International Game Technology said on Thursday its fiscal third-quarter net earnings rose a greater-than-expected 20 percent, on higher sales of its slot machines and improved results from its own gaming operations.

IGT, like other casino companies and suppliers have benefited from the boom in gambling in recent years, but some investors are concerned that new opportunities may be drying up.

It shares rose $2.30, or 6.1 percent, to $39.66 in morning trade on the New York Stock Exchange. The shares are still down more than 14 percent so far this year.

Net income rose to $136.4 million, or 41 cents a share, up from $114.1 million, or 33 cents a share, a year earlier.

That beat Wall Street expectations of 39 cents per share, on average, according to Reuters Estimates.

Expectations for the quarter, and for IGT overall, had been set too low and earnings power of the company had not been reflected in the consensus, said CIBC World Markets analyst David Katz, who rates the stock a sector outperformer.

The company said third-quarter revenue rose 15 percent to $706.5 million.

Product sales rose 23 percent to $364.6 million, while revenue from the company's own gaming operations rose 9 percent to $341.9 million.

Looking forward, the company forecast earnings slightly below Wall Street estimates for the next few quarters, due to the relatively slow rate of replacement of its equipment in casinos.

The company said it expects earnings of 35 to 40 cents per share for at least the next three quarters, according to IGT's Chief Executive T.J. Matthews, speaking on a conference call with analysts.

Wall Street analysts are expecting earnings per share of 41 cents for the fourth quarter of fiscal 2007, which ends in September, and 40 cents and 42 cents per share respectively for the first two quarters of fiscal 2008. (Reporting by Ayesha Rascoe and Bill Rigby)