Just like sitting down at the blackjack table, casino stocks are a gamble right now. Currently, the Gaming Industry holds a Zacks Industry Rank in the bottom 30%. With competition expanding and revenues in key markets slumping, it is important that casino investors play their cards right.

Competition runs deep

The ever-growing online gambling market has been a concern for casinos for the last several years. Even though the US government banned online gambling in 2006, the worldwide industry has nearly tripled since then. With states like Delaware and New Jersey bringing back legal online gambling, it seems that the online market will continue to undercut casinos going forward.

Also, investors should recognize the threat of fantasy sports companies like FanDuel and DraftKings. Because they aren’t technically considered “gambling”, these pay-to-play fantasy games offer consumers a legal and at-home alternative to the classic casino sports book.

Slumping revenues deal bad hands

Whether a result of expanding competition or not, casinos are seeing slumping revenues in key markets. As a recent Zacks Analyst Blog highlighted, revenues in the first week of June from casinos in Macau, China dropped 46% on a year over year basis. The report indicated continued declines in the range of 33% to 38% for the remainder of the year. This spells bad news for Wynn Resorts Ltd. ( WYNN) and Las Vegas Sands Corp. (LVS), which own key properties in the Macau region.

Formed in 2002, Wynn Resorts currently owns four properties, two in Las Vegas and two in Macau. Wynn Macau and Encore at Wynn Macau are separate luxury hotels with fully incorporated operations, including a casino. Wynn has struggled recently, missing Q1 earnings estimates by almost 50%.

In the past 60 days, 100% of 10 estimate revisions have lowered WYNN’s expected earnings. WYNN currently holds a Zacks Rank #5 (Strong Sell) and a Style Score grade of “F” for growth, suggesting that investors probably shouldn’t expect much from the company right now.

Las Vegas Sands owns the Venetian Hotel and the Sands Convention Center in Las Vegas, as well as Venetian Macau Limited, a developer of multiple properties in the Chinese region. LVS also fell short of their Q1 estimates, missing the mark by around 10%.

With revenues slumping hard this month, and a momentum grade of “F”, investors should consider indications that now may not be great timing for this stock. Las Vegas Sands currently holds a Zacks Rank #5 (Strong Sell).

Stocks to go “all in” on

While the casino industry may not be entirely bullish right now, smart investors still have the ability to make money in this market. Just like sitting down at the casino, investors need a sound strategy to beat the house. By identifying stocks with positive earnings estimate revisions and strong patterns of growth, Zacks has picked some stocks that we think could be winners.