Hilton, Caesars place their chips on gambling's rising popularity.

Casino gambling is on a roll and two local companies are poised to cash in on one industry that is probably in better shape coming out of the recession than it was going in.

Industry giants Hilton Hotels Corp. and Caesars World Inc. are both expanding their gambling operations with ambitious plans, including a joint $2 billion proposed project in Chicago. And both boast of significant increases in revenues from casino operations over recent years, a trend that industry analysts expect to continue as more states consider legalized gambling.

"It's big business and is getting bigger because there seems to be a decline in the puritan ethic that argued against gambling," said Carol Palmer, an industry analyst with Duff & Phelps in New York. "More people and states are becoming interested in it as a source of revenue and the population is getting older, which means there are more older people with more leisure time."

Observed David Leibowitz, senior vice president and industry analyst with American Securities in New York, "The gaming industry is expected to show significant growth throughout the decade and Caesars and Hilton are thought of as two of the more important players in the industry."

Revenues declined slightly in its last reporting quarter, but Century City-based Caesars has recorded an 8.5 percent increase in annual casino revenues to $729.9 million in fiscal 1992 ended July 31 from $673.1 million in fiscal 1990. In the same period, total revenues grew to $928.4 million from $870.2 million.

During roughly the same period, Hilton's revenues from casino operations increased from about 50 percent of the company's sales to roughly two-thirds of its total annual revenues that were $1.1 billion in calendar 1991. For the first nine months of this year, $557.6 million of the Beverly Hills-based company's $894.1 million in revenues came from casino operations.

Both companies' casino operations have increased as their hotel divisions have struggled through one of the industry's worst periods ever. At Caesars, for instance, hotel revenues were $106 million in fiscal 1990, $97.5 million in 1991 and $100.5 million in 1992.

However, investors see a bright future for casino operators and both companies' stock has performed fairly well during the recession. Currently, Hilton stock is trading in the $45 range compared to a 52-week high of $53.25 a share and a $34.25 low. Caesars' stock, which is also traded on the New York Stock Exchange, is near its 52-week high of over $41 compared to a 52-week low of $25.

Investment advisers generally have issued a buy or hold recommendation for both companies' stock, meaning that shareholders should keep rather than sell their issues.

The companies have survived the recession in good shape because gambling is a growing industry, analysts said. At Hilton, for instance, the take from casino operations increased 25 percent in the first quarter of this year, 49 percent in the second quarter and 41 percent in the third quarter.

"Gaming has become an accepted form of entertainment and, while other destinations have suffered, Las Vegas and other gambling destinations have done well," said Marc Grossman, a spokesman for Hilton's gambling division.

"I wouldn't say that gambling is a recession-proof business but people want excitement and the industry has grown up tremendously over the years to appeal to more people. Casinos are no longer dark places, they are now entertainment centers," he said.

In addition to the appeal of gambling to individuals, an increasing number of states are looking at legalized wagering as a source of new revenues.

In recent years, gambling on Indian reservations has been legalized in Wisconsin, Connecticut and Minnesota, and riverboat gambling is now permitted in Louisiana, Missouri and Illinois.

In several states, proponents are lobbying state legislators to allow casino gambling. The most notable current debate is to permit casino gambling in Chicago.

If the Illinois state legislature allows casino gambling, Caesars and Hilton are ready to build a $2 billion gaming and entertainment complex in Chicago. The two companies have teamed with another casino operator, Circus Circus Enterprises Inc., in plans to build a three-million-square foot facility.

In the United States, Hilton is also planning to build a $40 million riverboat in New Orleans that will feature gambling on the Mississippi River. Late last month, Hilton announced that it had been selected by the government of Uruguay to develop a $75 million, 300-room casino hotel in the resort city of Punta del Este.

Today, Hilton has five hotel-casinos in Nevada, as well as gaming halls in Australia and Turkey. The company has plans for additional casinos in New Zealand and Egypt, as well as a second facility in Australia. Hilton has also expressed a continued desire to enter the casino market in Atlantic City, N.J.

Caesars currently has casino operations in Nevada and in Atlantic City and was recently selected to build a $20 million gaming facility on the Agua Caliente Indian reservation near Palm Springs. Caesars is also considering casino operations in New Orleans and several other sites in the United States and overseas, said company spokesman James Leone.