(MONEY Magazine) – State budgets have seen better days. In the most recent fiscal year, estimated state budget shortfalls totaled close to $75 billion, according to the Center on Budget and Policy Priorities. But that's good news for International Game Technology (IGT), the world's leading manufacturer of slot machines. Why?

Faced with budget squeezes in the past, states have often expanded or legalized gaming, two moves constituents typically find more palatable than, say, raising taxes. And state legislators seem to be increasingly picking those options this time around. New York recently voted to allow slot machines at racetracks; voters in Arizona approved adding as many as 5,000 machines to the state's casinos; and Pennsylvania is expected to pass a bill to permit gambling in the state.

The boost to IGT, which controls roughly 70% of the domestic slot machine market, could be significant. Selling an additional 20,000 machines--Pennsylvania alone could order that many--would fatten IGT's bottom line by 15%, figures analyst Todd Griesbach of Liberty Acorn funds, which owns IGT shares. IGT, which recently started paying a dividend, should earn 15% a year through 2008. However, value investors may want to wait for a dip. At $25, IGT trades at an inflated 23 times estimated 2003 earnings. --A.C.