I view an investment in Progressive Gaming International (NASDAQ:PGIC) as similar to placing some money on a high-risk, high-reward roulette bet. The trick is figuring out whether the odds are in your favor or not.

Progressive Gaming provides gambling technology solutions for customers such as Boyd (NYSE:BYD), Station Casinos (NYSE:STN), and MGM Mirage (NYSE:MGM), and has partnered with other casino suppliers such as IGT (NYSE:IGT) and Shuffle Master (NASDAQ:SHFL). Progressive's products include table gaming solutions, real-time sports wagering systems, and a World Series of Poker platform developed with Harrah's (NYSE:HET).

There's a lot to both like and dislike about Progressive. On the positive side, Progressive sported mouthwatering 51% gross margins in 2006 and is shooting for 54% to 58% in 2007. In the first quarter, the installed systems base grew 18% year over year, and the Casino Jackpot Systems installed base grew a mind-boggling 285%. Progressive also has a lot of growth initiatives, including its poker and real-time betting products.

Unfortunately, Progressive also has a lot of hair on it. Revenue for the quarter was flat at $16.9 million versus last year, despite the rapid installed systems growth, due to a buildup in backlog, so growth should be easier to come by in the near term. The company also seems to be quite a ways away from critical mass, as SG&A, R&D, and depreciation and amortization costs still overwhelm gross profits, leaving the company with a $6 million operating loss for the quarter versus a $7.3 million operating loss last year.

Progressive is tricky. It's clear that the company has potential, given its high gross margins, aggressive investment in growth, and increasing installed base. If it can gain traction, it clearly has a business model that can scale well and throw off outsized profits. However, the company also has $63 million in debt and a long trail of red ink, so for now I'll put this one in the "interesting" pile and keep an eye on it.

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Fool contributor Emil Lee is an analyst and a disciple of value investing. He doesn't own shares in any of the companies mentioned above. Emil appreciates your comments, concerns, and complaints. The Motley Fool has a disclosure policy.