Like most of its rivals, regional casino operator Isle of Capri (NASDAQ:ISLE) posted Q1 results that missed Wall Street expectations. For the quarter, the company saw adjusted EBITDA from continuing operations increase 24.5% to $56.9 million. Net revenues from continuing operations rose 13% to $274 million. However, the net revenue figure fell far short of the $294.4 million analyst estimate. Meanwhile, net income -- which more than doubled to $9.2 million, or $0.29 per share -- also missed the $0.36-per-share analyst estimate. As a result, the company saw its shares drop 12% to $19.30 at Friday's close.

While Isle of Capri continues to benefit greatly in Mississippi and in Louisiana because of the absence of competitors destroyed by Hurricane Katrina, its performance was hurt by new or expanded competition elsewhere.

The upside: Biloxi, Natchez, and Lake Charles
In Mississippi and Louisiana -- where the competition is still reviving in the aftermath of Katrina -- Isle is riding high. In Biloxi, the company saw revenues more than double to $52.9 million, while adjusted EBITDA of $22.6 million was almost six times the $3.8 million in adjusted EBITDA the property recorded in last year's quarter. The Natchez property (also in Mississippi) also posted healthy gains thanks to Katrina-related population shifts. And in Lake Charles, La., where Harrah's (NYSE:HET) was knocked out of the picture, Isle posted a 12.8% gain in net revenue and a 26.1% gain in adjusted EBITDA.

The flipside: Iowa, Kansas City, and Black Hawk
In Iowa, Isle's three properties combined to report a 6.7% decline in net revenue and a 14.1% decline in adjusted EBITDA due to the presence of new competition.

The Kansas City property showed only a slight decline in net revenue, but a 30% drop in adjusted EBITDA. That property's performance was hurt by renovations at competing properties, namely Harrah's North Kansas City and Penn National Gaming's (NASDAQ:PENN) Argosy Riverside, which just opened a new poker room at the end of May.

The Black Hawk properties in Colorado also underperformed company expectations. Despite having their own recent upgrades, these properties showed a decline in adjusted EBITDA and only marginal revenue growth. The lackluster numbers may stem primarily from the introduction of the expanded and rebranded Ameristar (NASDAQ:ASCA) Black Hawk in April.

The company did note increased marketing expenditures in that market, as well as disruptions at one of its properties because of conversions to ticket-in/ticket-out (TITO) capable slots.

The competition only gets stiffer
With Harrah's Grand Casino Biloxi now online and MGM Mirage's (NYSE:MGM) Beau Rivage reopening on Tuesday, it will be interesting to see how deeply the Isle's Biloxi property will be affected by the new competition. From what I gather from the earnings conference call, the company seems to project that the 1700 hotel rooms at the Grand and Beau Rivage will simply grow the market and slow Isle's growth in Biloxi, rather than stop it or reverse Isle's business back toward pre-Katrina levels altogether.

Personally, I find this difficult to believe, particularly given Isle's poor history in the face of competition. That lack of competitive strength is evident in Kansas City, as well as Vicksburg and Bossier City -- two markets in which the company cashed out at the beginning of the current quarter. Black Hawk, Isle's biggest EBITDA contributor pre-Katrina, is also a question mark, now that the company has real competition from Ameristar. The rival casino firm is only just getting started, with a new 536-room AAA four-diamond quality hotel on the horizon.

Better opportunities elsewhere
At this point, while there are some interesting new projects on the horizon in Florida and Mississippi, I still see Isle of Capri as little more than a fringe player. That said, despite hitting a new 52-week low, I'd prefer to avoid the stock altogether -- especially since premium players such as Harrah's, Ameristar, MGM Mirage, and Station Casinos (NYSE:STN) are all available at reasonable prices.

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Fool contributor Jeff Hwang owns shares of Ameristar Casinos. The Fool has a disclosure policy.