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With Macau and Singapore getting most of the gaming headlines sometimes we forget that there is indeed a large gaming business here in the U.S. One of the larger operators, with 18 casinos now under its control, is Penn National (Nasdaq: PENN  ) , which reported earnings this week.

Revenue was up 15% in the quarter to $687.9 million, and earnings per share jumped to $0.71 from $0.09 a year ago. Earnings were affected negatively by Hollywood Casino Tunica closing because of flooding and by a positive impact from the addition of M Resort to the portfolio in June.

At M Resort in Las Vegas, which I think was a great investment at $230.5 million, property EBITDA was $2.1 million for the month of June. This wasn't a big impact on the quarter, but if we just multiply that by 12 months, we see that $25.2 million in EBITDA is the run rate we saw this month. With improvement in operations and a currently slow locals market, that number should improve significantly.

Competing in an increasingly competitive U.S. market, Penn National looks much stronger than Ameristar Casinos (Nasdaq: ASCA  ) , Boyd Gaming (NYSE: BYD  ) , or Pinnacle Entertainment (NYSE: PNK  ) , which are all struggling to make a profit. A savvy investment in M Resort and increasing volume as the economy recovers should help distinguish Penn as the best investment in the group.

The hidden gem of gaming
We might overlook smaller-market casinos, but Penn National has actually outperformed Las Vegas Sands (NYSE: LVS  ) on the stock market this year. It isn't as sexy as Las Vegas Sands or other companies with casinos in Asia, but Penn National is still a solid stock in the gaming space. The company has beaten earnings estimates the last five quarters, and shares trade at less than 25 times 2011 earnings.

For a local gaming play, Penn National is as good a bet as any.

Interested in reading more about Penn National? Click here to add it to My Watchlist, which will find all of our Foolish analysis on this stock.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Motley Fool newsletter services have recommended buying shares of Ameristar Casinos. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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