I think Nathan's being a little generous when he says that Station Casinos (NYSE:STN) and Boyd Gaming (NYSE:BYD) "slug it out" in the Las Vegas locals gaming market. Strictly in terms of EBITDA, Station Casinos is more than twice the size of Boyd Gaming in the Las Vegas locals market, and with a much higher-quality portfolio of properties to boot.

In the third quarter, Station Casinos' major Las Vegas operation, excluding Green Valley Ranch, posted an EBITDA margin of 33%, well ahead of the 28% EBITDA margin reported by Boyd's group. Including the 50%-owned Green Valley Ranch would reveal an even greater disparity -- it delivered an exceptional 41% EBITDA margin.

Geographic diversity?
Nathan points to the benefits of Boyd's "geographic diversity." I say, "So what?" In the third quarter, 76% of MGM Mirage's (NYSE:MGM) EBITDA came from the Las Vegas Strip. Do you think MGM Mirage's shareholders are complaining about a lack of geographic diversity? Do you think they are clamoring for a sell-off of Strip assets to relieve the company of its little concentration "problem" in that silly Strip market?

I doubt it.

The fact is that it is far better to be great at one thing than good at a lot of things. And Station Casinos has the Las Vegas locals gaming market locked down cold. If an investor is truly worried about overexposure to a single market, that investor can diversify his or her own portfolio. As I have recommended before, an investor can purchase a basket of top-notch casino operators without having to sacrifice quality. Doing that is better than accepting a mediocre portfolio of assets merely for the sake of diversity.

Cross-market play?
Nathan says that Boyd Gaming has stronger cross-marketing capabilities. I disagree. For one thing, Boyd doesn't even have a linked players' club system; for another, it wouldn't matter much even if it did.

This is the problem with being third best or worse in all of the regional markets. Not only does cross-market play necessitate having a destination your patrons would want to go to, but it also requires having properties in your regional markets that the patrons would actually choose to play in. Harrah's Entertainment (NYSE:HET) has both the top one or two casino operations in nearly every regional gaming market and substantial Las Vegas Strip holdings. What's more is that a Diamond card holder from any Harrah's property automatically has access to the Diamond Lounge, in addition to other VIP privileges, at any Harrah's-owned property in every market he or she visits.

How does Boyd Gaming compare with that? It doesn't.

I see that Boyd is now moving to link its Louisiana properties into a single program. Big whoop. Let's say that Boyd's Sam's Town Shreveport is your regular hangout. When you go down to New Orleans, chances are you are probably not stopping at Boyd's Treasure Chest; if you are going to gamble, you are going straight downtown to Harrah's. And if you go to Lake Charles, you are probably not going to waste your time at Boyd's Delta Downs racetrack; chances are you are going to Pinnacle Entertainment's (NYSE:PNK) L'Auberge du Lac.

And that's assuming you even frequent Sam's Town Shreveport to begin with. Even Nathan -- who happens to live in Shreveport himself -- will admit that when he does gamble, he usually plays at Harrah's Horseshoe Bossier-City or the privately owned Eldorado. Kind of puts a hole in that theory, doesn't it?

Closing thoughts
I am not about to buy either stock at these prices. I will point out, though, that Station Casinos is not as overpriced as Nathan probably thinks it is -- the stock has already passed the $82-per-share buyout price, suggesting at the very least that the market thinks the bid undervalues the company. That said, what this debate is really about is which company you would rather own. And by that standard, there is no question in my mind that Station Casinos better reflects the kind of company that belongs in a Foolish portfolio.

More Foolish reading:

There's more to this duel! Check out the other three arguments, enter your own thoughts at Motley Fool CAPS, and then vote for a winner.

Fool contributor Jeff Hwang owns none of the companies mentioned above.