As an investment prospect, I've never really liked Isle of Capri (NASDAQ:ISLE). But the fact is that with the pending mergers involving casino operators MGM Mirage (NYSE:MGG), Harrah's Entertainment (NYSE:HET), and Penn National (NASDAQ:PENN), we are running out of ways to play the casino game. And with gaming stocks in general trading at uber-premiums, we gaming diehards might as well see what some companies with the cheaper stocks in the industry might have to offer.

I should qualify what I'm going to say next by pointing out that Isle of Capri is on the cheaper end for a reason. While nearly every other company in the industry is posting record quarterly results, today it reported roughly flat third-quarter net revenues at $266.8 million, just a few million more than in the year-ago quarter. Meanwhile, adjusted EBITDA fell 12.6% to $53.1 million, and net income was cut by more than half to $3.5 million, or $0.11 per share.

That said, in my mind, there are three characteristics that give Isle of Capri merit.

The first is the relative safety in its niche casino operations, where the company holds monopolies in mini-markets such as Booneville, Mo., a town about a hundred miles east of Kansas City, as well as parts of Mississippi and Iowa. These niche operations are important because -- as we've discussed in the past -- Isle of Capri doesn't fare well against competition.

Secondly, Isle of Capri is still in the middle stages of its shift to ticket-in/ticket-out (TITO) slot machines. The company said that more than 61% of its slot machines are TITO-equipped and that that figure would increase to 72% by the end of the current quarter. TITO capability is important in that it helps cut operating costs and will help drive slot business, with the fast-growing market for penny and nickel slot players of particular importance.

The third aspect is the company's expansion opportunities. Slot machines at pari-mutuel gaming facilities (wherein gamblers effectively bet against each other, and not against the house -- common in certain sporting events) are on the table in Broward and Dade Counties in South Florida, which would be a boon to growth. Isle of Capri has long owned a racetrack in Broward County, and has the exclusive right to negotiate the purchase of the Miami Jai-Alai facility in Dade County. In addition, the company is also one of several American casino operators vying for the right to build one of the eight potential "supercasinos" in the United Kingdom, though any operation there is still several years away.

Isle of Capri is not one of the more attractive players in the gaming space, but it is by no means in bad shape, and does have some merit. Every investor looks through a slightly different lens, and Isle of Capri may well be furnishing enough high points to justify itself for the right crowd.

That said, while it's on the cheaper end of the industry, this stock is in no way cheap. I'd say a better option at this price would be a premium competitor in Ameristar Casinos (NASDAQ:ASCA), but as I wrote last week, I don't think Ameristar's stock price offers the margin of safety for a buy either.

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Fool contributor Jeff Hwang owns shares of Ameristar Casinos.