Hotel/casino operator Mandalay Resort Group (NYSE:MBG) reported strong second-quarter earnings after the bell Tuesday. Net income for the quarter increased 47% year over year to $43.2 million, while EPS increased an even more impressive 63% to $0.67 per share, reflecting an 11% year-over-year decline in share count.

The results were driven primarily by Mandalay Bay, Luxor, and Excalibur -- the company's three properties on the south end of the Las Vegas Strip. Higher average daily rates (ADR) and occupancy rates for the hotels drove a combined 21% increase in operating cash flow for the three properties. Monte Carlo, a 50-50 joint venture with MGM Mirage (NYSE:MGG), delivered a 24% increase in operating cash flow.

Gaming revenues were relatively flat.

The news wasn't all good, however. For one, the company cited continued expansion of Native American gaming in California and poor economic conditions for a slight aggregate decline in operating cash flow at its other properties in Nevada.

Moreover, The Grand Victoria, Mandalay Bay's 50-50 joint venture in the $2.3 billion Chicagoland market, continues to suffer. Operating cash flow for the Illinois riverboat decreased from $28.6 million to $20.6 million year-over-year, as casinos lay victim to a pair of state tax increases in the past 14 months; the latest purge taxes all gaming revenues over $250 million at a prohibitive 70%. The Grand Victoria generated $383 million in net gaming revenues in the most recent fiscal year.

Illinois woes aside, Mandalay Bay continues to demonstrate its financial strength. Along with earnings, the company also announced the increase of its quarterly dividend from $0.23 to $0.25 per share.