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Despite recent management assertions to the contrary, we believe the big slot expansion at Sands Bethlehem will be delayed past year end.

Everyone knows that the retail and hotel portion of Sands Bethlehem is being mothballed until both economic and liquidity conditions improve. However, we have now confirmed that LVS will only "modestly" increase its slots at Bethlehem by 250 units instead of the 2,000 units commonly expected (by the sell side).  We've also seen incorrect sell side projections of almost 3,000 units shipping into PA in 2010, despite the fact that only one of the two Philadelphia projects has even broken ground and the other still hasn't nailed down a site.  But we're used to the sell side being wrong.

Back to Sands Bethlehem, the property appears to be promoting very aggressively to increase visitation to the property, especially midweek.  Our EBITDA estimate for Bethlehem is $22MM in 2009 and $38MM in 2010 (vs the Street close to $70MM).  Unless there is a miraculous economic recovery, it could take at least three years for the property to reach mature margins approaching 20%.  The Street consensus numbers suggest Sands hitting 19% margins after just 2 full quarters of operations.  Pipe dream.  As a reminder, when you include the fees payable to PA, the real tax rate is close to 60%.  According to another PA operator, there is no way that labor will be less than 10% of revenues, and then one has marketing and all the other costs to consider.  That same competitor allocates 4-5% of gaming dollars to marketing, but given that Sands' property is brand new, its spending on marketing is materially above that percentage.

LVS is still all Macau, all the time, and that is certainly our focus.  The Bethlehem situation is only marginally negative for LVS and the slot manufacturers.