NEW YORK (

TheStreet

) -- Judging by the Altman Z-Score,

casino stocks are nearly all in threat of filing for bankruptcy over the next two years. And while that assessment is definitely worthy of debate, it's enough to make an investor wonder: Is the any safe bet within the gaming sector?

The oddsmakers say: yes. Indeed, slot machine makers like

International Game Technology

(IGT) - Get Report

,

WMS Industries

(WMS) - Get Report

and

Bally Technologies

(BYI)

have all proved to be safer from bankruptcy filings over the past five years than their casino-operator counterparts.

One way to test if a company poses any threat of filing for bankruptcy is through the Altman Z-Score, a formula developed by New York University professor Edward Altman in 1968. The Altman Z-Score measures several aspects of a company's financial health to forecast the probability of it going bankrupt within two years. Since its inception, the formula has been 72% accurate in predicting corporate bankruptcies two years prior from the filing.

>>Bankruptcy Watch: 8 Risky Casino Stocks

On a general basis, companies with a Z-Score higher than 3.0 are considered safe, while those with a score of 1.8 or lower are considered distressed. Anything in between is a gray area -- a push, as it were.

Looking at this metric over a five-year period, it's clear slot machine makers are the safest of the bunch. Bear in mind, however, that the Altman Z-Score is merely a snapshot of a company's financial health, at that moment in time, and does not take into account future growth or deceleration. This means that any potential pullback in replacement spending from casinos, which analysts are forecasting, would not be included in the Z-Score tally.

With that in mind, click below for a look at the bankruptcy risk for slot machine makers...

WMS Industries

WMS Industries

(WMS) - Get Report

is one of the best-positioned companies in the sector, with an Altman Z-Score of 9.99 -- and that score has risen substantially over the past five years.

"We believe WMS's balance sheet gives it the ammunition to make 'strategic tuck-in acquisitions,' buy back stock and make research and development investments to fuel future growth," KeyBanc Capital Markets analyst Dennis Forst wrote in a note last week.

In its fourth quarter, WMS said that it expects higher repurchase activity in fiscal 2011, and its board of directors approved a three-year share repurchase authorization that will allow the company to buy back up to $300 million in shares before Aug. 3, 2013.

WMS is hosting its analyst day today, and analysts are optimistic heading into the meeting. "We believe there could be potential for upside revisions given the initial strength in its Bluebird xD cabinet, as well as the timing of several new market opportunities," J.P. Morgan analyst Joseph Greff wrote in a note.

Greff also expects to see a boost from its Lord of the Rings games, which WMS launched on June 30.

Still, management issued disappointing full-year outlook last month, calling for revenue in the range of $830 million to $850 million, less than analysts' forecast of $852.2 million.

Anticipation of higher costs and weak replacement cycle could ultimately temper the stock going forward.

Bally Technologies

Bally Technologies

(BYI)

Altman Z-Score has recovered significantly over the past five years, and now stands at 5.2 for the trailing 12 months, compared with 1.47 back in 2005.

Bally recently signed a deal with

Penn National Gaming

(PENN) - Get Report

to provide slot-management systems and other services for an Illinois casino and three other properties in development in Ohio and Maryland. Financial terms of the deal were not disclosed.

Another underappreciated catalyst for Bally is the New York Aqueduct Racetrack. Sterne Agee analyst David Bain expects a 10-cent to 16-cent annual benefit once Genting fully ramps up the Aqueduct. A temporary facility should be running within six months, which will have a smaller, but incremental impact.

According to a deal with New York, Bally Technologies will provide the market-share of video lottery terminals and electronic games installed in the state's casinos through December 2017.

Bally issued conservative full-year guidance after reporting its fourth quarter earnings last month, and analysts fully expect the company to, at the very least, meet guidance. Shipments to Italy and Illinois are expected to provide a positive impact toward the end of 2010 and into 2011.

International Game Technology

International Game Technology

(IGT) - Get Report

is the weakest of the bunch, falling within the aforementioned gray area with an Altman Z-Score of 2.03. IGT's score has been falling since last year, when it went from a 5.62 reading in 2008 down to 2.18 in 2009.

While its score might be the lowest of the bunch, its recent win of a Canadian contract should increase its pipeline visibility, which has been a concern.

In its third quarter, IGT saw an increase in profit, aided by a big tax boost, although its domestic operations slumped. As a result, several analysts lowered revenue estimates for the year.

--Written by Jeanine Poggi in New York.

>To contact the writer of this article, click here:

Jeanine Poggi

.

>To follow the writer on Twitter, go to

http://twitter.com/jpoggi

.

>To submit a news tip, send an email to:

tips@thestreet.com

.

RELATED STORIES:

>>Bankruptcy Watch: 8 Risky Casino Stocks

>>Will 'Boardwalk Empire' Revive Atlantic City?