I gotta admit, I still don't get it. It's been more than a month since Landry's Restaurants (NYSE:LNY) announced that it's buying the Golden Nugget casino and hotel, and I am still frankly a bit puzzled by it all.

While I realize that gaming might be in the CEO's blood (members of his family control Station Casinos (NYSE:STN)), I'm a little concerned that Landry's might be buying at or near the top of the market. Then again, Landry's does already have experience in non-restaurant leisure businesses, and considering the results posted for the fourth quarter, maybe it is time for this company to branch out.

Sales for the fourth quarter were up only 2% over last year, and same-store sales were negative for the period. Although there were pockets of good news -- Rainforest Cafe had positive comps for the quarter and the Saltgrass Steak House chain seems to also be doing well -- results and forward guidance were pretty lackluster.

As a quick reminder, Landry's will be paying $295 million for the Golden Nugget ($140 million in cash and $155 million in assumed debt). Given that the company needs to acquire a gaming license to complete the deal, management does not expect the transaction to close until late this year at the earliest.

Honestly, I'd still rather see the company focus more on its existing business. While Joe's Crab Shack is certainly the flagship chain (144 of the company's 297 restaurants), Landry's lists 28 separate dining and leisure concepts on its website. What's more, around one-third of the company's restaurants are located in Texas, and many areas of the country appear underpenetrated.

Despite my skepticism about the Golden Nugget purchase (full disclosure: I can't stand most casinos), it might make a certain amount of sense. Landry's does have a decent history of acquiring struggling concepts and turning them around -- for example, the Rainforest Cafe and Saltgrass businesses. What's more, casinos can generate considerable free cash when they're run properly.

Also, a hotel property in Las Vegas is an interesting opportunity to expand the company's brands (to say nothing of making money from the hotel/casino itself). People travel from all over the world to Vegas, and it's possible that the company could use that opportunity to expose people to the various Landry's restaurant concepts as a means of building brand awareness ahead of new store openings around the country.

Although the company lowered its guidance for 2005 (and consensus estimates have fallen about 15% over the past three months), it's trading at only about 14 times next year's guesstimates. Of course, a company with comparatively lower margins, return on equity, and growth than its peers should trade at some discount.

In any event, investors looking at Landry's have to decide whether to hold 'em or fold 'em.

Fools who see this as a way to diversify the business away from the ultra-competitive and ultra-fickle restaurant trade may want to put some chips on the table. Those looking for more of a pure play on restaurants, though, might be better served by folding their hands and looking in the direction of names such as Cheesecake Factory (NASDAQ:CAKE), Buffalo Wild Wings (NASDAQ:BWLD), or Red Robin (NASDAQ:RRGB).

Fool contributor Stephen Simpson has no ownership interest in any stocks mentioned.