Shuffle Master (NASDAQ:SHFL) reported another dismal quarter after the bell yesterday. Is holding this stock in your portfolio too much of a gamble?

Net revenues for the third quarter jumped almost 11% to $45.1 million. Profit from continuing operations, however, fell 63% to $2.7 million. Net income from continuing operations came in at $0.08 per diluted share versus $0.20 per diluted share in last year's comparable quarter. Wall Street expectations were not met.

Clearly, Shuffle Master is no longer the master of its casino domain. What once was a mighty growth company is now a hopeful turnaround in the making. And while it seems that Shuffle Master is still nowhere near a sure bet of any kind, the earnings report contains a few positive signs.

There's more cash on the balance sheet this time around. Cash and cash equivalents came in at $16.1 million, versus the $8.9 million on the books at the end of October 2006. Net debt also decreased during that time frame, coming in at $210 million vs. $220 million. Plus, net cash from operating activities was up slightly.

Sampling some more cool stats, we see that the total shuffler installed base increased 17% year over year. The total electronic-table-game installed base jumped 39%, while the leased electronic-table-game installed base went up more than 300%.

Shuffle Master is also in the midst of reorganizing its corporate headquarters. The Las Vegas office will be split in two: Corporate Headquarters Group and Shuffle Master-Americas. The former will be responsible for marketing and typical headquarters stuff such as corporate accounting and human resources; Shuffle Master-Americas will be responsible for such duties as product compliance, operations and service, and sales.

The company signed a letter of intent back in July to buy the table game assets of Progressive Gaming (NASDAQ:PGIC). Will this event, along with the reorganization effort, bear fruit? Maybe, but it doesn't alleviate my concerns about buying into Shuffle Master at this time.

Gambling is a good investment thesis, and there are many ideas out there, such as International Game Technology (NYSE:IGT), Wynn Resorts (NASDAQ:WYNN), Bally Technologies (NYSE:BYI), and Ameristar Casinos (NASDAQ:ASCA), which fellow Fool Jeff Hwang recently looked at. Fools should also consider the boom going on in Macau. Shuffle Master might be a weak hand right now, but it should still be thrown into the gaming watch list. If it looks like the company gets on track to approach analyst estimates for fiscal 2008 -- according to Yahoo! Finance, the company could earn $0.73 per share in that year -- the company could be cheap on a PEG ratio basis. I can't buy into the company right now, though. Even considering the positive elements I highlighted from the earnings release, Shuffle Master will need to show more of its cards before I can know how to bet.

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Fool contributor Steven Mallas owns none of the companies mentioned. As of this writing, he was ranked 10,033 out of more than 60,000 investors in the CAPS system. Don't know what CAPS is? Check it out. The Fool has a disclosure policy.