I feel badly for Las Vegas, whose tourism industry was hit by the collateral damage of federal bailout recipients Wells Fargo (NYSE:WFC) and Goldman Sachs (NYSE:GS) canceling conferences there last month.

Here's a suggestion to help make up for lost business: Actively court associations representing bankruptcy attorneys or vulture fund capitalists. Judging from the stream of casino-industry woes, tourism officials could market their sales pitch as: "Come to Las Vegas for a Working Vacation."

If you thought things were going bad in early February and worse a few weeks later, March hasn't looked good for stockholders or bondholders either. Casino operators continue scrambling to restructure debt, preparing for bankruptcy reorganization, and enduring credit-rating downgrades.

A series of revelations involving big-name private companies, like Harrah's Entertainment, as well as big-name public companies, like MGM Mirage (NYSE:MGM) and Las Vegas Sands (NYSE:LVS), should serve notice to Fools -- as well as those who feel foolish about investing in the gambling business -- to look beyond stock prices for the health of your investments.

Do your homework
Bonds and balance sheets are the best way to assess the prospects of the casinos. If you own any corporate bond mutual funds right now, it's a good idea to see how much casino paper they hold. You don't need a credit-rating firm to tell you which way the debt is flowing. Just check SEC filings for both public and private companies.

If you see the word "forbearance," that means creditors have either extended a debt-repayment deadline or the deadline has expired. If you see the phrase "notice of acceleration," that means a company hasn't made an on-time payment of interest and/or principal, thus triggering a process for a lender to demand all the money now. The lender could offer a forbearance.

And if you see a phrase like "Amendment No. 5" alongside "forbearance," you know that a company and its creditors have been talking for a long time about restructuring debt.

All of those words and phrases appeared in a December SEC filing by Herbst Gaming, which missed a December interest payment. On March 10, it agreed with its lenders to file a pre-packaged Chapter 11 reorganization. “We have more debt than our operations can support,” the company said. Privately-held Herbst owns casinos in Nevada, Missouri and Iowa. Many operate under the brand name Terrible's.

More March madness
I can't pass up a segue like that, but let the news and numbers speak for themselves. These things don't happen overnight. For example, Herbst bought multiple properties in early 2007.

Investors in MGM Mirage could have seen the storm approaching by checking SEC filings from more than a year ago that warned of "significant indebtedness." The debt was $11.2 billion in 2007. By year-end 2008, it was $13.5 billion.

If investors had heeded that warning, maybe they could have better absorbed the March 17 report by MGM’s accounting firm, Deloitte & Touche, of "substantial doubt" that MGM could remain as a "going concern" unless MGM restructured debt quickly.

The firm was responding to MGM's comment that it might be unable to comply with all of its credit covenants this year, especially if the economy and the casino business remain depressed. MGM got some breathing room on March 17 because it secured a waiver from lenders until May 15 for meeting all the terms of a credit agreement. 

The hits keep coming
Then there's the debt match involving Station Casinos and Boyd Gaming (NYSE:BYD) Station is trying to renegotiate debt payments while fending off Boyd's bid for certain assets. Boyd said that it has "sufficient liquidity" to make the purchase.

Station recently missed two interest payments, but it got extensions for one until March 31 and for the other until April 14. Station is trying to arrange a pre-packaged bankruptcy, and it also is fighting with a bondholder in court over how to proceed with a bankruptcy filing.

Data detectives could have gotten an inkling of the debt dilemma by following SEC filings, starting in 2007 when Station was taken private for $8.8 billion, including the assumption or repayment of $3.4 billion in debt. The deal closed in November 2007. Long-term debt is now $5.4 billion.

Calculate the odds
Station, Las Vegas Sands, and MGM Mirage provide only some of the highlights -- or lowlights -- of the industry's March mauling. Harrah's Entertainment announced a weak fourth quarter with a huge non-cash charge for asset impairments. Pinnacle Entertainment (NYSE:PNK) delivered a fourth quarter loss that was much worse than Wall Street had predicted. Pinnacle recorded a non-cash charge related to "decreased values in the current economy for casinos and casino development sites." 

These events illustrate why investors must remain vigilant about casino companies for which debt is a standard operating strategy.

Today, if companies say they're forging ahead, or just delaying or postponing expansion plans -- rather than canceling them -- then ask yourself if they're being optimistic or unrealistic.

Look at the state of the economy. Look at the projected timetable and scope of an economic recovery. How confident are you in companies whose appetites for expansion have created your investing dilemma today?

Fool contributor Robert Steyer doesn't invest in any companies cited in this article. Watching the behavior of some casino companies reminds him of a story told many ways by many comedians over the years. Standing outside a casino's front door, a man beckons to another who is about to enter. "Please sir, can you spare $1,000. I just lost my job, my kids need braces, and my wife requires medical care." The second man responds: "If I help, how do I know you won't just bet the money in the casino." The first man replies: "Don't worry. I have gambling money." The Fool has a disclosure policy.