Las Vegas Strip Image

The Las Vegas Strip is built to take gamblers money, but if you invest in its casinos, you could be a winner in Las Vegas. Image in public domain. 

Las Vegas' multi-billion dollar megaresorts weren't built by winners at the city's gaming tables and slot machines. The house always wins if you play long enough. If you're ready to flip the odds on its head, it might be time to look at investing in gaming stocks.

Why gaming stocks are a better bet than any table game
Gaming companies like MGM Resorts (NYSE:MGM), Caesars Entertainment (NASDAQ:CZR), Wynn Resorts (NASDAQ:WYNN), and Las Vegas Sands (NYSE:LVS) own some of the most iconic resorts in the world, and dominate the Las Vegas Strip from start to finish. From the Bellagio to The Venetian to Wynn Las Vegas, these are the moneymakers in Las Vegas, and the dominant players in the gaming industry.

The good news is you don't always have to bet against them in casinos, where the house always has an edge. By owning stock in these companies, you can participate in some of the wins they experience -- whether it's in Las Vegas, Macau, or even your local casino. But, like any bet in Las Vegas, knowing the odds is key for investors in gaming stocks.

Las Vegas Sands Sands Macau Gaming Area Image

If you thought gambling was big in Las Vegas, you should see Macau. Image source: Las Vegas Sands.

How to stack the odds in your favor
Making a winning bet in gaming stocks comes down to three things: location, debt, and resort quality.

Location is all about the broader market a company serves, whether it's in China, Las Vegas, or the middle of Iowa. Just think... would you rather own a casino in the heart of the Las Vegas Strip, or just a few miles away in downtown Las Vegas? What about in Macau, or in downtown Detroit? Location is the first key to winning in gaming.

The top location in the world right now is Macau, which has grown to be a $47 billion gaming market, by far the largest in the world. Macau is also where the most profitable gaming companies like Las Vegas Sands and Wynn Resorts get most of their revenue -- not from their well-known homes on the Las Vegas Strip. When it comes to location, Macau is where the odds are in your favor. 

The second key is staying away from too much debt, which can drown a company, even if it's performing well. For example, Caesars Entertainment can't generate a profit, in large part because it has more than $20 billion of debt hanging over the stock. The great recession was riddled with bankrupt gaming companies which bet their futures on new casinos built by debt. We know that didn't end well. Better odds lie with companies that are making more conservative bets on their futures and keeping debt levels low.

Finally, the resorts that companies own matter. You can see the difference on the Las Vegas Strip, where the Bellagio is consistently one of the most profitable resorts despite neighboring low-profit properties like the Flamingo and Bally's Las Vegas. Wynn Las Vegas is consistently the most profitable resort on The Strip because of its quality room, restaurants, and attractions. Customers will pay for quality, and if it's in a great location, they'll pay a huge premium.

Wynn Palace Macau Image

Wynn Palace could double Wynn Resorts' profits when it's completed in early 2016. Image source: Wynn Resorts.

The one gaming stock you should own
When you look for location, a strong balance sheet, and high quality resorts, there are really only a few options in gaming. Las Vegas Sands has premium locations around the world and a balance sheet that could withstand a market crash. Melco Crown actually has the best balance sheet in the industry, and with 100% of its revenue currently coming from Macau, it's a solid bet, as well.

But the one stock with limited downside and incredible upside for investors is Wynn Resorts. The company has a premium location in Las Vegas and a waterfront property in Macau that's one of the most profitable resorts in the region. It also has just $4.2 billion in net debt compared to $1.9 billion in EBITDA -- a proxy for cash flow -- in the last 12 months, so it has a strong balance sheet. Steve Wynn is also one of the most successful resort builders in the world, creating premium properties wherever he operates.

But it's the growth opportunities for Wynn Resorts that set it apart from the competition. A resort under construction in Cotai could double the company's EBITDA when it opens, and a new resort on the waterfront in Boston could begin construction early next year.

If you're tired of losing money gambling in Las Vegas, it may be time to put the odds in your favor and bet on Wynn Resorts. It may be the best bet available in Las Vegas, even if it isn't a bet you can find in a casino.

Travis Hoium manages an account that owns shares of Wynn Resorts, Limited. The Motley Fool is short Caesars Entertainment. 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.