company's ability to continue as a going concern is
        dependent on it ultimately achieving profitability, producing revenues and/or
        raising additional capital. Management intends to obtain additional debt
        or
        equity capital to meet all of its existing cash obligations and to support
        the
        revenue generating process; however, there can be no assurance that the sources
        will be available or available on terms favorable to the Company.
  ***Intangible
        assets***
  On
        March
        10, 2006, the Company purchased certain assets and assumed certain liabilities
        of Select Video, Inc. (Select Video). Three patents were acquired as a part
        of
        the March 10, 2006 purchase. The patents are stated at cost and are amortized
        on
        a straight-line basis over 60 months. Amortization expense was $2,068 for
        both
        the three months ended March 31, 2008 and 2007 and $16,543 for the period
        from
        January 10, 2006 (inception) to March 31, 2008. Estimated amortization expense
        for the next four years of patents issued as of March 31, 2008 is as
        follows:
  Years
        ending December 31:
 Remainder
                  of 2008
              
              $
              6,2032009
              
              
              8,2712010
              
              
              8,2712011
              
              
              2,069Total
              
              $
              24,814
  4
 Poker
          Magic, Inc.
 (A
          Development Stage Company)
 Notes
          to
          Financial Statements
 March
          31,
          2008
 ***Impairment
        of long-lived assets***
  Management
        reviews the Company’s long-lived assets for impairment when events or changes in
        circumstances indicate that the carrying amount of an asset may not be
        recoverable. If impairment indicators are present and the estimated future
        undiscounted cash flows are less than the carrying value of the assets, the
        asset’s value will be adjusted appropriately. No impairment indicators were
        present as of March 31, 2008 or December 31, 2007.
  ***Recent
        accounting pronouncements***
  In
        February 2007, the Financial Accounting Standards Board (FASB) issued Statement
        of Financial Accounting Standards (SFAS) No. 159, “The Fair Value Option for
        Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits
        entities to choose to measure many financial instruments and certain other
        items
        at fair value. The objective is to expand the use of fair value measurements
        in
        accounting for financial instruments. SFAS 159 is effective for fiscal years
        beginning after November 15, 2007. The adoption of SFAS 159 did not have
        a
        material impact on the Company’s financial statements.
  In
        December 2007, the FASB issued SFAS No. 160 Noncontrolling Interests in
        Consolidated Financial Statements-an amendment of ARB No. 51. SFAS 160
        establishes accounting and reporting standards for the noncontrolling interest
        in a subsidiary and for the deconsolidation of a subsidiary. The guidance
        will
        become effective as of the beginning of the Company's fiscal year beginning
        after December 15, 2008. Management believes the adoption of this pronouncement
        will not have a material impact on the Company's financial
        statements.
  In
        September 2006, the FASB issued SFAS No. 157, “Fair Value Measures” (“SFAS
        157”). SFAS 157 defines fair value, establishes a framework for measuring fair
        value and enhances disclosures about fair value measures required under other
        accounting pronouncements, but does not change existing guidance as to whether
        or not an instrument is carried at fair value. SFAS 157 is effective for
        fiscal
        years beginning after November 15, 2007. The adoption of SFAS 157 did not
        have a
        material impact on the Company’s financial statements.
  In
        May 2008, the FASB issued Statement of Financial Accounting Standards
        (“SFAS”) No. 162, *The
        Hierarchy of Generally Accepted Accounting Principles* .
        This
        standard is intended to improve financial reporting by identifying a consistent
        framework, or hierarchy, for selecting accounting principles to be used in
        preparing financial statements that are presented in conformity with generally
        accepted accounting principles in the United States for non-governmental
        entities. SFAS No. 162 is effective 60 days following approval by the U.S.
        Securities and Exchange Commission (“SEC”) of the Public Company Accounting
        Oversight Board’s amendments to AU Section 411, *The
        Meaning of Present Fairly in Conformity with Generally Accepted Accounting
        Principles* .
        We do
        not expect SFAS No. 162 to have a material impact on the preparation of our
        financial statements.
  5
 Poker
          Magic, Inc.
 (A
          Development Stage Company)
 Notes
          to
          Financial Statements
 March
          31,
          2008
  **NOTE
        2—NET LOSS PER COMMON SHARE**
  Basic
        net
        loss per common share is computed by dividing net loss by the weighted average
        number of vested common shares outstanding during the period. A reconciliation
        of the numerator and denominator used in the calculation of basic and diluted
        net loss per common share follows:
  Three  months  ended
                March  31,  2008
              
              Three  months  ended
                March  31,  2007
              
              Period  from  January
                10,  2006  (inception)  to
                March  31,  2008Numerator:Net
                  loss
              
              $
              (56,244
              )
              $
              (35,033
              )
              $
              (298,945
              )Denominator:Weighted-average
                  number of common shares outstanding
              
              
              7,755,101
              
              
              7,033,880
              
              
              6,479,963Basic
                  and diluted net loss per common share
              
              $
              (.01
              )
              $
              (.00
              )
              $
              (.05
              )
  **NOTE
        3—COMMITMENTS AND CONTINGENCIES**
  The
        asset
        purchase agreement with Select Video dated March 10, 2006, stated that if
        and
        when the Company receives any revenue generated by Winners Pot Poker and
        other
        similar games, Select Video shall receive an amount equal to five percent
        (5%)
        of all gross proceeds generated by these games.
  For
        the
        period from January 10, 2006 (inception) to March 31, 2008 there was no revenue
        related to these games.
  **NOTE
        4—SHAREHOLDERS’ EQUITY**
  ***Common
        stock***
  On
        January 10, 2006, the founders of the Company purchased 2,500,000 shares
        of
        common stock for $2,500.
  On
        March
        10, 2006, the Company purchased certain assets and assumed certain liabilities
        of Select Video in exchange for 3,022,991 shares of common stock issued at
        the
        deemed fair market value of $.001 per share or $3,023.
  On
        May
        23, 2006, the Company issued 60,000 shares of common stock at $.25 per share
        in
        lieu of cash for liabilities assumed.
  During
        2006, the Company raised additional cash of $87,500 at $.25 per share through
        the issuance of 350,000 shares of common stock.
  During
        2006, the Company issued 22,000 shares to various consultants at $.25 per
        share
        for services rendered.
  During
        2006, the Company issued 100,000 shares valued at $4,000 (value of the services
        to be provided) for services rendered and to be rendered.
  At
        December 31, 2006 a total of 6,104,991 shares of common stock were issued
        and
        outstanding. No warrants or options were issued in 2006.
  6
 Poker
            Magic, Inc.
 (A
            Development Stage Company)
 Notes
            to
            Financial Statements
 March
            31,
            2008
  On
        January 15, 2007, the Company issued 600,000 shares of common stock to two
        consultants for services to be provided over a 12 month period commencing
        on
        January 15, 2007. These services were valued at $50,000.
  On
        January 15, 2007, the Company issued 500,000 shares of common stock to the
        two
        founders for their services to be provided over a 12 month period commencing
        January 15, 2007. These services were valued at $48,000.
  On
        July
        26, 2007, the Company settled the note payable of $7,084 for a cash payment
        of
        $2,375 and the issuance of 20,000 shares of common stock valued at $4,709
        for
        payment in full on the note.
  In
        July
        2007, the Company raised cash of $20,000 at $.25 per share through the issuance
        of 80,000 shares of common stock.
  On
        August
        1, 2007, the Company issued 65,000 shares of common stock for services to
        be
        provided over a 12 month period commencing retroactively on June 1, 2007.
        These
        services were valued at $5,000.
  On
        August
        1, 2007, the Company issued 100,000 shares of common stock to a consultant
        for
        services to be provided over a 12 month period commencing on August 1, 2007.
        These services were valued at $8,300.
  On
        August
        1, 2007, the Company issued 25,000 shares of common stock for services. These
        services were valued at $1,000.
  On
        November 26, 2007, the Company issued 50,000 shares of common stock to a
        consultant for services to be provided over a 12 month period commencing on
        November 26, 2007. These services were valued at $12,500.
  In
        December 2007, the Company raised cash of $30,000 at $.25 per share through
        the
        issuance of 120,000 shares of common stock.
  The
        Company believes the value of the services provided during 2007 was the best
        measurement of the value of the common stock.
  In
        January 2008, the Company raised cash of $25,000 at $.25 per share through
        the
        issuance of 100,000 shares of common stock.
  At
        March
        31, 2008 a total of 7,764,991 shares of common stock were issued and
        outstanding. No warrants or options were issued since inception and there
        were
        not any warrants or options outstanding at March 31, 2008.
  **NOTE
        5—INCOME TAXES**
  On
        January 1, 2007, the Company adopted the provisions of FIN 48, which clarifies
        the accounting for uncertainty in income tax positions. This interpretation
        requires the Company to recognize in the consolidated financial statements
        only
        those tax positions determined to be more likely than not of being sustained
        upon examination, based on the technical merits of the positions. Interest
        and
        penalties are expensed as incurred. The adoption of FIN 48 did not result
        in an
        adjustment to the Company's financial statements.
  At
        March
        31, 2008, the Company had federal and state net operating loss carryforward
        of
        approximately $278,000 available to offset future taxable income. The Company’s
        federal and state net operating loss carryforwards will begin to expire in
        2026
        if not used before such time to offset future taxable income or tax liabilities.
  7
  Poker
          Magic, Inc.
 (A
          Development Stage Company)
 Notes
          to
          Financial Statements
 March
          31,
          2008
 **NOTE
        6—SUBSEQUENT EVENTS**
  In
        May
        2008, the Company raised cash of $262,500 at $.25 per share through the issuance
        of 1,050,000 shares of common stock.
  On
        May
        28, 2008, the Company issued an investor a warrant to purchase 1,000,000
        shares
        of common stock at a price of $.35 per share if purchased within 6 months
        of
        issuance. The price increases to $.425 for months 7 to 12 and increases to
        $.50
        after 12 months. The warrant expires on May 27, 2010.
  On
        June
        26, 2008, and as a result of the expiration of the initial test period
        contemplated in the December 26, 2007 agreement together with the New Jersey
        Casino Control Commission’s adoption of temporary regulations governing the
        Winner’s Pot Poker game, the Company entered into an amendment to the License
        Agreement for the licensing of the game. Presently, two units (each unit
        consisting of the game’s table layout) are under license. The Company and
        Bally’s amended the License Agreement to provide that the monthly license fee
        for the use of one unit for a full week will be $475, and the monthly license
        fee for an additional unit for weekend use only is $200. The amendment also
        provides that Bally’s is solely responsible for any costs associated with any
        repairs or replacements of a unit or table signage resulting from ordinary
        wear
        and tear.
  On
        August
        5, 2008, the Board of Directors authorized the issuance of 380,000 shares
        of
        common stock at $0.25 per share for consulting services to be rendered to
        the
        Company.
  8




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





*Our
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operation set forth below should be read in conjunction with our audited
      consolidated financial statements, and notes thereto, contained in our Form
      10
      Registration Statement, as amended, filed with the SEC on August 6, 2008 and
      relating to our year ended December 31, 2007, and the period from January 10,
      2006 (inception) to December 31, 2006.*





**Cautionary
      Note Regarding Forward-Looking Statements**





Some
      of
      the statements made in this section of our report are forward-looking
      statements. These forward-looking statements generally relate to and are based
      upon our current plans, expectations, assumptions and projections about future
      events. Our management currently believes that the various plans, expectations,
      and assumptions reflected in or suggested by these forward-looking statements
      are reasonable. Nevertheless, all forward-looking statements involve risks
      and
      uncertainties and our actual future results may be materially different from
      the
      plans, objectives or expectations, or our assumptions and projections underlying
      our present plans, objectives and expectations, which are expressed in this
      section. An example of specific factors that might cause our actual results
      to
      differ from our current expectations include but are not limited
      to:





·
            Our
                lack of a significant prior operating history to provide our management
                with a basis to better evaluate certain
                likelihoods





·
            Our
                need for additional financing





·
            The
                significant risk that our game may not be accepted by casinos or
                gaming
                establishments or, ultimately, by gaming consumers and
                enthusiasts





·
            Our
                inability to obtain required registrations, licenses and approvals
                with or
                from appropriate state gaming
                authorities





·
            Changes
                in legal and regulatory regimes applicable to our business or our
                games





·
            Our
                inability to effectively protect our intellectual property,
                or





·
            Our
                inability, for any reason, to retain our executive management
                personnel.





In
      light
      of the foregoing, prospective investors are cautioned that the forward-looking
      statements included in this filing may ultimately prove to be inaccurate—even
      materially inaccurate. Because of the significant uncertainties inherent in
      such
      forward-looking statements, the inclusion of such information should not be
      regarded as a representation or warranty by Poker Magic, Inc. or any other
      person that our objectives, plans, expectations or projections that are
      contained in this filing will be achieved in any specified time frame, if
      ever.




9




**General
      Overview**





Poker
      Magic Inc. is a Minnesota corporation formed in January 2006. In this report,
      we
      refer to Poker Magic, Inc. as “we,” “us,” “Poker Magic” or the “Company.” We are
      a development-stage company focused on promoting and placing our Winner’s Pot
      Poker game into casinos and entertainment facilities country-wide, including
      those residing in Native American tribal lands. We believe that the long-term
      success of our operations will be determined by our ability to bring new and
      innovative products, game play and services to the market.





Our
      current gaming product is “Winner’s Pot Poker,” which is a table game form of
      five-card stud poker. In the Winner’s Pot Poker game, the dealer deals each
      player, and the dealer himself, two cards face down and three cards face up.
      Each player “antes” before the deal to be eligible to receive cards in the game.
      After each player has received his or her first three cards from the dealer,
      each player may either fold or place a first bet equal to the ante. The first
      bet may not be any more or less than the ante. After the next card is dealt,
      each of the remaining players has a choice between folding or placing a second
      bet that must be equal to twice the ante. The dealer may not fold. After the
      last card is dealt, the hands are compared and the winning hand (determined
      by
      using standard poker rankings) takes a predetermined percentage of the total
      bets and antes made in the course of the game. In addition, players are entitled
      to make certain optional “bonus bets.”





We
      had no
      revenues from January 10, 2006 (inception) through December 31, 2007, or from
      January 1, 2008 through March 31, 2008. We presently expect to begin generating
      revenues during fiscal 2008.





For
      the
      three months ended March 31, 2008, we incurred $56,244 in operating expenses.
      During this period, our expenses related primarily to our efforts to market
      our
      Winner’s Pot Poker game to casinos and gaming establishments and begin
      generating revenues, and other selling, general and administrative expenses.
      The
      most significant components of these other selling, general and administrative
      expenses were (i) compensation expense attributable to share issuances to
      third-party consultants and executive management for services rendered, and
      (ii)
      expenses for professional services such as legal and accounting
      services.





As
      of
      March 31, 2008, we had $12,578 in cash on hand and current liabilities of
      $4,317. As of the date of this filing, we had $201,784 in cash on hand, and
      our
      management presently believes this cash will be sufficient to continue
      operations through June 2009. Thereafter, we expect we will require additional
      capital. If our present expectations relating to our expenses prove inaccurate
      and we incur more expenses than anticipated, we will be required to seek
      additional financing prior to June 2009.





10




Management
      believes that the most significant uncertainties facing the Company relate
      to
      our ability to increase our revenues, the accuracy of our expense forecast,
      our
      ability to acquire necessary licenses, registrations and approvals, and our
      ability to obtain financing when and as needed and on terms acceptable to
      us.





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





For
      the
      three months ended March 31, 2008 and March 31, 2007, we had no revenues. During
      both three-month periods, we were focused primarily on efforts to (i) ensure
      temporary regulatory approval and compliance of the Winner’s Pot Poker game,
      (ii) obtain the agreement of casinos and gaming establishments to provide gaming
      table space to the Winner’s Pot Poker game, and (iii) complete the process of
      amending our Registration Statement on Form 10 originally filed with the SEC
      on
      January 29, 2008. Amendments to that Registration Statement were completed
      and
      filed with the SEC on March 11 and August 6, 2008.





During
      the three months ended March 31, 2008 and March 31, 2007, we incurred selling,
      general and administrative expenses in the pursuit of our plan of operation.
      For
      the three months ended March 31, 2008, we incurred selling, general and
      administrative expenses aggregating $56,244 compared to $35,033 for the three
      months ended March 31, 2007. The increase in the most recent quarterly period
      was primarily attributable to increased professional expenses incurred in the
      course of amending our Registration Statement on Form 10/A filed with the SEC,
      and increased expenses incurred in the marketing of the Winner’s Pot Poker
      game.





Over
      the
      three month period ended March 31, 2008, the most significant components of
      our
      selling, general and administrative expenses were (i) general operating and
      marketing expenses relating to our Winner’s Pot Poker game and (ii) professional
      expenses for legal and accounting services. These expenses aggregated $13,832
      and $21,878, respectively. In addition, we incurred $8,534 expense relating
      to
      consulting services rendered to the Company and $12,000 in expense relating
      to
      services rendered to the Company by executive management. Shares issued to
      consultants during the relevant period related to gaming-related and general
      business consulting services rendered to the Company.





In
      contrast, over the three month period ended March 31, 2007, the most significant
      components of our selling, general and administrative expenses were (i) expense
      relating to shares issued to our executive management and consultants, and
      (ii)
      expenses for professional services such as legal, accounting and professional
      consulting services related to compliance with regulations applicable to public
      reporting companies. These expenses aggregated $20,147 and $5,000, respectively.
      In the three months ended March 31, 2007, a total of $10,147 related to shares
      issued to consultants and $10,000 related to shares issued to executive
      management. Shares issued to consultants during the relevant period related
      to
      general business consulting and introductory services, and accounting services
      rendered to the Company. Shares issued to executive management related to
      services rendered and to be rendered during fiscal 2007.





11




We
      presently expect that compensation expense arising from share issuances to
      our
      executive management will continue to decrease from fiscal 2007 levels as we
      have no current plans or expectations to issue additional shares to our present
      management as compensation for services rendered or to be rendered during fiscal
      2008. We have recorded an expense for the estimated officer compensation as
      an
      addition to paid-in capital. We do, however, expect that we will continue to
      issue shares to consultants to compensate them for services rendered, primarily
      as a means to conserve our cash resources. In this regard, we do not anticipate
      hiring employees in the near future and expect instead, where necessary or
      appropriate, to rely on services provided by consultants through at least fiscal
      2008.





We
      anticipate that our professional expenses will increase during fiscal 2008
      as we
      continue to seek gaming regulatory compliance and licenses, complete required
      amendments to our Form 10 Registration Statement, become a public reporting
      company that files periodic reports with the SEC under the Securities and
      Exchange Act of 1934, and generally seek to comply with the various legal,
      accounting and governance rules and regulations applicable to public reporting
      companies.





Finally,
      we anticipate that the portion of our selling, general and administrative
      expenses relating to the general operations and the marketing of our Winner’s
      Pot Poker game to casinos and gaming establishments will increase during fiscal
      2008.





**Liquidity
      and Capital Resources**





Net
      cash
      used in operating activities was $49,425 during the three months ended March
      31,
      2008 compared to $11,548 for the three months ended March 31, 2007. The increase
      in cash used was primarily the result of payments of legal and accounting
      expenses and expenses relating to our marketing efforts for our Winner’s Pot
      Poker game.





Net
      cash
      provided by financing activities was $25,000 during the three months ended
      March
      31, 2008 compared to $0 for the three months ended March 31, 2007. The increase
      in the most recent period relates to proceeds received from private placement
      sales of common stock during January 2008.





As
      of
      March 31, 2008, we had $12,578 cash on hand and current liabilities of $4,317.
      As of the date of this filing, our management believes we have sufficient
      capital to continue operations through June 2009. Thereafter, we expect we
      will
      require additional capital. If we are unable to obtain additional financing
      when
      needed, we may be required to abandon our business or our status as a public
      reporting company.




12




Our
      primary non-cash asset at December 31, 2007 and March 31, 2008 was intellectual
      property rights and trademarks, which are the foundation for our product
      offerings. We currently own the rights to United States Patent Number 5,839,732,
      issued on November 24, 1998, that relates to our current Winner’s Pot Poker
      table game. This patent was acquired from Select Video, Inc., a Delaware
      corporation, pursuant to an Asset Purchase Agreement dated March 10, 2006.
      In
      addition, we own a federally registered trademark for “WINNER’S POT POKER,”
Registration Number 2,172,043, issued on July 7, 1998, which was acquired
      pursuant to that same agreement. Finally, we also own registered trademarks
      for
“POKER MAGIC” and to “AC (ATLANTIC CITY) STUD POKER,” which we similarly
      acquired pursuant to the Asset Purchase Agreement with Select Video. Other
      than
      the trademark “Poker Magic” which we have adopted as our corporate name, we do
      not have any current plans for the sale or license of such other trademarks.
      We
      do not have any currently pending applications for un-issued patents, trademarks
      or copyrights. The expiration dates of our patent rights vary based on their
      filing and issuance dates. We intend to continue to actively file for patent
      protection, where reasonable, within the United States. We expect also to seek
      protection for our future products by filing for copyrights and trademarks
      in
      the United States.





Currently,
      we do not have any employees. Mr. Douglas M. Polinsky, the Chief Executive
      Officer and Chairman of our Board of Directors, and Joseph A. Geraci, II, our
      Chief Financial Officer and a director of the Company, both serve as consultants
      to the Company in their officer capacities. We rely on sales and marketing
      agents and outside professional services on an as-needed basis. We believe
      that
      using consultants to perform necessary operational functions is currently more
      cost effective than hiring full-time employees, and such practice affords us
      flexibility in directing our resources during our development stage. We plan
      to
      develop new gaming products primarily by utilizing the services of outside
      developers, sales agents and regulatory and compliance service providers in
      an
      effort to minimize capital expenditures and corporate expenses. We presently
      do
      not expect to incur any material capital expenditures in the near future or
      during the next 12 months. At this time, we do not anticipate purchasing or
      selling any significant equipment or other assets in the near term.





**Trends
      and Uncertainties**




As
      a
      development-stage company involved in the gaming business, we believe we can
      identify certain broad trends in our revenues and expenses, and components
      thereof. We also believe that the most significant risks and uncertainties
      surrounding our business relate to revenues and expenses, and regulatory and
      financing matters. These trends and uncertainties are discussed
      below.





***Revenues***





As
      indicated above, we most recently have been focused on obtaining temporary
      regulatory approval/compliance of its Winner’s Pot Poker game, obtaining the
      agreement of casinos and gaming establishments to provide gaming table space
      to
      the Winner’s Pot Poker game, and completing the process of amending its
      Registration Statement on Form 10 originally filed with the SEC on January
      29,
      2008. Amendments to that Registration Statement were completed and filed with
      the SEC on March 11 and August 6, 2008.





13




These
      efforts culminated in our license agreement with Bally’s Park Place, Inc. d/b/a/
      Bally’s Atlantic City, permitting Bally’s, on a non-exclusive basis, to use one
      unit of the Winner’s Poker Pot game on a trial basis at no charge until such
      time that the New Jersey Casino Control Commission ended the test period for
      the
      game. We entered into that license agreement on December 26, 2007. We had
      earlier (on August 22, 2007) secured the issuance of temporary rules and
      amendments governing the implementation of Winner’s Pot Poker in Atlantic City
      casinos. The amendments and rules added Winner’s Pot Poker to the list of
      authorized table games in New Jersey, governed the physical characteristics
      of
      the Winner’s Pot Poker game layout, defined the card deck for use with the
      Winner’s Pot Poker game, specified the terms of the use of the cards during
      Winner’s Pot Poker game play, and contained technical proposals governing the
      operation of Winner’s Pot Poker. We had also earlier obtained a transactional
      waiver from the New Jersey Casino Control Commission for the licensure
      requirement applicable to casino service industry (CSI), which waiver permitted
      us to legally license to Bally’s Park Place the play of our Winner’s Pot Poker
      game in Bally’s Atlantic City casinos.





After
      a
      successful trial period, we amended our license agreement with Bally’s Park
      Place on June 26, 2008. Under the amended license agreement, Bally’s Park Place
      will pay us a license fee in the amount of (i) $475 per month for the right
      to
      the use of our Winner’s Pot Poker game in the Atlantic City casinos for a full
      week during that month, and (ii) $200 per month for the right to the use of
      our
      Winner’s Pot Poke game in the Atlantic City casinos on weekends only during that
      month. The amendment currently contemplates the licensure of only two Winner’s
      Pot Poker game units—one for full-week use and the other for weekend-only use.
      This amendment was entered into after the adoption by the New Jersey Casino
      Control Commission of temporary regulations governing the rules of the Winner’s
      Pot Poker game. The amended license agreement is a month-to-month agreement
      that
      may be cancelled by either party at any time.





Based
      on
      our recent amendment of the license agreement with Bally’s Park Place, we expect
      that we will begin to recognize revenue from operations during fiscal 2008.
      Given that the present terms of the license agreement, as amended, provide
      only
      that Bally’s Park Place will license the right to use two game units of our
      Winner’s Pot Poker product, we do not expect that our initial revenues will be
      significant. Instead, we expect that we must continue to market our game to
      casinos and gaming establishments that present suitable opportunities for us,
      and that the most efficient way for us to begin generating more significant
      revenues will be to consummate a definitive license agreement with Harrah’s
      Entertainment or some other enterprise that involves a wider group of
      gaming-related affiliates and establishments. For example, Harrah’s
      Entertainment, indirectly (through subsidiaries and other affiliates) operates
      approximately 40 casinos across the United States.





As
      part
      of our marketing efforts for the Winner’s Pot Poker game, our management has met
      with the management or representatives of over ten different casinos or gaming
      establishments over the past three months in an effort to secure additional
      licensing arrangements. To date, our licensing efforts have been focused on
      entering into such agreements with casinos and gaming establishments in
      Minnesota, New Jersey and Nevada. It is extremely difficult to anticipate,
      however, how much success we will have in our efforts to license our games
      to
      establishments other than Bally’s Park Place, if any at all, and thereby
      generate additional revenues. It is also difficult to assess how long we will
      be
      able to maintain our present arrangement with Bally’s Park Place in light of the
      fact that our amended license agreement has a month-to-month term.





14




***Expenses***





As
      indicated above, we expect that our selling, general and administrative expenses
      overall will increase, perhaps significantly, as we continue to seek gaming
      regulatory compliance and licenses, prepare and file periodic reports with
      the
      SEC under the Securities and Exchange Act of 1934, and generally seek to comply
      with the various legal, accounting and governance rules and regulations
      applicable to public reporting companies. We also expect that we will continue,
      when and as we deem necessary or appropriate, to continue compensating
      consultants with shares of our common stock as part of our effort to conserve
      cash resources.





***Regulation***





Currently,
      we have yet to obtain the final licensure required in the states of Nevada,
      New
      Jersey and Minnesota, which jurisdictions have been the focus of our marketing
      efforts thus far. In particular, we expect that we will require at least the
      following licenses, registrations and approvals in the near future to permit
      us
      to license our gaming products to casinos and gaming establishments in the
      relevant jurisdictions:





·
            Casino
                service industry (CSI) supplier license issued by the New Jersey
                Casino
                Control Commission (which license would be more broad and flexible
                than
                the current transactional waiver which we have thus far secured from
                the
                New Jersey Casino Control
                Commission)





·
            Distribution
                licenses permitting us to distribute Winner’s Pot Poker game units (i.e.,
                table layouts) to casinos and gaming establishments in Nevada, issued
                by
                the Nevada State Gaming Control
                Board





·
            Distribution
                licenses permitting us to distribute Winner’s Pot Poker game units to
                casinos and gaming establishments in Minnesota,
                and





·
            Registration
                with the Nevada Gaming Commission as a publicly traded
                company.





In
      addition, we will likely require positive results from suitability reviews
      (generally focusing on financial stability, honesty, character and integrity)
      of
      our executive management and other key personnel or significant shareholders
      conducted by the Nevada Gaming Commission and similar state agencies in other
      jurisdictions. We intend to continue working with the New Jersey Casino Control
      Commission and other state regulatory authorities to obtain the above-described
      and other registrations and licenses that we deem necessary or desirable as
      market opportunities come to light.





15




In
      general, we have little control over the various licensing, registration and
      suitability review processes and outcomes in the various states. It is possible
      that we may not be able to obtain required or desired licenses, registrations
      or
      approvals suitably fast enough to exploit potential opportunities with casinos
      or gaming establishments. It is also possible that our applications for
      licenses, registrations or findings of suitability may be rejected by state
      regulatory authorities.





***Financing***





As
      discussed above under the caption “Liquidity and Capital Resources,” our
      management believes we have sufficient capital to continue operations through
      June 2009. Thereafter, we expect we will require additional capital. Our current
      forecast for financing needs is largely based on our understanding of the
      expenses we anticipate incurring in our efforts to comply with gaming regulatory
      and public reporting company disclosure requirements. In this regard, we note
      that our current forecasts are largely based on our past experience with other
      enterprises and proposed budgets proposed by our professional consultants.
      If
      our actual expenses significantly exceed our present expectations we will likely
      require additional financing prior to June 2009.





Once
      needed, we cannot be certain that any required additional financing will be
      available on terms favorable to us, if at all. This is especially true in light
      of the current poor state of the U.S. capital markets and the general economic
      downturn that has occurred. If, however, we are able to raise additional funds
      by the issuance of our equity or equity-linked securities, including through
      the
      issuance and exercise of warrants, the existing shareholders will experience
      dilution of their ownership interest. If additional funds are instead raised
      by
      the issuance of debt or other senior or preferred equity instruments such as
      preferred stock, we may be subject to certain limitations in our operations,
      and
      issuance of such securities may have rights senior to those of the then-existing
      holders of common stock. If adequate funds are not available on acceptable
      terms, we may be unable to expand, develop or enhance products or to respond
      to
      competitive pressures. If we are unable to obtain additional financing when
      needed, we may be required to abandon our business or our status as a public
      reporting company.





**Going
      Concern**





We
      have
      incurred operating losses, accumulated deficit and negative cash flows from
      operations since January 10, 2006 (inception). As of December 31, 2007, we
      had
      an accumulated deficit of $242,701, and as of March 31, 2008, we had an
      accumulated deficit of $298,945. These factors, among others, raise substantial
      doubt about our ability to continue as a going concern. In this regard, our
      current independent auditors have included an explanatory paragraph in opinions
      they have previously issued related to our annual financial statements as to
      the
      substantial doubt about our ability to continue as a going concern. Our
      consolidated financial statements included in this filing do not include any
      adjustments related to recoverability and classification of asset carrying
      amounts, or the amount and classification of liabilities that might result,
      should we be unable to continue as a going concern. Our ability to continue
      as a
      going concern ultimately depends on achieving profitability, producing revenues
      or raising additional capital to sustain operations. Although we intend to
      obtain additional financing to meet our cash needs and to support the
      revenue-generating process, we may be unable to secure any additional financing
      on terms that are favorable or acceptable to us, if at all.





16




**Critical
      Accounting Policies**





For
      detailed information on our critical accounting policies and estimates, please
      see our financial statements and notes thereto included in this report and
      in
      our Registration Statement on Form 10/A filed with the SEC in August 2008.
      There
      have been no material changes to our critical accounting policies and estimates
      from those disclosed in our Registration Statement on Form 10/A.





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





**Evaluation
      of Disclosure Controls and Procedures**





An
      evaluation of the effectiveness of our “disclosure controls and procedures” (as
      such term is defined in Rules 13(a)-15(e) of the Securities Exchange Act of
      1934) was carried out by the Company under the supervision and with the
      participation of our Chief Executive Officer and Chief Financial
      Officer.





Based
      on
      that evaluation, our Chief Executive Officer and Chief Financial Officer
      recognized the additional risks to an effective internal control environment
      with a limited accounting staff and the inability to fully segregate all duties
      within our accounting and financial functions, including the financial reporting
      and quarterly close process. Management has concluded that with certain
      oversight controls that are in place and the duties we have been able to
      successfully segregate, the remaining risks associated with the lack of
      segregation of duties are not sufficient to justify the costs of potential
      benefits to be gained by adding additional employees given our development
      stage, the limited scope of our operations, and the number of business
      transactions we currently process. Management intends to periodically reevaluate
      this situation and continue to assess ways in which duties can be further
      segregated as our business evolves.





**Changes
      in Internal Control Over Financial Reporting**





During
      the three months ended March 31, 2008, no change in our internal control over
      financial reporting occurred which has materially affected, or is reasonably
      likely to materially affect, our internal control over financial
      reporting.





**PART
      II – OTHER INFORMATION**





**Item
              1A.**
            **Risk
                Factors.**





There
      have been no material changes to our risk factors and uncertainties during
      the
      three months ended March 31, 2008. For a discussion of risk factors applicable
      to Poker Magic and its business, please refer to the “Risk Factors” section of
      our Registration Statement on Form 10/A filed with the SEC on August 6,
      2008.





17




**Item
              2.**
            **Unregistered
                Sales of Equity Securities and Use of
                Proceeds.**





In
      January 2008, we issued a total of 100,000 shares of common stock to one
      accredited investor for total cash consideration of $25,000.




The
      foregoing offer, sale and issuance of our common shares in unregistered
      transactions was exempt from registration under Sections 4(6) or 4(2) of the
      Securities Act of 1933. We relied on the representation of the investor as
      set
      forth in subscription agreement or investment representation letter for our
      determination that the investor was (i) purchasing for investment purposes
      only
      and not with a view toward distribution, (ii) either alone or through a
      purchaser representative, knowledgeable and experienced in financial and
      business matters such that each was capable of evaluating the risks of the
      investment, (iii) “accredited investor” as defined in Rule 501 under the
      Securities Act, or (iv) all of the foregoing. In addition, the transaction
      described above all involved only one individual investor.





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





Exhibit
                No.
            
            Description31.1
            
            Certification
                of Chief Executive Officer31.2
            
            Certification
                of Chief Financial Officer32
            
            Certification
                of Chief Executive Officer and Chief Financial Officer pursuant to
                Section
                906 of the Sarbanes-Oxley Act of
                2002





**SIGNATURES**





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





POKER
                MAGIC, INC./s/
                Douglas PolinskyDouglas
                Polinsky*Chief
                Executive Officer*Dated:
                August 25, 2008/s/
                Joseph A. Geraci, IIJoseph
                A. Geraci, II*Chief
                Financial Officer*Dated:
                August 25, 2008


18


**INDEX
      TO EXHIBITS FILED WITH THIS REPORT**





Exhibit
                No.
            
            Description31.1
            
            Certification
                of Chief Executive Officer31.2
            
            Certification
                of Chief Financial Officer32
            
            Certification
                of Chief Executive Officer and Chief Financial Officer pursuant to
                Section
                906 of the Sarbanes-Oxley Act of
                2002




19