Online gambling for real money was banned in 2011 in the U.S. but a U.S. appeals court overturned the federal law that banned states from offering online gambling within state borders to residents. Since then, the race has been on.

Real-money gambling went live in the U.K. earlier this month as Zynga Inc. (NASDAQ: ZNGA) and partner Bwin.Party Digital Entertainment, which is owned by Boyd Gaming Corp. (NYSE: BYD), launched two real-money games.

The real money in the U.S., of course, is not in Nevada or even more populous New Jersey, but in being able to offer real-money gambling across the country. But Nevada, and its 3 million people, could be a proving ground for other online casino games from Boyd, International Game Technology (NYSE: IGT), Bally Technologies Inc. (NYSE: BYI), and Shuffle Master Inc. (NASDAQ: SHFL), all of which already have been granted Nevada licenses to offer real-money online games and Ceasars Entertainment Corp. (NASDAQ: CZR) and MGM Resorts International Inc. (NYSE: MGM), both of which have also applied.

Of the other contenders, Ceasars is thought to have the inside track with its widely recognized “World Series of Poker” franchise.

This former Portuguese colony is one of the two special administrative regions of the Peoples Republic of China, the other being Hong Kong, which is just 37 miles to the northwest. In 2002, the Macau government ended the former monopoly gambling system and six casino operating concessions were granted.

The gaming analysts at Deutsche Bank A.G. (NYSE: DB) feel that high-speed rail is changing Macau’s visitor profile. The new visitor is more likely to have come from further away, spend a night in a hotel and spend more on shopping. The biggest data point for investors is Macau casinos’ total revenue soared 29.5% in March through Sunday, compared to a year ago. Backing the Deutsche Bank opinion, RBC Capital Markets raised its 2013 revenue growth forecast for Macau casinos to 10.5%, up from 10%.

Given those positive data points and share prices that have fallen as much as 14% from their peaks, the Deutsche Bank team says the time to buy the gaming stocks with exposure to Macau is now. The stocks to buy on their list trade Asian shares on the Hong Kong exchange. Here we focus on the American-traded counterparts. The following are the Macau gaming stocks to buy now.

With more than 1,000 rooms and almost 500 gaming tables in Macau, Wynn Resorts Ltd. (NASDAQ: WYNN) is a top name to buy. The Thomson/First Call price target for this Wall St. favorite is $141.

Based in Hong Kong, Melco Crown Entertainment Ltd. (NASDAQ: MPEL) owns and operates three successful resorts in Macau with more than 600 combined gaming tables. The Wall St. consensus price target for the stock is $24.60.

Long-time Las Vegas operator MGM Resorts International (NYSE: MGM), through its subsidiary MGM China, makes the list of stocks to buy. The consensus estimate for this venerable gambling name is $14.

Another Hong Kong-based gaming company, Galaxy Entertainment Group makes the list of stocks to buy now. Currently only traded on the over-the-counter pink sheets, investors may want to keep an eye on Galaxy to see if it gets Nasdaq listing.

The final name on the list to buy, for investors looking to take advantage of the staggering growth in Macau, is Las Vegas Sands Corp. (NYSE: LVS). This premiere gaming company owns and operates the Venetian Macao Resort Hotel, the Four Seasons Hotel Macao, the Plaza Casino and the Sands Macao and Sands Cotai Central in Macau. This gives it a commanding presence in this high-growth region. It is widely owned by portfolio managers, and the consensus price objective for the stock is $60.

With multiple new ways to quickly travel to this “Las Vegas of China,” more and more visitors will be attracted to Macau. It is important for investors to remember that some of these companies have powerful domestic franchises to complement their Asian properties. Plus the fact remains that the largest part of the revenue stream is from gambling. Never forget the old adage, “They don’t build those big casinos because the house loses.”

For the quarter the casino operator reported an adjusted earnings per share (EPS) loss of $0.31 and $625.8 million in revenues. In the same period a year ago, the company reported an EPS loss of $0.03 on revenue of $606.7 million. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for an EPS loss of $0.13 and $635.37 million in revenue.

On a GAAP basis, Boyd posted a quarterly EPS loss of $10.24, compared with a GAAP net loss of $0.01 in the fourth quarter of 2011. The quarterly loss was mostly due to a $994 million impairment charge on the 87-acre site of Boyd’s planned Echelon development in Las Vegas. The company also announced this morning that it has sold its Echelon site on the Las Vegas Strip to a Malaysian gambling group for $350 million in cash.

For the full year the company reported an adjusted EPS loss of $0.28 on revenues of $2.489 billion. The consensus estimates called for a full-year EPS loss of $0.11 on revenues of $2.5 billion.

The company’s CEO said:

Our highest priority is strengthening our balance sheet. The sale of the Echelon site is another important step in the ongoing effort to improve our long-term financial position. While we remain committed to the Las Vegas market, we determined that developing a large-scale project on the Las Vegas Strip was not consistent with our current strategy.

Boyd was a bit coy about its current strategy, saying only that the company remains focused on its core business, integrating some recently acquired assets, and “finding new ways to drive revenue and EBITDA growth throughout the business.” Funny thing is the company did not mention the recent approval of online gambling in both Nevada and New Jersey. Boyd has a stake in a joint venture to create online gaming software, and given the poor performance the company announced this morning, one might expect a little hype about how big online gaming could be.

The company offered no guidance, but the consensus estimate for the first quarter calls for EPS of $0.21 on revenues of $758.25 million. For the year, the consensus EPS estimate is $0.45 on revenues of $2.99 billion.

Shares are trading up more than 3% in the premarket this morning, at $6.67 in a 52-week range of $4.75 to $8.52. Thomson Reuters had a consensus analyst price target of around $6.20 before today’s results were announced.

Shares of Zynga Inc. (NASDAQ: ZNGA) are reacting well to the Nevada law, but other gambling technology stocks, like International Game Technology (NYSE: IGT), Bally Technologies Inc. (NYSE: BYI), Boyd Gaming Corp. (NYSE: BYD), WMS Industries Inc. (NYSE: WMS), and Shuffle Master Inc. (NASDAQ: SHFL), aren’t getting the message.

Bally, IGT and Shuffle Master have received licenses to operate online gambling in Nevada, and Zynga filed an application for a license in December. The biggest payday could come for Zynga and the others if they can pair up with the big casino operators, most of which have come around to support online gambling over the past couple of years.

Shares of Zynga are up about 4.6% today at $3.10 in a 52-week range of $2.09 to $15.91.

A news release on Business Wire was issued by Kazuo Okada today saying that he remains determined to fight Steve Wynn’s involuntary redemption of his nearly 20% stake in Wynn Resorts at what is called a 30% discount. If this sort of fight was taking place anywhere else it might be covered significantly more in the media. With Okada’s resignation from the board of directors this is sure to be one of the more strange fights among corporate insiders that we have seen.

Mr. Okada said at one point in his release,

“Mr. Wynn continues to engineer a scenario where there is no longer any reason for me to continue to serve on a Board of Directors that, at his direction and insistence, undermines me at every turn, seems to act on Mr. Wynn’s every whim, and impedes my ability to serve as an independent voice for Wynn Resorts shareholders. I have also heard that there have been incredible cover ups by Mr. Wynn where he, in conspiracy with former employees, manipulated the media and made requests for cooperation in the Philippines.”

Here is the full press release.

Wynn Resorts is down less than 1% today at $115.67 against a 52-week range of $90.11 to $138.28 and its market cap is more than $11.5 billion. A stake of 20% here is substantial. Sometimes news is so strange that it almost sounds made up, but this is the sort of news that is too strange to make up.

The acquisition price represents a 45% premium to Ameristar’s average closing price for the 90 days ended yesterday. Pinnacle expects the deal to close by the end of the third quarter of 2013, pending approval from Ameristar shareholders and regulatory agencies.

Ameristar’s owns eight casinos in the six states, including one in Jackpot, Nevada, while Pinnacle owns seven casinos in three states and a racetrack in Ohio. Pinnacle is also a partner in developing the first casino in Vietnam.

Pinnacle’s CEO said:

We believe the transaction represents a uniquely attractive opportunity for Pinnacle and its shareholders given the significantly improved geographic and operational diversification of the combined portfolios. In addition, we believe there is considerable opportunity to expand reach and generate synergies and efficiencies of scale from the increased size of the combined company, as well as an opportunity to drive property margin expansion by applying best practices garnered from both Pinnacle and Ameristar across the combined enterprise.

Shares of Ameristar are up 19.9% this morning, at $26.40 after posting a new 52-week high of $26.59 earlier. The prior 52-week range was $15.04 to $23.47.

Pinnacle’s shares are up 13.7% at $15.18 after putting up a new 52-week high of $15.40 earlier. The prior range was $8.89 to $13.73.

Paul Ausick

Shares of other casino owner-operators are also up on the news, with Las Vegas Sands Corp. (NYSE: LVS) up 4.3%, Melco Crown Entertainment Ltd. (NASDAQ: MPEL) up 2.1%, Wynn Resorts Ltd. (NASDAQ: WYNN) up about 1%, and Ameristar Casinos Inc. (NASDAQ: ASCA) up 13.3%.

Penn intends to put 17 casinos of its 29 total casinos and racetracks into the REIT and expects the new company to receive about $450 million annually in rent from the casino operations company.

Penn’s CEO said:

This proposed transaction would be transformational for Penn National and its shareholders and presents a direct path toward unlocking the tremendous value of our real estate asset portfolio. Our plan is to create two well capitalized companies with strong free cash flow that are positioned for growth in the gaming and REIT sectors.

Investors expect other casino owners to follow suit because the REIT structure does not require the company to pay federal taxes, thereby unlocking the value of the underlying real estate and boosting investor returns through the requirement that a REIT distribute at least 90% of taxable earnings as dividends.

Penn has also announced plans to bid for the right to build a casino in Philadelphia. The proposed property is estimated to cost the company $480 million if Penn is the winning bidder.

Penn’s shares are up nearly 30% at $48.77 after posting a new 52-week high of $50.50 earlier today. The previous range was $33.62 to $46.55.

Paul Ausick

On a GAAP basis, Wynn reported EPS of $1.11, compared with $1.01 in the same period a year ago.

Wynn declared a cash dividend of $8 a share today, which includes the usual $0.50 a share quarterly dividend. The special dividend will be payable on November 20th to shareholders of record on November 7th. The stock will begin to trade ex-dividend on November 5th.

The company’s Macau operations posted net revenues of $910.5 million in the quarter, down 4.3% from the same period a year ago. Turnover in the company’s VIP table games segment was down 12.1% from a year ago, while the mass market table games segment rose 8.3% year-over-year. Slot machine handle fell 13.2% in Macau.

In Las Vegas, net revenues totaled $388 million, up 11.8% from the same period a year ago. Casino revenues rose to $155.6 million, up 22.6% year-over-year, slot machine handle rose 7.4%, and non-casino revenues rose 5.3% year-over-year.

The drop in Macau revenues is the result of visa restrictions imposed by the Chinese government and a government-mandated lowered spending limit on credit cards. It hit Macau’s VIP segment especially hard: table games turnover fell 12.1% year-over-year from $31.4 billion in 2011 to $27.6 billion this year.

But that cash dividend makes up for a lot of problems.

Wynn’s shares are up nearly 3% in after-hours trading, at $112.29, in a 52-week range of $90.11 to $142.20. The consensus target price for the shares was around $132.20 before today’s report.

Paul Ausick

Kazuo Okada is a founder and member of the board of directors of Wynn Resorts and collectively owns 24,549,222 shares of Wynn’s common stock.  This represents some 19.6% of the outstanding shares.

Okada is talking up the 30% decline in share prices along with a loss of confidence with Steve Wynn’s personal financial and control goals. It noted a questionable $135 million donation it made to a public university in Macau while Wynn was seeking local government approval to open a casino, and it noted that the donation is currently under investigation and has brought on lawsuits against the company.

Mr. Okada has gone on to say that Wynn Resorts has attempted to silence his influence, has raised serious questions of corporate governance, and more. The two nominees are Professor Jonathan R. Macey and Mr. Fredric G. Reynolds, both of whom have served on public company boards of directors.

Wynn Resorts shares are still trading around $112.50 against a 52-week range of $90.11 to $161.33. Rival casino Las Vegas Sands Corp. (NYSE: LVS) trades around $46.60 and its 52-week range is $34.72 to $62.09.

Wynn shares are down about 30% from its 52-week high and Las Vegas Sands is down about 25% from its 52-week high.

FULL LETTER VIA SEC FILING

JON C. OGG

So far four companies, including Bally, IGT and Shuffle Master have received licenses to operate online gambling in Nevada. Today Bally was upgraded to Buy at Brean Murray, not least based on the company’s positioning in what many believe will be a $5 billion online gambling industry by 2015.

Why then did short interest in Bally jump nearly 40% in the two weeks to August 15? The company beat earnings and revenue estimates in its latest quarter and the target price remains about 25% higher than the current share price. And what about short interest on the other gambling technology companies? Here’s a quick look.

As noted earlier, Bally’s short interest rose 40% to 6 million shares, and 14.2% of the company’s float is now short.

Short interest in Boyd Gaming fell 1.7% to 10.5 million shares, or 19% of the company’s float.

IGT’s short interest fell 6.4% to 14.7 million shares, or 5.5% of the float.

Short interest in WMS rose 7.2% to 6.4 million shares, or 11.8% of the company’s float.

Shuffle Master’s short interest fell 15.7% to 2.25 million shares, or 4.7% of the company’s float.

Short interest in Zynga fell 39% to 19.3 million shares, or 12.2% of the company’s float.

Zynga aside, only three of these companies trade more than 1 million shares daily on a 3-month average: IGT, WMS and Boyd. Short interest in all but two — IGT and Shuffle Master — is around 12% or more.

There are a couple of possibilities for Bally’s stock. One is that a short squeeze could push the shares higher, although based on today’s price movement that might not be in the cards. Another is that fragmented, state-by-state application of online gambling will encourage competition from small companies that do not need large profits to succeed.

In other words, Bally, IGT, Zynga and the rest need federally-approved, nationwide gambling to make reasonable profits. Chances of that happening before the next Congress are pretty slim. Thus, being short on gaming technology stocks makes sense.

Bally’s shares are down 0.4% this morning, at $44.35 in a 52-week range of $24.74 t o$49.32. Thomson Reuters has a consensus target price for the stock of $54.08.

Paul Ausick