The growing belief that the world will suffer a punishing economic recession has investors furiously dumping stocks. Indexes around the world are dropping dramatically.

In this article we won't talk about the coming recession, the reasons to its creation or the drop in all major stock prices. What we will do is try to analyze the gambling industry and help you figure out what you can do with your money in these fickle days.

We decided to focus on four leaders from two different corners of the gambling world: The Online Gambling industry and the land based industry.

This analysis will give you a clear view about the gambling industry and where it is going in the current and near future.

MGM Mirage 

Through its subsidiaries, MGM owns and operates casino resorts in the United

States. The company's resorts offer gaming, hotel, dining, entertainment, retail,

and other resort amenities. It also owns and operates a golf club and several courses.

International Game Technology (IGT)

International Game Technology (symbol: IGT) engages manufacturing and marketing of computerized gaming equipment and services in North America and internationally. The company offers gaming systems and services. It provides casino-style slot machines encompassing classic physical reel slots, video poker slots, video reel slots, and Class III, a regulatory classification for a casino-style slot machine.

888

888 is the leading online gambling operator. It has two main brands:

Casino-on-Net: Since its official launch in 1997, over 25 million people have experienced Casino-on-Net's gaming environment, making it the largest online gaming venue. Pacific Poker: One of the strongest online poker brands in the industry, hosting thousands of poker enthusiasts all over the world at any given time, day or night. 888 recently made several major acquisitions: Globalcom, a leading Online Bingo operator is just one example.

Playtech

Playtech (symbol: PTEC.L), the world's largest publicly traded online gaming software supplier, is a vibrant, forward-thinking software company. It supplies gaming platforms to online gaming industry's top operators. Founded in 1999, Playtech has proven itself to be a leader in the industry by delivering top-notch products and impeccable service to its clients. During 2007-2008 Playtech has made several important acquisitions and collaborations. The most recent one was with William Hill (symbol: WMH.L), UK's second biggest sportsbook-maker.

Recession - 4 company revenue chart

     Playtech (+10%)          888 (-30%)             IGT (-70%)           MGM Mirage  (-90%)

Naturally, these 4 companies divide up into two:

Online and land based, while all in the defined casino industry. The distinction jumps right out. The land based companies dropped by steep margins in the past year - MGM by 90% and IGT by over 70%, while online companies like 888 stated a 30% decline and Playtech with a 10% increase.

What caused these vast differences, and how we get an insider's edge for cutting a profit now and in the near future?

We chose to answer the question not by merely reading you the obvious financial reports and data, but by also going into the psychological investment niche:

Apparently, all of the four companies are engaged in the same field of gambling, a field known for its relatively hard shell and stability to recessions, and also as a locomotive in the entertainment business; and what better example than Vegas - a great city that grew from within the gambling and entertainment industry in a stable pace, for decades, and overcame many crises along the way. Vegas lights up, to many of us, our dreams and imagination, as did the past few years. More and more hotels arose, with thousands of rooms, right out of the desert.

So what exactly happened to MGM in 2008, and what caused the sudden drop?

MGM played out the same way as all the investment banks who hit the fans: building more and more hotels and projects at high leverages and low capital, instead of concentrating only on the core businesses. They took billion dollar loans, hoping that the people will pore in at the black jack tables and slot machines. But during this past year, U.S. real estate hit a huge blow, and the dreams remained in the casinos. Vegas's oxygen, being the American clientele, began to reconsider before each visit to the city of lights. Slowly but surely, hotels started to see a major drop both in the guest flow, and of course the cash flow. The recession effect took down the share to a 5 year low, and everybody is wondering how the company will keep up to its commitments. We're still optimistic about the company's ability to bounce back out of this poor situation, and surprise all of its investors.

IGT - since IGT and MGM are practically derivative of each other, it's no surprise that when visitor from all over the globe cancel their visits, IGT suffers great loss in facility and service sales. And indeed, IGT''s graph looks very similar to that of MGM, due to their connection. IGT seems to be a better choice than MGM. On one hand, you don't see casinos around the U.S. renewing their machine stocks. But on the other hand, IGT has been very busy in penetrating new territory. First, the online gambling market, through Wager Works, which was purchased by IGT back in 2005, and second, the cellular gaming market, with the help of its recent 2008 purchase of the Million-2-1 company.

Recently, these stocks have been rising quickly by a large percentage, due to new evaluation that the recession isn't as bad as it looked. We're talking about companies with years of tradition under their belt, working in a hundred year industry. So as long as people keep gambling, these companies will keep making their dollar. It may very well be that the price of these companies as at an all time low, and for those of you who believe that economy will restore in the short term, you have two great investment opportunities lying in front of you.

The online industry didn't suffer such a blow as the companies reviewed here for a couple of reasons:

• These companies don't have high future expenses, and the monthly cash flow needed is quite low, along with their low fixed expenses. These online companies are much more dynamic, and are able to take on these hard times with co operations and company mergers. We estimate that the leading companies in the gambling field are only going to get stronger due to this current crisis, thanks to the speedy mergers and acquisitions.
• Their U.S. exposure is very limited due to the fact that they work all over the globe, and are not subdued only to the states.
• There is a constant growth in online users and in bandwidth speed in many countries, which bring more and more gambling buffs into the online gambling arena.

To sum up:

These four companies are eye catchers for immediate and future investors. Those of you looking for opportunities and believe in the upcoming economic rise, should check out IGT, MGM and similar stocks who are at an all time low with great growth potential of maybe up to hundreds of margins.

For those investors looking for more stable and long term investments, there is no doubt that online casino stocks deliver. The world did indeed change ever since the high-tech bubble burst and it seems that the lessons have been learned, at least in online gambling terms. Online gambling has turned into an optimum investment in terms of delivering for investors, even in these wavy times.

So what's your next wager?