Flying over the glittering Las Vegas strip is a singularly unique experience. Where else can one see the pyramids of Egypt, the Eiffel Tower, a medieval castle, and the Manhattan skyline all on a single street? While newer, flashier resorts such as Mandalay Bay, the flagship property of Mandalay Resort Group (NYSE:MBG), and the MGM Mirage's (NYSE:MGG) Bellagio might garner more attention these days, perhaps none shine as brightly as Caesar's Palace. To this writer, the alluring glory of ancient Rome is still a favorite gambling destination.

It seems others agree: Caesars Entertainment (NYSE:CZR) increased first-quarter guidance last week. The company raised earnings per share estimates to the $0.17-$0.19 range, well above Wall Street consensus estimates of $0.12.

Earnings revisions have been trending higher, with the latest optimistic outlook stems from three factors: higher than expected room revenue, higher than expected table wins, and higher than expected international results. Investors are left to wonder whether this announcement is merely a short-term anomaly, or indicative of future growth. The latter seems to be the case, with analysts lifting full-year earnings to $0.54 this year and $0.61 in 2005.

Boasting 29 properties on four continents, 29,000 hotel rooms, and over 2 million square feet of gaming space, Caesars is the world's largest hotel and casino operator. Though overall top-line growth has stalled in recent years at $4.5 billion, signs of life are showing on the horizon.

Net income is once again in the black, with trailing 12-month figures topping $109 million, compared to losses in 2001 and 2002. Earnings-per-share growth is also on the rise, with projections in the low teens going forward. Finally, management has opted to direct free cash flow towards debt reduction rather than expansion, resulting in a healthier balance sheet and the lowest debt to capital ratio among top-tier casino operators.

The fortunes of the gaming industry are often tied to the overall health of the global economy, particularly the Pacific Rim sector where many of the largest players (referred to as "whales" in casino jargon) are actively courted. Competition for these select patrons is fierce, as their play accounts for a sizeable percentage of a casino's revenues.

As the economy continues to expand, expect corresponding increases in disposable income to bring leisure travelers to Las Vegas in droves. Corporate meetings will also garner plenty of visitors eager to plunk down a few dollars on the roulette wheel. Las Vegas is among the world's most popular choices for business conventions.

Other variables, however, make investing in Caesars something of a, please pardon the pun, gamble. To begin, the shares aren't exactly cheap, with the stock trading near three-year highs and a P/E ratio of 36. Its forward P/E of 24, however, looks far more reasonable, as well as the price-to-cash flow ratio of 6.3, which stands at less than half of the S&P 500. Furthermore, already onerous tax rates have been rising in key markets such as Illinois, New Jersey, and Nevada, as state leaders like to tap casino revenues to cope with budget deficits. Perhaps the biggest hurdle is cutthroat competition.

Can Caesars beat the odds? Many of mighty Caesars' foes have faded into the Las Vegas desert. Personally, I wouldn't bet against them.

Don't exactly find slot machines a relaxing hobby, find another at the Hobbies and Interests discussion board.

Motley Fool contributor Nathan Slaughter prefers to invest in Caesars via their blackjack tables, and owns none of the shares listed.