Outspoken entrepreneur and real-estate mogul Donald Trump is well known for stating that he doesn’t like gambling. Instead, he says he prefers to own the casinos — The Trump Taj Mahal Casino resort, Trump Plaza Hotel and Casino and the Trump Marina Hotel Casino, all in Atlantic City, N.J., to be more precise.#-ad_banner-#

In gambling parlance, I’d say Trump likes being the house. In other words, Trump only likes betting on sure things. 

The house has a distinct edge over the players, because casino games are structured so that, over time, the house always wins. This is true even with the huge jackpots and winning streaks of the lucky gamblers. Almost insidiously, these lucky winners serve as nectar to attract the next wave of losing players in a never-ending cycle. 

It’s no wonder the industry is growing. In my travels, I have noticed a rapid growth of casino openings and other gaming venues around the United States. What was once only present Las Vegas and Atlantic City now seems to be spreading rapidly from city to city. In fact, the industry operated in 22 states in 2011, bringing in about $35.6 billion in gross revenue, according to the American Gaming Association (AGA).

State governments are excited to sanction these businesses, viewing them as a high income tax source. After all, the casino industry pays more in taxes than most industries. In 2011 alone, casinos returned about $7.9 billion to states in the form of taxes, a 4.5% increase in comparison with the previous year, according to AGA.

Although casinos obviously perform better in a growing economy, I consider the industry close to recession-proof. When times are tough, individuals often turn to gambling as a quick way to increase their income. While this is misguided, tough economic times actually push many into gambling in an effort to make more money. Not only this, but going to the local casino can be relatively cheaper when compared to traveling or other forms of entertainment with zero chance of a payoff. Such is the case that in 2011, consumers spent more at casinos than they did on music, movies and outdoor entertainment combined.

Internationally, the gaming picture is even brighter. For instance, in Macao — the Las Vegas of China — casino revenue rocketed 42% in 2011 to an all-time record of $33.5 billion. Remember, if China’s economy is reportedly slowing, then imagine what will happen to the local casino industry when the economy goes back into overdrive.

Clearly, Trump knows a good investment when he sees one — just look at his $2.6 billion real estate empire.

And although it’s simply too expensive for the average investor to own a gaming hall or casino directly — not to mention very risky — there is an investment that provides exposure to this thriving industry that’s easy to buy or sell.

The best way I have found for investors to profit from this industry growth trend is by owning the Market Vector’s Gaming ETF (NYSE: BJK). 

This exchange-traded fund (ETF) originally tracked the S-Network Global Gaming Index. The index is weighted and designed to follow the global gaming industry. But as of Sept. 20, this index was replaced by a proprietary index from the fund’s provider, Van Eck. The new index not only tracks the global casino industry, but branches out into other forms of gaming — sports betting, lottery companies and the technology companies behind the gaming infrastructure.

I like this diversification within the sector because it helps mitigate single-industry risk, which is always a vexing issue. The fund has an expense ratio of 0.65% and yields nearly 2% annually. 

Taking a look at the ETF technically, shares have trended up since August, peaking out at $35 prior to falling back to $33.50, then pushing ahead, forming a double top on the daily chart in the $35 range. The price remains above the 50- and 200-day simple moving averages, but the double top creates strong technical resistance. 

Risks to Consider: Although this ETF is diversified, more than 15% of its assets are in two stocks: Las Vegas Sands (NYSE: LVS) and Wynn Resorts (NYSE: WYNN), both of which have recently traded near or above the critical 200-day simple moving average. Another risk is the potential of political action making gaming illegal in certain jurisdictions, or simply making gambling a state-owned industry. Although it’s unlikely, this remains a possibility in fast-growing China, for example.

Action to Take –> Investors wanting to trade this growing gaming trend should buy on a daily close above $35 with a target price of $40 and stops at $32.