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The gambling industry has reported losses due to tough economic times.  Casinos from Las Vegas to Atlantic City are underperforming when compared to numbers from prior years.  But not every one is doing as poorly as brick and mortar casinos; slot machines are actually doing quite well.  As a matter of fact, manufacturers of slot machines are expected to out perform casino operators due to their low balance sheet risk and an increase in demand. 

Steven Kent, an analyst from Goldman Sachs, gave the gaming technology sector an ‘attractive’ rating.  The reason for the positive rating is that gaming technology allows investors a means of tapping into the consumer discretionary market with minimal risk.  Prior to the recent rating increase, the gaming technology sector was rated ‘neutral’ by Kent.

Acknowledging that investors may need a little time to become comfortable with discretionary shares and that casinos face capital pressures, Kent is perfectly aware that his upgrade may be jumping the gun.

Slot machines and the rest of the gaming sector have not had it as rough as many casino operators have recently.  Despite the tough times for casinos, they still need equipment for their operations.  Casino operators have, however, had to restrain consumer discretionary spending.

Kent liked Bally Technology Inc. in particular.  Bally Technology provides slot machines for many of the world’s top casinos.  Bally received a rating of ‘buy’.

At the moment Bally only received 15 percent of its revenue from outside the North American continent.  In the future the company plans to expand overseas operations. 

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