There's one thing about which there's no debate: Stocks in the gaming group have been a bad bet for those who bought in pre-crisis. MGM Mirage (NYSE:MGM) and Las Vegas Sands (NYSE:LVS) are down more than 90% from their 2007 highs, while Wynn Resorts (NASDAQ:WYNN) is down a "more modest" 75%.

On a parallel track, there's lots of debate among investors trying to figure out whether financial leviathans like Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), and Morgan Stanley (NYSE:MS) are sporting bargain prices. Their price tags may look low in comparison to 2007, but some worry that they may have been overvalued and benefitting from unsustainable earnings. I believe that's exactly the question we need to tackle for the gaming companies.

With that in mind, let's take a look at the valuations of four gaming stocks -- MGM, Las Vegas Sands, Wynn, and smaller competitor Ameristar Casinos (NASDAQ:ASCA) -- to get a better idea of whether we're looking at a royal flush or a toilet flush in the casino industry.

So are they cheap?
To figure this out I set up a spreadsheet delving into the past eight years of results from all four companies. Using a little Excel magic, I then estimated the earning power of each company and based my "cheapness scale" on how that earning power compares to today's price. I could give you the gory details, but I want you to keep reading, not fall asleep.

MGM
Cheapness scale: dirt cheap

MGM is clearly the cheapest of the group. While significant concerns over the potential for the company to go bankrupt have largely gone away, they still linger to some extent. The upshot to those concerns, though, is that they have left the stock comically cheap for those confident in the company's future.

To ascertain that MGM is dirt cheap, you don't have to mess around with the complicated modeling that I did. The stock is currently trading at a relatively low multiple on its depressed earnings over the past year (adjusted for goodwill impairments and other one-time impacts) and well under its tangible book value.

We'll get a better look at how the recent debt and equity offerings shift the numbers around when MGM reports earnings early next month, but I suspect that it will still look crazy cheap.

Ameristar
Cheapness scale: this ain't full price

By a nose, Ameristar gets my nod as the second-cheapest among the gaming group. By focusing on smaller regional markets, Ameristar has been able to produce a return on its assets well above what MGM has -- though obviously with a lot less scale. Its scary-looking balance sheet had investors running for the hills late last year, but the stock has quadrupled since then. Even with that massive run-up, this still looks like a reasonably valued company.

Las Vegas Sands and Wynn
Cheapness scale: this ain't full price

Las Vegas Sands and Wynn are more difficult to deal with, because of more limited operating histories and a significant number of new property openings in the past few years. I suspect that going forward, both will probably see higher returns on their assets than MGM, but not quite as good as Ameristar. It's also worth noting that both Las Vegas Sands and Wynn are still in growth mode, with Marina Bay Sands and Encore at Wynn Macau both expected to open in 2010.

Though I see Sands and Wynn as considerably more expensive than MGM and slightly pricier than Ameristar, taking into account the quality and expected growth for both, I've put them in the same cheapness category as Ameristar.

So what's the catch?
These aren't cheap without reason. As I noted above, the balance sheets are pretty ugly almost across the board -- with Wynn potentially qualifying as "less ugly" -- and many investors expect that operating conditions will be tougher for the casinos going forward.

To that I would add my concern that management at these companies won't know when to go from growth mode to "cashing in" mode. Between 2000 and 2008, every one of these companies has consumed rather than produced cash, with both MGM and Las Vegas Sands spending more than $9 billion. There's certainly value to growth, but I'm a fan of companies that are putting cash in the bank, rather than tapping the bank for loans.

Laying down bets
The lack of clarity about the future of the gaming industry combined with unwieldy balance sheets puts the casinos out of the picture for most conservative investors.

For a risk-taker looking for deep value and the potential for big returns, MGM could trounce the market over the next few years if it continues to outrun the bankruptcy bogeyman. Wynn and Las Vegas Sands could be of interest to growth-oriented investors as both add properties and see their returns come back to a more normal level.

Ameristar doesn't have the rock-bottom valuation that MGM does, and growth is unlikely to be on the menu until it gets its balance sheet under control. This, combined with the risk still inherent in its operations, makes it my least favorite of the group. It is, however, the only one of the four that pays a dividend.

So what do you think?
To back up my thoughts, I've rated both MGM and Las Vegas Sands outperformers in my CAPS portfolio (I gave Wynn the nod back in April). Now it's your turn to let the CAPS community know what you think. Are the casinos great buys? Or are they sinkholes with stocks on the verge of plunging? Click here to join the 135,000-member-strong community.

Further Foolishness:

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Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned in this article. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool. The Fool's disclosure policy likes to riffle in the rain.