With its 3,909 slot machines in bars, restaurants and roadside stores across Nevada,

Jackpot Enterprises

(J)

knows a lot about betting.

On Wednesday, the company placed a big wager on its future, tying itself to the Internet, and investors won a bonanza.

Jackpot's stock soared 7 points, or 49.6%, to 21 1/8 Wednesday after the company pulled a complete about-face, changing its name to

J Net Enterprises

. It said it plans to become a so-called Internet incubator, following the increasingly popular path plowed by companies like

CMGI

(CMGI)

, which serves as a sort of mothership for small Internet start-ups.

As for all those slot machines, the company said it was exploring "strategic alternatives," which would presumably include the sale of this business.

The turnaround drew bemusement and befuddlement from Wall Street analysts, but investors poured money into the largely unknown venture all day long.

The company's shares trade on the

New York Stock Exchange

, but not a single Wall Street firm maintains a rating on the stock, and the stock has hovered between 7 and 14 for the last five years.

During that time, the slot-machine business has been steady, but opportunities for growth have been few. With the economy roaring, states have stopped legalizing new forms of gambling, and the industry has counted on consolidation to win Wall Street's approval.

For Jackpot, even that fell through last summer when

Harrah's Entertainment

(HET)

outbid Jackpot's $8.25-a-share offer to buy the casino chain

Players International

(PLAY) - Get Report

. Lucky for Jackpot, though, Players was forced to pay the slot-machine company $13.5 million to break the deal and accept Harrah's offer, according to filings with the

Securities and Exchange Commission

.

Two major Jackpot shareholders, Alan J. Hirschfield, and Allen R. Tessler, the company's chairman, took a look at the balance sheet after that payday. The company had more than $65 million in cash and no debt, but still not a single growth opportunity.

So Hirschfield, who ran

Columbia Pictures

and

20th Century Fox

in the 1970s, and Tessler, the former co-chairman of

Data Broadcasting Corporation

, both 63 years old, decided to leave a stable business and enter one of the most risky.

The two men recruited Todd Meister, 29 and Keith Meister, 27, Harvard graduates whose

Meister Brothers Investments

firm has a stake in nine Internet companies with names like

Cyberbills

and

UReach

. The Meisters were made co-presidents, and the newly restyled J Net acquired a controlling stake in their company. Meanwhile, J Net bought 35% of

Digital Boardwalk Alliance

, an Internet technology developer.

To top it off, Jackpot's chief executive, Don R. Kornstein, stepped aside to allow Mr. Tessler to become chief executive.

All of this (not to mention plans for a $100 million fund called

J Net Ventures I

) was announced Wednesday, leaving Wall Street analysts scratching their heads.

"I didn't know they could spell incubator in Las Vegas," said one entertainment industry analyst, speaking on condition that he would not be identified.

The company said it won't make a decision on its slot-machines business for at least six months. Dennis Forst, who covers the gaming industry for

McDonald Investments

, said maintaining slot machines is "not a growth business, but there are people who will buy those assets." The company's biggest competitor is

Alliance Gaming

.

Several analysts said they had no idea what to make of Jackpot's move onto the Internet.

"There's so much demand out there and there's so much cash that I think many companies want to jump on the bandwagon," said Safa Rashtchy, an Internet analyst for

U.S. Bancorp Piper Jaffray

. "But you really have to see what expertise they bring in that will make them a better incubator than everyone else, not just having the cash."