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The chart below analyzes the Q4 promotional environment as measured by promotional allowances as a percentage of gross revenues. Not surprisingly, each operator spent a higher percent of gross revenues in giveaways. However, with the exception of the Las Vegas operators, the year over year increases were not as great as I would have expected for the rest.

Despite the awful consumer environment, the regional operators managed to keep promotional expenses in check. The promotional percentage increased 1% or less in Q4 2008 in these markets.

One standout of note is Boyd Gaming. BYD’s promotional percentage barely increased despite operating in everyone’s favorite punching bag market: Las Vegas. The Las Vegas locals market is BYD’s largest. Thanks to a severely capital constrained Station Casinos (the largest play in the LV locals market), the promotional environment remained somewhat tame, despite a pretty dreadful top line performance. We are not so negative on the 2010-and-beyond outlook for the Las Vegas market (See “THE LAS VEGAL LOCALS MACRO MODEL”) due in part to Station’s demise. Imagine if BYD could walk away with some of the Station assets?

The situation is much more dire for the other major Las Vegas market, the Strip. As can be seen in the chart, LVS and WYNN saw their promotional percentage increase significantly. MGM hasn’t reported but we expect to see an increase there as well.