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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Century Casinos, Inc.    CNTY

CENTURY CASINOS, INC.

(CNTY)
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CENTURY CASINOS // Management Discussion and Analysis of Financial Condition and Results of Operations (form 10 Q : CENTURY CASINOS INC /CO/ Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

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08/08/2018 | 06:12am EDT

Forward-Looking Statements, Business Environment and Risk Factors


This quarterly report on Form 10-Q contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the Private Securities Litigation Reform Act of 1995. In addition, Century
Casinos, Inc. (together with its subsidiaries, the "Company") may make other
written and oral communications from time to time that contain such statements.
Forward-looking statements include statements as to industry trends and future
expectations of the Company and other matters that do not relate strictly to
historical facts and are based on certain assumptions by management at the time
such statements are made. These statements are often identified by the use of
words such as "may," "will," "expect," "believe," "anticipate," "intend,"
"could," "estimate," or "continue," and similar expressions or variations. These
statements are based on the beliefs and assumptions of the management of the
Company based on information currently available to management. Such
forward-looking statements are subject to risks, uncertainties and other factors
that could cause actual results to differ materially from future results
expressed or implied by such forward-looking statements. Important factors that
could cause actual results to differ materially from the forward-looking
statements include, among others, the risks described in the section entitled
"Risk Factors" under Item 1A in our Annual Report on Form 10-K for the year
ended December 31, 2017. We caution the reader to carefully consider such
factors. Furthermore, such forward-looking statements speak only as of the date
on which such statements are made. We undertake no obligation to update any
forward-looking statements to reflect events or circumstances after the date of
such statements.



References in this item to "we," "our," or "us" are to the Company and its
subsidiaries on a consolidated basis unless the context otherwise requires. The
term "USD" refers to US dollars, the term "CAD" refers to Canadian dollars, the
term "PLN" refers to Polish zloty and the term "GBP" refers to British pounds.
Certain terms used in this Item 2 without definition are defined in Item 1.



Amounts presented in this Item 2 are rounded. As such, rounding differences could occur in period over period changes and percentages reported throughout this Item 2.




EXECUTIVE OVERVIEW



Overview

Since our inception in 1992, we have been primarily engaged in developing and
operating gaming establishments and related lodging, restaurant and
entertainment facilities. Our primary source of revenue is from the net proceeds
of our gaming machines and tables, with ancillary revenue generated from hotel,
restaurant, horse racing (including off-track betting), bowling and
entertainment facilities that are in most instances a part of the casinos.



We view each property as a separate operating segment and aggregate all such
properties into three reportable segments based on the geographical locations in
which our casinos operate: Canada, United States and Poland. We have additional
business activities including our casino in Bath, England; concession,
management and consulting agreements; and certain other corporate and management
operations that we report as Corporate and Other.



                                       34

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The table below provides information about the aggregation of the Company's operating segments into reportable segments:





Reportable Segment  Operating Segment
Canada              Century Casino & Hotel - Edmonton
CanadaCentury Casino Calgary
Canada              Century Downs Racetrack and Casino
Canada              Century Bets!
Canada              Century Casino St. Albert
Canada              Century Mile Racetrack and Casino
United StatesCentury Casino & Hotel - Central CityUnited StatesCentury Casino & Hotel - Cripple CreekPoland              Casinos Poland
Corporate and Other Cruise Ships & Other
Corporate and Other Century Casino Bath
Corporate and Other Corporate Other




The following operating segments are owned, operated and managed by us through wholly-owned subsidiaries:

· The Century Casino & Hotel in Edmonton, Alberta, Canada;

· The Century Casino St. Albert in Edmonton, Alberta, Canada;

· The Century Casino Calgary, Alberta, Canada;

· The Century Casino & Hotel in Central City, Colorado;

· The Century Casino & Hotel in Cripple Creek, Colorado; and

· The Century Casino Bath in Bath, England

The casino at CCB opened in May 2018 with 56 slot and electronic roulette machines and 13 table games.

We have controlling financial interests through our subsidiary CRM in the following operating segments:

· We have a 66.6% ownership interest in CPL and we consolidate CPL as a

majority-owned subsidiary for which we have a controlling financial interest.

Polish Airports owns the remaining 33.3% of CPL. We account for and report the

33.3% Polish Airports ownership interest as a non-controlling financial

interest. CPL has been in operation since 1989 and, as of June 30, 2018, owned

licenses for seven casinos throughout Poland, five of which were operating.

CPL was awarded a license for an eighth casino in July 2018. As of June 30,

2018, CPL operated a total of 305 slot machines and 87 tables. The following

    table summarizes the Polish cities in which CPL operated casinos as of June 30,
    2018.





City            Location                 License Expiration Number of Slots Number of Tables
Warsaw          Marriott Hotel           September 2022           70               27
Warsaw          Hilton Hotel             April 2019               70               24
Bielsko-Biala   Hotel President          October 2023             35               5
Katowice        Park Inn by Radisson     October 2023             60               14
Wroclaw         Double Tree Hilton Hotel November 2023            70               17




Casino licenses are granted for six years. When a casino license expires, the
Polish Minister of Finance notifies the public of its availability, and
interested parties can submit an application for the casino license. Following
approval of a casino license by the Minister of Finance, there is a period in
which applicants can appeal the decision. In October 2017, we were awarded
casino licenses expiring in 2023 for the Polish cities of Katowice and Wroclaw.
The Wroclaw casino opened in April 2018 and the Katowice casino opened in May
2018. In June 2018, we were awarded casino licenses expiring in 2024 for the
Polish cities of Krakow and Lodz. The Krakow casino reopened in July 2018 with
60 slot machines and 7 table games, and the Lodz casino is expected to open in
August 2018 with 60 slot machines and 7 table games. In addition to these
licenses, in July 2018 we were awarded a third casino license in Warsaw (our
second license at the Marriott Hotel). We expect to open this casino in January
2019. CPL was not awarded new licenses for the casinos in Plock and Poznan,
which closed in February 2018 and April 2018, respectively.

                                       35

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· We have a 75% ownership interest in CDR and we consolidate CDR as a

majority-owned subsidiary for which we have a controlling financial interest.

We account for and report the remaining 25% ownership interest in CDR as a

non-controlling financial interest. CDR operates Century Downs Racetrack and

Casino, a REC in Balzac, a north metropolitan area of Calgary, Alberta, Canada.

CDR is the only horse race track in the Calgary area and is located less than

one-mile north of the city limits of Calgary and 4.5 miles from the Calgary

    International Airport.



· We have a 75% ownership interest in CBS and we consolidate CBS as a

majority-owned subsidiary for which we have a controlling financial interest.

RMTC owns the remaining 25% of CBS. We account for and report the 25% ownership

interest of RMTC in CBS as a non-controlling financial interest. CBS operates

the pari-mutuel network, consisting of the sourcing of common pool pari-mutuel

    wagering content and live video to off-track betting parlors throughout
    southern Alberta.



The following agreements make up the operating segment Cruise Ships & Other in the Corporate and Other reportable segment:

· As of June 30, 2018, we operated 13 ship-based casinos through concession

agreements with four cruise ship owners. The following table summarizes the

cruise lines and the associated ships on which we operated ship-based casinos

    as of June 30, 2018.




          Cruise Line      Ship          Number of Slots Number of Tables
          TUI Cruises      Mein Schiff 2       17               -
          TUI Cruises      Mein Schiff 3       20               1
          TUI Cruises      Mein Schiff 4       17               1
          TUI Cruises      Mein Schiff 5       17               1
          TUI Cruises      Mein Schiff 6       17               1
          Windstar Cruises Wind Surf           27               4
          Windstar Cruises Wind Star           11               2
          Windstar Cruises Wind Spirit         12               2
          Windstar Cruises Star Pride          11               2
          Windstar Cruises Star Breeze         11               2
          Windstar Cruises Star Legend         12               2
          Thomson Cruises  TUI Discovery       17               3
          Diamond Cruise   Glory Sea           28               17



The concession agreement to operate the ship-based casino onboard the Mein Schiff 1 ended in April 2018 when the vessel was transferred to another cruise line.




In March 2015, in connection with an agreement with Norwegian to terminate our
concession agreements with Oceania and Regent, we entered into a two-year
consulting agreement with Norwegian that became effective on June 1, 2015. Under
the consulting agreement, we provided limited consulting services for the
ship-based casinos of Oceania and Regent in exchange for receiving a consulting
fee of $2.0 million payable $250,000 per quarter through May 2017.



· Through our subsidiary CRM, we have a 7.5% ownership interest in MCE and we

report our ownership interest using the cost method of accounting. MCE has an

exclusive concession agreement with Instituto Provincial de Juegos y Casinos to

lease slot machines and provide related services to Casino de Mendoza, a casino

located in Mendoza, Argentina and owned by the Province of Mendoza. MCE may

also pursue other gaming opportunities. CRM has appointed one director to MCE's

board of directors and had a three-year option through October 2017 to purchase

up to 50% of the shares of MCE, which we did not exercise. In addition, CRM and

MCE have entered into a consulting services agreement pursuant to which CRM

provides advice on casino matters and receives a service fee consisting of a

fixed fee plus a percentage of MCE's EBITDA.

                                          36


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· On April 25, 2018, our subsidiary, CRM, purchased a 51% ownership interest in

GHL. The remaining 49% of GHL is owned by unaffiliated shareholders and is

reported as a non-controlling financial interest. GHL entered into an agreement

with MCL and its owners, pursuant to which GHL purchased an initial 6.36%

ownership interest in MCL for a total consideration of $0.4 million and agreed

to purchase an additional ownership interest in MCL up to a total of 51% of MCL

over a three-year period for approximately $3.6 million. GHL has the option to

purchase an additional 19% ownership interest in MCL for a total of 70% of MCL

    under certain conditions.




MCL is the owner of a small hotel and international entertainment and gaming
club in the Cao Bang province of Vietnam that is 300 feet from the Vietnamese -
Chinese border station. The hotel offers 30 rooms, and the international
entertainment and gaming club currently offers seven electronic table games for
non-Vietnamese passport holders under a provincial investment certificate that
allows for up to 26 electronic table games. Under the agreement, the parties
agreed to use certain funds for the renovation and expansion of the
facility. GHL and MCL also entered into a management agreement, which provides
that GHL will manage the operations at the hotel and international entertainment
and gaming club in exchange for receiving a portion of MCL's net profit. The
Company will account for GHL's interest in MCL as an equity investment. GHL is
included in the Corporate and Other reportable segment. See Note 3 for
additional information related to GHL and MCL.





Additional Projects Under Development




In September 2016, we were selected by HRA as the successful applicant to own,
build and operate a horse racing facility in the Edmonton market area, which we
are planning to operate as Century Mile Racetrack and Casino. In March 2017, we
received approval for the Century Mile project from the AGLC. Century Mile will
be a one-mile horse racetrack and a multi-level REC. The project is located on
Edmonton International Airport land close to the city of Leduc, south of
Edmonton. We began construction on the Century Mile project in July 2017. We
estimate this project will cost approximately CAD 60.0 million ($45.6 million
based on the exchange rate in effect as of June 30, 2018) and that it will be
completed in early 2019. We will finance the project with $25.0 million of the
$34.4 million received from the common stock offering we completed in November
2017, of which $14.1 million has been used as of June 30, 2018. The balance of
the Century Mile project will be financed through an increase in our borrowing
capacity under the BMO Credit Agreement or with available cash. On May 4, 2018,
we were approved to increase the borrowing capacity on our BMO Credit Agreement
by CAD 35.0 million ($26.6 million based on the exchange rate in effect on June
30, 2018) for the Century Mile project. We expect the amended BMO Credit
Agreement to be finalized in the third quarter of 2018.



In August 2017, we announced that, together with the owner of the Hamilton
Princess Hotel & Beach Club in Hamilton, Bermuda, we had submitted a license
application to the Bermudan government for a casino at the Hamilton Princess
Hotel & Beach Club. The casino will feature approximately 200 slot machines, 17
live table games, one or more electronic table games and a high limit area and
salon privé. In September 2017, the Bermuda Casino Gaming Commission granted a
provisional casino gaming license, which is subject to certain conditions and
approvals including the adoption of certain rules and regulations by the
Parliament of Bermuda. CRM entered into a long-term management agreement with
the owner of the hotel to manage the operations of the casino and receive a
management fee if the license is awarded. CRM will also provide a $5.0 million
loan for the purchase of casino equipment if the license is awarded.



We are exploring an expansion at Century Casino & Hotel Cripple Creek to provide additional hotel rooms for our existing casino and hotel. We estimate this project, if undertaken, will cost approximately $6.5 million.

                                       37

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Presentation of Foreign Currency Amounts - The average exchange rates to the
U.S. dollar used to translate balances during each reported period are as
follows:









                    For the three months                   For the six months
                       ended June 30,                        ended June 30,
Average Rates        2018          2017      % Change      2018         2017      % Change
Canadian dollar      1.2912        1.3451                  1.2778       1.3343
(CAD)                                            4.0%                                 4.2%
Euros (EUR)          0.8393        0.9096        7.7%      0.8264       0.9240       10.6%
Polish zloty         3.5769        3.8354                  3.4881       3.9459
(PLN)                                            6.7%                                11.6%
British pound        0.7353        0.7822                  0.7270       0.7947
(GBP)                                            6.0%                                 8.5%
Source: Pacific
Exchange Rate
Service



We recognize in our statement of earnings foreign currency transaction gains or
losses resulting from the translation of casino operations and other
transactions that are denominated in a currency other than U.S. dollars. Our
casinos in Canada and Poland represent a significant portion of our business,
and the revenue generated and expenses incurred by these operations are
generally denominated in Canadian dollars and Polish zloty. A decrease in the
value of these currencies in relation to the value of the U.S. dollar would
decrease the earnings from our foreign operations when translated into U.S.
dollars. An increase in the value of these currencies in relation to the value
of the U.S. dollar would increase the earnings from our foreign operations when
translated into U.S. dollars.



                                       38
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DISCUSSION OF RESULTS

Century Casinos, Inc. and Subsidiaries










                             For the three months                              For the six months
                                ended June 30,                      %            ended June 30,                      %
Amounts in thousands           2018         2017       Change     Change        2018         2017       Change     Change
Gaming Revenue             $  32,605$  33,412$   (807)     (2.4%)   $  66,612$  65,900$    712       1.1%
Hotel Revenue                    505          494          11       2.2%          959          932          27       2.9%
Food and Beverage
Revenue                        3,781        3,413         368      10.8%        7,340        6,754         586       8.7%
Other Revenue                  2,757        2,582         175       6.8%        5,359        5,156         203       3.9%
Total Operating Revenue       39,648       39,901        (253)     (0.6%)      80,270       78,742       1,528       1.9%
Less Promotional
Allowances (1)                      -      (2,571)     (2,571)   (100.0%)            -      (5,013)     (5,013)   (100.0%)
Net Operating Revenue         39,648       37,330       2,318       6.2%       80,270       73,729       6,541       8.9%
Gaming Expenses              (16,435)     (16,056)        379       2.4%      (34,176)     (31,702)      2,474       7.8%
Hotel Expenses                  (180)        (154)         26      16.9%         (354)        (297)         57      19.2%
Food and Beverage
Expenses                      (3,924)      (3,099)        825      26.6%       (7,560)      (6,065)      1,495      24.6%
General and
Administrative Expenses      (15,942)     (12,362)      3,580      29.0%      (29,607)     (23,429)      6,178      26.4%
Total Operating Costs
and Expenses                 (38,651)     (33,689)      4,962      14.7%      (76,020)     (65,596)     10,424      15.9%
Losses from Equity
Investment                        (1)            -         (1)   (100.0%)          (1)            -         (1)   (100.0%)

Earnings from Operations 996 3,641 (2,645) (72.6%)

     4,249        8,133      (3,884)    (47.8%)
Non-Controlling Interest         220         (368)       (588)   (159.8%)        (174)      (1,008)       (834)    (82.7%)
Net Earnings
Attributable to Century
Casinos, Inc.
Shareholders                     317        1,802      (1,485)    (82.4%)  

1,244 3,962 (2,718) (68.6%) Adjusted EBITDA (2) $ 4,661$ 6,412$ (1,751) (27.3%) $ 11,226$ 13,131$ (1,905) (14.5%)

Earnings Per Share
Attributable to Century
Casinos, Inc.
Shareholders
Basic Earnings Per Share   $    0.01$    0.07$  (0.06)    (85.7%)  
$    0.04$    0.16$  (0.12)    (75.0%)
Diluted Earnings Per
Share                      $    0.01$    0.07$  (0.06)    (85.7%)   $    0.04$    0.16$  (0.12)    (75.0%)



(1) See Note 2, "Significant Accounting Policies," to our condensed consolidated

financial statements included in Part I, Item 1 of this report for a

discussion of the impact of the adoption of ASU 2014-09 on the presentation

of promotional allowances.

(2) For a discussion of Adjusted EBITDA and reconciliation of Adjusted EBITDA to

      net earnings attributable to Century Casinos, Inc. shareholders, see
      "Non-GAAP Measures - Adjusted EBITDA" below.



Items impacting comparability of the results include the following:

· The casino at CCB began operating in May 2018. CCB contributed a total of $0.5

million in net operating revenue and ($0.4) million in net losses for the three

months ended June 30, 2018 and $0.5 million in net operating revenue and ($0.8)

million in net losses for the six months ended June 30, 2018. CCB is reported

    in the Corporate and Other reportable segment.



· The impact from casino closures due to license expirations and delays in

license tender awards in Poland impacted quarter over quarter and year over

year comparability of results for CPL. See the Poland discussion below for

    additional information.




Net operating revenue increased by $2.3 million, or 6.2%, and by $6.5 million,
or 8.9%, for the three and six months ended June 30, 2018 compared to the three
and six months ended June 30, 2017. Following is a breakout of net operating
revenue by segment for the three and six months ended June 30, 2018 compared to
the three and six months ended June 30, 2017:



· Canada increased by $1.3 million, or 9.2%, and by $2.8 million, or 10.3%.

· United States increased by $0.5 million, or 6.7%, and by $0.7 million, or 4.8%.

· Poland increased by $0.3 million, or 2.0%, and by $3.1 million, or 10.8%.

· Corporate and Other increased by $0.2 million, or 20.2%, and decreased by

    ($0.1) million, or (5.2%).


                                       39
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Operating costs and expenses increased by $5.0 million, or 14.7%, and by $10.4
million, or 15.9%, for the three and six months ended June 30, 2018  compared to
the three and six months ended June 30, 2017. Following is a breakout of
operating costs and expenses by segment for the three and six months ended June
30, 2018 compared to the three and six months ended June 30, 2017:



· Canada increased by $1.2 million, or 11.1%, and by $2.2 million, or 10.5%.

· United States increased by $0.3 million, or 5.0%, and by $0.5 million, or 4.0%.

· Poland increased by $2.3 million, or 16.6%, and by $5.9 million, or 22.3%.

· Corporate and Other increased by $1.2 million, or 39.7%, and by $1.9 million,

    or 32.3%.




Earnings from operations decreased by ($2.6) million, or (72.6%), and by ($3.9)
million, or (47.8%), for the three and six months ended June 30, 2018 compared
to the three and six months ended June 30, 2017. Following is a breakout of
earnings from operations by segment for the three and six months ended June 30,
2018 compared to the three and six months ended June 30, 2017:



· Canada increased by $0.1 million, or 3.8%, and by $0.6 million, or 9.7%.

· United States increased by $0.2 million, or 15.0%, and by $0.2 million, or

8.8%.

· Poland decreased by ($2.0) million, or (312.4%), and by ($2.8) million, or

(113.5%).

· Corporate and Other decreased by ($1.0) million, or (50.2%), and by ($2.0)

    million, or (56.4%).




Net earnings decreased by ($1.5) million, or (82.4%), and by ($2.7) million, or
(68.6%), for the three and six months ended June 30, 2018 compared to the three
and six months ended June 30, 2017. Items deducted from or added to earnings
from operations to arrive at net earnings include interest income, interest
expense, gains (losses) on foreign currency transactions and other, income tax
expense and non-controlling interest.



Non-GAAP Measures - Adjusted EBITDA


We define Adjusted EBITDA as net earnings (loss) before interest expense
(income), net, income taxes (benefit), depreciation, amortization,
non-controlling interest (earnings) losses and transactions, pre-opening
expenses, acquisition costs, non-cash stock-based compensation charges, asset
impairment costs, (gain) loss on disposition of fixed assets, discontinued
operations, (gain) loss on foreign currency transactions and other, gain on
business combination and certain other one-time items. Intercompany transactions
consisting primarily of management and royalty fees and interest, along with
their related tax effects, are excluded from the presentation of net earnings
(loss) and Adjusted EBITDA reported for each segment. Not all of the
aforementioned items occur in each reporting period, but have been included in
the definition based on historical activity. These adjustments have no effect on
the consolidated results as reported under US GAAP. Adjusted EBITDA is not
considered a measure of performance recognized under US GAAP.



Management believes that Adjusted EBITDA is a valuable measure of the relative
performance of the Company and its properties. The gaming industry commonly uses
Adjusted EBITDA as a method of arriving at the economic value of a casino
operation. Management uses Adjusted EBITDA to evaluate and forecast the
operating performance of the Company and its properties as well as to compare
results of current periods to prior periods. Management believes that presenting
Adjusted EBITDA to investors provides them with information used by management
for financial and operational decision-making in order to understand the
Company's operating performance and evaluate the methodology used by management
to evaluate and measure such performance. Management believes that using
Adjusted EBITDA is a useful way to compare the relative operating performance of
separate reporting segments by eliminating the above mentioned items associated
with the varying levels of capital expenditures for infrastructure required to
generate revenue, and the often high cost of acquiring existing operations. Our
computation of Adjusted EBITDA may be different from, and therefore may not be
comparable to, similar measures used by other companies within the gaming
industry.



                                       40
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The reconciliation of Adjusted EBITDA to net earnings (loss) is presented
below.










                                          For the three months ended June 30, 2018
                                                                          Corporate
Amounts in thousands            Canada      United States     Poland      and Other      Total
Net earnings (loss)            $  1,947$        1,151$   (776)$   (2,005)$    317
Interest expense (income),
net                               1,020                  -         36            19       1,075
Income taxes (benefit)              684               397        (210)         (857)         14
Depreciation and
amortization                        798               546         673           153       2,170
Net earnings (loss)
attributable to
non-controlling interests           199                  -       (389)          (30)       (220)
Non-cash stock-based
compensation                           -                 -           -          232         232
Gain on foreign currency
transactions and cost
recovery income                     (65)                 -        (12)         (113)       (190)
Loss (Gain) on disposition
of fixed assets                       1                (3)        831              -        829
Pre-opening expenses                408                  -           -           26         434
Adjusted EBITDA                $  4,992$        2,091$    153$   (2,575)$  4,661









                                          For the three months ended June 30, 2017
                                                                          Corporate
Amounts in thousands            Canada      United States     Poland      and Other      Total
Net earnings (loss)            $  1,823    $          836    $    435$   (1,292)$  1,802
Interest expense (income),
net                                 867                  -         29            (8)        888
Income taxes (benefit)              794               510         198          (638)        864
Depreciation and
amortization                        845               618         472            83       2,018
Net earnings attributable to
non-controlling interests           150                  -        218              -        368
Non-cash stock-based
compensation                           -                 -           -          126         126
Loss (gain) on foreign
currency transactions and
cost recovery income                 13                  -       (244)          (50)       (281)
Loss on disposition of fixed
assets                               10                  -        241              -        251
Acquisition costs                      -                 -           -          151         151
Pre-opening expenses                   -                 -        225              -        225
Adjusted EBITDA                $  4,502$        1,964$  1,574$   (1,628)$  6,412




                                       41
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                                           For the six months ended June 30, 2018
                                                                          Corporate
Amounts in thousands            Canada      United States     Poland      and Other      Total
Net earnings (loss)            $  3,972$        2,025$   (246)$   (4,507)$  1,244
Interest expense (income),
net                               1,959                  -        110            18       2,087
Income taxes (benefit)            1,219               699         112        (1,037)        993
Depreciation and
amortization                      1,670             1,086       1,322           245       4,323
Net earnings (loss)
attributable to
non-controlling interests           328                  -       (124)          (30)        174
Non-cash stock-based
compensation                           -                 -           -          347         347
(Gain) loss on foreign
currency transactions and
cost recovery income               (138)                 -       (181)           70        (249)
Loss on disposition of fixed
assets                                3                 1         858             1         863
Pre-opening expenses                689                  -        405           350       1,444
Adjusted EBITDA                $  9,702$        3,811$  2,256$   (4,543)$ 11,226







                                           For the six months ended June 30, 2017
                                                                          Corporate
Amounts in thousands            Canada      United States     Poland      and Other      Total
Net earnings (loss)            $  3,306$       1,553$  1,518$ (2,415)$  3,962
Interest expense (income),
net                               1,785                  -         16           (12)      1,789
Income taxes (benefit)            1,324               951         612        (1,028)      1,859
Depreciation and
amortization                      1,648             1,228       1,044           183       4,103
Net earnings attributable to
non-controlling interests           248                  -        760              -      1,008
Non-cash stock-based
compensation                           -                 -           -          235         235
Loss (gain) on foreign
currency transactions and
cost recovery income                 31                  -       (464)          (52)       (485)
Loss on disposition of fixed
assets                               11                  -        241             3         255
Acquisition costs                    28                  -           -          152         180
Pre-opening expenses                   -                 -        225              -        225
Adjusted EBITDA                $  8,381$        3,732$  3,952$   (2,934)$ 13,131






                                       42
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Non-GAAP Measures - Constant Currency




The impact of foreign exchange rates is highly variable and difficult to
predict. We use a Constant Currency basis to show the impact from foreign
exchange rates on the current period results compared to the prior period
results using the prior period's foreign exchange rates. In order to properly
understand the underlying business trends and performance of the Company's
ongoing operations, management believes that investors may find it useful to
consider the impact of excluding changes in foreign exchange rates from our
operating revenue, earnings from operations, net earnings (loss) attributable to
Century Casinos, Inc. shareholders and Adjusted EBITDA. Constant Currency
results are calculated by dividing the current quarter or year to date local
currency segment results, excluding the local currency impact of foreign
currency gains and losses, by the prior year's average exchange rate for the
quarter or year to date and comparing them to actual U.S. dollar results for the
prior quarter or year to date. The current and prior year's average exchange
rates for the three and six month periods are presented above. The Constant
Currency results are presented below.








                                For the three months                  For the six months
                                   ended June 30,                       ended June 30,
Amounts in thousands               2018         2017     % Change       2018        2017     % Change
Net operating revenue as
reported (GAAP)               $    39,648$ 37,330         6%    $  80,270$ 73,729         9%
Foreign currency impact vs.
2017                               (1,608)                             (5,035)
Net operating revenue
constant currency
(non-GAAP)                    $    38,040$ 37,330         2%    $  75,235$ 73,729         2%

Earnings from operations
(GAAP)                        $       996$  3,641       (73%)   $   4,249$  8,133       (48%)
Foreign currency impact vs.
2017                                  (16)                               (230)
Earnings from operations
constant currency
(non-GAAP)                    $       980$  3,641       (73%)   $  

4,019 $ 8,133 (51%)


Net earnings attributable
to Century Casinos, Inc.
shareholders as reported
(GAAP)                        $       317$  1,802       (82%)   $   1,244$  3,962       (69%)
Foreign currency impact vs.
2017                                  (10)                                (61)
Net earnings attributable
to Century Casinos, Inc.
shareholders constant
currency (non-GAAP)           $       307$  1,802       (83%)   $   1,183$  3,962       (70%)



Gains and losses on foreign currency transactions are added back to net earnings in our Adjusted EBITDA calculations. As such, there is no foreign currency impact to Adjusted EBITDA when calculating Constant Currency results.



Non-GAAP Measures - Net Debt



We define Net Debt as total long-term debt (including current portion) plus
deferred financing costs minus cash and cash equivalents. Net Debt is not
considered a liquidity measure recognized under US GAAP. Management believes
that Net Debt is a valuable measure of our overall financial situation. Net Debt
provides investors with an indication of our ability to pay off all of our
long-term debt if it became due simultaneously. The reconciliation of Net Debt
is presented below.







Amounts in thousands                               June 30, 2018     June 30, 2017
Total long-term debt, including current portion   $       54,296$       54,675
Deferred financing costs                                     208               310
Total principal                                   $       54,504$       54,985
Less: cash and cash equivalents                   $       54,435$       38,810
Net Debt                                          $           69    $       16,175









                                       43
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Reportable Segments

The following discussion provides further detail of consolidated results by
reportable segment.






Canada
                             For the three months                             For the six months
                                ended June 30,                     %            ended June 30,                     %
Amounts in thousands           2018         2017       Change    Change        2018         2017       Change    Change
Gaming                     $  10,105$   9,750$   355       3.6%    $  19,852$  18,771$ 1,081       5.8%
Hotel                            132          134         (2)     (1.5%)         268          271         (3)     (1.1%)
Food and Beverage              2,533        2,328        205       8.8%        5,022        4,675        347       7.4%
Other                          2,561        2,104        457      21.7%        4,862        4,037        825      20.4%
Total Operating Revenue       15,331       14,316      1,015       7.1%       30,004       27,754      2,250       8.1%
Less Promotional
Allowances (1)                      -        (276)      (276)   (100.0%)            -        (552)      (552)   (100.0%)
Net Operating Revenue         15,331       14,040      1,291       9.2%       30,004       27,202      2,802      10.3%
Gaming Expenses               (2,925)      (2,907)        18       0.6%       (5,964)      (5,942)        22       0.4%
Hotel Expenses                   (49)         (55)        (6)    (10.9%)         (97)         (99)        (2)     (2.0%)
Food and Beverage
Expenses                      (2,102)      (1,931)       171       8.9%       (4,167)      (3,802)       365       9.6%
General and
Administrative Expenses       (5,672)      (4,655)     1,017      21.8%      (10,766)      (9,017)     1,749      19.4%
Total Operating Costs
and Expenses                 (11,546)     (10,393)     1,153      11.1%      (22,664)     (20,508)     2,156      10.5%
Earnings from Operations       3,785        3,647        138       3.8%        7,340        6,694        646       9.7%
Non-Controlling Interest        (199)        (150)        49      32.7%         (328)        (248)        80      32.3%
Net Earnings                   1,947        1,823        124       6.8%        3,972        3,306        666      20.1%
Adjusted EBITDA            $   4,992$   4,502$   490      10.9%    $   9,702$   8,381$ 1,321      15.8%



(1) See Note 2, "Significant Accounting Policies," to our condensed consolidated

financial statements included in Part I, Item 1 of this report for a

discussion of the impact of the adoption of ASU 2014-09 on the presentation

      of promotional allowances.




In November 2017, CAL opened an 18 hole miniature golf course. We are marketing
the miniature golf course and bowling alley as an entertainment center in order
to attract a new customer demographic to visit the casino.



Construction on the Century Mile project began in July 2017, and we estimate that it will be completed in early 2019.

Three Months Ended June 30, 2018 and 2017

The following discussion highlights results for the three months ended June 30, 2018 compared to the three months ended June 30, 2017.

Results in U.S. dollars were impacted by a 4.0% exchange rate increase in the average rate between the U.S. dollar and the Canadian dollar for the three months ended June 30, 2018 compared to the three months ended June 30, 2017.




Revenue Highlights


   In CAD                                   In U.S. dollars

? At CRA, net operating revenue ? At CRA, net operating revenue

decreased by (CAD 0.1) million, or increased by $0.1 million, or 2.9%.

(1.2%), due to decreased gaming

revenue.

? At CSA, net operating revenue ? At CSA, net operating revenue

   remained constant.                       increased by $0.1 million, or 

5.4%.

? At CAL, net operating revenue ? At CAL, net operating revenue

increased by CAD 0.3 million, or increased by $0.3 million, or 19.0%.

   14.2%, due to increased gaming
   revenue and increased revenue from
   the entertainment center.
?  At CDR, net operating revenue         ?  At CDR, net operating revenue

increased by CAD 0.6 million, or increased by $0.7 million, or 15.3%.

   10.8%, due to increased gaming and
   pari-mutuel revenue.



                                       44
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Operating Expense Highlights



   In CAD                                   In U.S. dollars

? At CRA, operating expenses remained ? At CRA, operating expenses increased

   constant.                                by $0.1 million, or 3.9%.

? At CSA, operating expenses increased ? At CSA, operating expenses increased

   by CAD 0.1 million, or 4.8%,             by $0.1 million, or 9.3%.

primarily due to increased payroll

costs.

? At CAL, operating expenses remained ? At CAL, operating expenses increased

   constant.                                by $0.1 million, or 4.6%.

? At CDR, operating expenses increased ? At CDR, operating expenses increased

   by CAD 0.3 million, or 8.1%, due to      by $0.4 million, or 12.6%.
   increased payroll costs and
   racing-related operating expenses.




Operating expenses related to the Century Mile project were $0.4 million for the
three months ended June 30, 2018 related to the land that we are leasing from
the Edmonton Airport.



Earnings from operations at CBS, which operates the Southern Alberta pari-mutuel
off-track betting network, remained constant for the three months ended June 30,
2018 compared to the three months ended June 30, 2017.



A reconciliation of net earnings to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion above.

Six Months Ended June 30, 2018 and 2017

The following discussion highlights results for the six months ended June 30, 2018 compared to the six months ended June 30, 2017.




Results in U.S. dollars were impacted by a 4.2% exchange rate increase in the
average rate between the U.S. dollar and the Canadian dollar for the six months
ended June 30, 2018 compared to the six months ended June 30, 2017.



Revenue Highlights


   In CAD                                   In U.S. dollars

? At CRA, net operating revenue ? At CRA, net operating revenue

   remained constant.                       increased by $0.4 million, or 

4.0%.

? At CSA, net operating revenue ? At CSA, net operating revenue

increased by CAD 0.1 million, or increased by $0.3 million, or 6.7%.

2.2%, due to increased gaming and

   food and beverage revenue.
?  At CAL, net operating revenue         ?  At CAL, net operating revenue

increased by CAD 0.6 million, or increased by $0.6 million, or 17.6%.

   12.5%, due to increased gaming
   revenue and increased revenue from
   the entertainment center.
?  At CDR, net operating revenue         ?  At CDR, net operating revenue

increased by CAD 1.4 million, or increased by $1.5 million, or 18.5%.

   13.6%, due to increased gaming and
   pari-mutuel revenue.



                                       45
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Operating Expense Highlights



   In CAD                                   In U.S. dollars

? At CRA, operating expenses decreased ? At CRA, operating expenses increased

by (CAD 0.2) million, or (1.6%), by $0.2 million, or 2.6%.

primarily due to decreased marketing

costs.

? At CSA, operating expenses increased ? At CSA, operating expenses increased

   by CAD 0.1 million, or 2.9%,             by $0.2 million, or 7.5%.

primarily due to increased payroll

costs.

? At CAL, operating expenses increased ? At CAL, operating expenses increased

   by CAD 0.1 million, or 2.4%,             by $0.3 million, or 6.9%.

primarily due to increased general

and administrative expenses. ? At CDR, operating expenses increased ? At CDR, operating expenses increased

   by CAD 0.7 million, or 10.0%, due to     by $0.8 million, or 14.9%.
   increased payroll costs and
   racing-related operating expenses.




Operating expenses related to the Century Mile project were $0.7 million for the
six months ended June 30, 2018 related to the land that we are leasing from the
Edmonton Airport.



Earnings from operations at CBS, which operates the Southern Alberta pari-mutuel
off-track betting network, remained constant for the six months ended June 30,
2018 compared to the six months ended June 30, 2017.



A reconciliation of net earnings to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion above.

                                       46

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United States
                             For the three months                              For the six months
                                ended June 30,                      %            ended June 30,                      %
Amounts in thousands            2018        2017       Change     Change        2018         2017       Change     Change
Gaming                     $    7,022$  8,587$ (1,565)    (18.2%)   $  13,441$  16,787$ (3,346)    (19.9%)
Hotel                             373         360          13       3.6%          691          661          30       4.5%
Food and Beverage                 985         908          77       8.5%        1,870        1,738         132       7.6%
Other                              96          96            -      0.0%          181          173           8       4.6%
Total Operating Revenue         8,476       9,951      (1,475)    (14.8%)      16,183       19,359      (3,176)    (16.4%)
Less Promotional
Allowances (1)                       -     (2,008)     (2,008)   (100.0%)            -      (3,916)     (3,916)   (100.0%)
Net Operating Revenue           8,476       7,943         533       6.7%       16,183       15,443         740       4.8%
Gaming Expenses                (3,252)     (3,317)        (65)     (2.0%)      (6,281)      (6,481)       (200)     (3.1%)
Hotel Expenses                   (131)        (99)         32      32.3%         (257)        (198)         59      29.8%
Food and Beverage
Expenses                       (1,006)       (687)        319      46.4%       (1,921)      (1,312)        609      46.4%
General and
Administrative Expenses        (1,993)     (1,876)        117       6.2%       (3,914)      (3,720)        194       5.2%
Total Operating Costs
and Expenses                   (6,928)     (6,597)        331       5.0%      (13,459)     (12,939)        520       4.0%
Earnings from Operations        1,548       1,346         202      15.0%        2,724        2,504         220       8.8%
Net Earnings                    1,151         836         315      37.7%        2,025        1,553         472      30.4%
Adjusted EBITDA            $    2,091$  1,964$    127       6.5%    $   3,811$   3,732$     79       2.1%



(1) See Note 2, "Significant Accounting Policies," to our condensed consolidated

financial statements included in Part I, Item 1 of this report for a

discussion of the impact of the adoption of ASU 2014-09 on the presentation

      of promotional allowances.



Three Months Ended June 30, 2018 and 2017

The following discussion highlights results for the three months ended June 30, 2018 compared to the three months ended June 30, 2017.

Market Share Highlights

· The Central City market increased by 15.4% and CTL's share of the Central City

market was 26.6% compared to 29.8% for the three months ended June 30, 2017.

We attribute the increase in the Central City market and the decrease in our

market share to additional marketing promotions done by one of our competitors

that recently renovated a casino in Central City.

· The Cripple Creek market increased by 0.5% and CRC's share of the Cripple Creek

market was 10.4% compared to 9.6% for the three months ended June 30, 2017. We

attribute the increase in our market share to successful marketing promotions

that we have done to increase new visitors and to increase repeat business by

    our current customer base.




Revenue Highlights

· At CTL, net operating revenue increased by $0.2 million, or 4.5%, due to

increased gaming revenue.

· At CRC, net operating revenue increased by $0.3 million, or 10.1%, due to

    increased gaming revenue.




Operating Expense Highlights

· At CTL, operating expenses increased by $0.3 million, or 6.9%, due to increased

gaming-related expenses and payroll costs.

· At CRC, operating expenses increased by $0.1 million, or 2.0%, due to increased

    gaming-related expenses.



A reconciliation of net earnings to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion above.

                                       47

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Six Months Ended June 30, 2018 and 2017

The following discussion highlights results for the six months ended June 30, 2018 compared to the six months ended June 30, 2017.

Market Share Highlights

· The Central City market increased by 9.6% and CTL's share of the Central City

market was 26.7% compared to 29.3% for the six months ended June 30, 2017. We

attribute the increase in the Central City market and the decrease in our

market share to additional marketing promotions done by one of our competitors

that recently renovated a casino in Central City.

· The Cripple Creek market increased by 1.9% and CRC's share of the Cripple Creek

market was 10.2% compared to 9.6% for the six months ended June 30, 2017. We

attribute the increase in our market share to successful marketing promotions

that we have done to increase new visitors and to increase repeat business by

    our current customer base.




Revenue Highlights

· At CTL, net operating revenue increased by $0.2 million, or 2.5%, due to

increased gaming revenue.

· At CRC, net operating revenue increased by $0.5 million, or 8.3%, due to

    increased gaming revenue.




Operating Expense Highlights

· At CTL, operating expenses increased by $0.4 million, or 5.3%, due to increased

gaming-related expenses and payroll costs.

· At CRC, operating expenses increased by $0.1 million, or 2.0%, due to increased

    gaming-related expenses and payroll costs.



A reconciliation of net earnings to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion above.

                                       48

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Poland
                             For the three months                              For the six months
                                ended June 30,                      %            ended June 30,                      %
Amounts in thousands           2018         2017       Change     Change        2018         2017       Change     Change
Gaming                     $  14,369$  14,357$     12       0.1%    $  31,442$  28,907$  2,535       8.8%
Food and Beverage                161          177         (16)     (9.0%)         346          341           5       1.5%
Other                             37           11          26     236.4%          161          101          60      59.4%
Total Operating Revenue       14,567       14,545          22       0.2%       31,949       29,349       2,600       8.9%
Less Promotional
Allowances (1)                      -        (258)       (258)   (100.0%)            -        (516)       (516)   (100.0%)
Net Operating Revenue         14,567       14,287         280       2.0%       31,949       28,833       3,116      10.8%
Gaming Expenses               (9,412)      (9,243)        169       1.8%      (20,456)     (18,081)      2,375      13.1%
Food and Beverage
Expenses                        (625)        (481)        144      29.9%       (1,277)        (951)        326      34.3%
General and
Administrative Expenses       (5,208)      (3,455)      1,753      50.7%       (9,223)      (6,315)      2,908      46.0%
Total Operating Costs
and Expenses                 (15,918)     (13,651)      2,267      16.6%      (32,278)     (26,391)      5,887      22.3%
Earnings from Operations      (1,351)         636      (1,987)   (312.4%)        (329)       2,442      (2,771)   (113.5%)
Non-Controlling Interest         389         (218)       (607)   (278.4%)         124         (760)       (884)   (116.3%)
Net (Loss) Earnings             (776)         435      (1,211)   (278.4%)        (246)       1,518      (1,764)   (116.2%)
Adjusted EBITDA            $     153$   1,574$ (1,421)    (90.3%)   $   2,256$   3,952$ (1,696)    (42.9%)



(1) See Note 2, "Significant Accounting Policies," to our condensed consolidated

financial statements included in Part I, Item 1 of this report for a

discussion of the impact of the adoption of ASU 2014-09 on the presentation

      of promotional allowances.




In Poland, casino gaming licenses are granted for a term of six years. These
licenses are not renewable. Once a gaming license has expired, any gaming
company can apply for a new license for that city. Delays by the Polish
government in awarding licenses following their expiration resulted in several
casinos closing throughout Poland, lost gaming tax revenue for the government
and additional costs and expenses for the casino operators, including CPL. CPL's
results were significantly impacted by the additional costs and expenses
associated with the temporary closure of several of CPL's casinos in Poland. The
following is a summary of changes in and comparability of the casinos operated
by CPL in 2017 and 2018.


· The casino at the Marriott Hotel in Warsaw, Poland was operational for the full

three and six months ended June 30, 2018 and 2017.

· The casino at the LIM Center in Warsaw, Poland closed in May 2017. The license

was transferred to the Hilton Warsaw Hotel and Convention Centre in Warsaw,

Poland.

· The casino at the Hilton Warsaw Hotel and Convention Centre in Warsaw, Poland

opened in June 2017.

· The casino at the Dwor Kosciuszko Hotel in Krakow, Poland closed in March 2018.

CPL was awarded a new license for this city and the casino opened in July 2018.

· The casino at the Manufaktura Entertainment Complex in Lodz, Poland closed in

February 2018. CPL was awarded a new license for this city and plans to open

the casino in August 2018.

· The casino at the Hotel Andersia in Poznan, Poland closed in April 2018. CPL

was not awarded a new license for this city and is currently determining the

costs of terminating employees who will not relocate.

· The casino at the Hotel Plock in Plock, Poland closed in February 2018. CPL was

not awarded a new license for this city and is currently determining the costs

of terminating employees who will not relocate.

· The casino at the HP Park Plaza Hotel in Wroclaw, Poland closed in June 2017.

CPL was awarded a new license for this city and the casino opened in April

2018.

· The casino at the Altus Building in Katowice, Poland closed in July 2016. CPL

was awarded a new license for this city and the casino opened in May 2018.

· The casino at the Hotel President in Bielsko-Biala, Poland opened in January

    2018.




CPL also was awarded a license for a third casino in Warsaw, Poland in July 2018
that it plans to open in the Marriott Hotel in January 2019. This casino will be
located on a floor directly above the casino that CPL currently operates in the
Marriott Hotel.



Effective April 2017, the Polish gaming laws permit online gaming and slot
arcades operated through a state run company. We expect online gaming to begin
operating in 2018. The first slot arcades opened in Poland in June 2018.
Increased competition could occur and adversely affect our results of operations
in the future.



In late 2017, the Polish Parliament enacted a new Polish income tax law
requiring casino patron winnings over PLN 2,280 ($609 based on the exchange rate
in effect on June 30, 2018) in a single casino visit to be subject to personal
income tax on those winnings. This law was repealed effective July 19, 2018.

                                       49

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Three Months Ended June 30, 2018 and 2017


Results in U.S. dollars were impacted by a 6.7% increase in the average exchange
rate between the U.S. dollar and Polish zloty for the three months ended June
30, 2018 compared to the three months ended June 30, 2017.



Revenue Highlights


   In PLN                                   In U.S. dollars

? Net operating revenue decreased by ? Net operating revenue increased by

   (PLN 2.7) million, or (4.9%), due to     $0.3 million, or 2.0%.
   the impacts described above.




Operating Expense Highlights


   In PLN                                   In U.S. dollars

? Operating expenses increased by PLN ? Operating expenses increased by $2.3

4.7 million, or 9.0%, primarily due million, or 16.6%.

to PLN 2.7 million in payroll and

rental costs related to maintaining

staff and space while awaiting

license tender decisions. Increased

operating expenses also relate to

additional payroll costs and general

and administrative costs for the

operation of the Hilton and

Bielsko-Biala casinos for the full

second quarter in 2018. Due to the

closure of the Plock and Poznan

casinos there was an additional

expense of PLN 2.0 million related to

the disposal of assets at those

locations. The increased expenses are

offset by decreased gaming related

expenses due to the impacts described

   above.



A reconciliation of net earnings to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion above.

                                       50

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Six Months Ended June 30, 2018 and 2017

Results in U.S. dollars were impacted by an 11.6% increase in the average exchange rate between the U.S. dollar and Polish zloty for the six months ended June 30, 2018 compared to the six months ended June 30, 2017.



Revenue Highlights


   In PLN                                   In U.S. dollars

? Net operating revenue decreased by ? Net operating revenue increased by

   (PLN 2.5) million, or (2.2%), due to     $3.1 million, or 10.8%.
   the impacts described above.




Operating Expense Highlights


   In PLN                                   In U.S. dollars

? Operating expenses increased by PLN ? Operating expenses increased by $5.9

8.7 million, or 8.3%, primarily due million, or 22.3%.

to PLN 4.1 million in payroll and

rental costs related to maintaining

staff and space while awaiting

license tender decisions. Increased

operating expenses also relate to

additional payroll costs and general

and administrative costs for the

operation of the Hilton and

Bielsko-Biala casinos for the full

six months ended June 30, 2018. Due

to the closure of the Plock and

Poznan casinos, there was an

additional expense of PLN 2.0 million

related to the disposal of assets at

those locations. The increased

expenses are offset by decreased

gaming-related expenses due to the

   impacts described above.



A reconciliation of net earnings to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion above

                                       51

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Corporate and Other
                            For the three months                            For the six months
                               ended June 30,                     %           ended June 30,                     %
Amounts in thousands           2018        2017       Change    Change       2018        2017       Change     Change
Gaming                    $    1,109$    718$   391      54.5%    $  1,877$  1,435$    442      30.8%
Food and Beverage                102            -       102     100.0%         102            -        102     100.0%
Other                             63         371       (308)    (83.0%)        155         845        (690)    (81.7%)
Total Operating Revenue        1,274       1,089        185      17.0%       2,134       2,280        (146)     (6.4%)
Less Promotional
Allowances                          -        (29)       (29)   (100.0%)           -        (29)        (29)   (100.0%)
Net Operating Revenue          1,274       1,060        214      20.2%       2,134       2,251        (117)     (5.2%)
Gaming Expenses                 (846)       (589)       257      43.6%      (1,475)     (1,198)        277      23.1%
Food and Beverage
Expenses                        (191)           -       191     100.0%        (195)           -        195     100.0%
General and
Administrative Expenses       (3,069)     (2,376)       693      29.2%      (5,704)     (4,377)      1,327      30.3%
Total Operating Costs
and Expenses                  (4,259)     (3,048)     1,211      39.7%      (7,619)     (5,758)      1,861      32.3%
Losses from Equity
Investment                        (1)           -        (1)   (100.0%)         (1)           -         (1)   (100.0%)
Losses from Operations        (2,986)     (1,988)      (998)    (50.2%)     (5,486)     (3,507)     (1,979)    (56.4%)
Non-Controlling
Interest                          30            -       (30)   (100.0%)         30            -        (30)   (100.0%)
Net Loss                      (2,005)     (1,292)      (713)    (55.2%)     (4,507)     (2,415)     (2,092)    (86.6%)
Adjusted EBITDA           $   (2,575)$ (1,628)$  (947)    (58.2%)   $ (4,543)$ (2,934)$ (1,609)    (54.8%)




We began operating the ship-based casinos onboard the Mein Schiff 6 in May 2017.
The concession agreement to operate the ship-based casino onboard the Mein
Schiff 1 ended in April 2018 when the vessel was transferred to another cruise
line. The Mein Schiff 1 contributed a total of $0.2 million in revenue and less
than $0.1 million in net losses attributable to Century Casinos, Inc.
shareholders for the year ended December 31, 2017.



The casino at CCB opened in May 2018.




In April 2018, CRM purchased a 51% ownership interest in GHL. GHL entered into
agreements with MCL, the owner of a small hotel and international entertainment
and gaming club in the Cao Bang province of Vietnam, under which GHL manages MCL
and owns 6.36% of its outstanding shares. We consolidate GHL as a majority-owned
subsidiary for which the Company has a controlling financial interest and
account for GHL's interest in MCL as an equity investment. GHL is included in
the Corporate Other operating segment.

Three Months Ended June 30, 2018 and 2017

The following discussion highlights results for the three months ended June 30, 2018 compared to the three months ended June 30, 2017.

Revenue Highlights

· Net operating revenue for Cruise Ships & Other decreased by ($0.3) million, or

(30.1%), due to the completion of the consulting agreement with Norwegian in

May 2017 and termination of the management agreement we had to direct the

operation of the casino at the Hilton Aruba Caribbean Resort & Casino (the

"Aruba Management Agreement") in November 2017.

· Net operating revenue for CCB for the three months ended June 30, 2018 was GBP

    0.4 million. In U.S. dollars, net operating revenue was $0.5 million.




Operating Expense Highlights

· Operating expenses for Cruise Ships & Other decreased by ($0.1) million, or

(15.7%), due to decreased payroll costs.

· Operating expenses for CCB for the three months ended June 30, 2018 were GBP

1.1 million. In U.S. dollars, operating expenses were $1.4 million. Prior to

the opening of the casino, from April through mid-May 2018, CCB had operating

    expenses of GBP 0.3 million, which were $0.4 million in U.S. dollars.




                                       52
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Losses from operations attributable to our Corporate Other operating segment,
which includes certain other corporate and management operations, increased by
$0.1 million, or 4.4%, for the three months ended June 30, 2018 compared to the
three months ended June 30, 2017 primarily due to additional expenses of $0.1
million from GHL.


A reconciliation of net earnings to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion above.

Six Months Ended June 30, 2018 and 2017

The following discussion highlights results for the six months ended June 30, 2018 compared to the six months ended June 30, 2017.

Revenue Highlights

· Net operating revenue for Cruise Ships & Other decreased by ($0.7) million, or

(28.9%), due to the completion of the consulting agreement with Norwegian in

May 2017 and termination of the Aruba Management Agreement in November 2017.

· Net operating revenue for CCB for the six months ended June 30, 2018 was GBP

    0.4 million. In U.S. dollars, net operating revenue was $0.5 million.




Operating Expense Highlights

· Operating expenses for Cruise Ships & Other decreased by ($0.2) million, or

(11.3%), due to decreased payroll costs.

· Operating expenses for CCB for the six months ended June 30, 2018 were GBP 1.3

million. In U.S. dollars, operating expenses were $1.8 million. Prior to the

opening of the casino, from January through mid-May 2018, CCB had operating

    expenses of GBP 0.5 million, which were $0.7 million in U.S. dollars.




Losses from operations attributable to our Corporate Other operating segment,
which includes certain other corporate and management operations, increased by
$0.3 million, or 7.2%, for the six months ended June 30, 2018 compared to the
six months ended June 30, 2017 primarily due to increased payroll costs,
increased stock compensation expense and additional expenses of $0.1 million
from GHL.


A reconciliation of net earnings to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion above.





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Non-Operating Income (Expense)

Non-operating income (expense) was as follows:







                       For the three months                           For the six months
                          ended June 30,                     %          ended June 30,                    %
Amounts in
thousands                2018          2017     Change    Change       2018        2017      Change    Change
Interest Income      $         14     $   27$  (13)   (48.1%)   $      33$     48$  (15)   (31.3%)
Interest Expense           (1,089)      (915)      174     19.0%       (2,120)     (1,837)      283     15.4%
Gain on Foreign
Currency
Transactions                  190        281       (91)   (32.4%)         249         485      (236)   (48.7%)
Non-Operating
(Expense) Income     $       (885)$ (607)$ (278)   (45.8%)   $  (1,838)$ (1,304)$ (534)   (41.0%)



Interest income

Interest income is directly related to interest earned on our cash reserves.




Interest expense

Interest expense is directly related to interest owed on the BMO Credit
Agreement, the fair value adjustments for our interest rate swap agreements, our
CPL and CCB borrowings, interest expense related to the CDR land lease and our
capital lease agreements.  The increased interest expense for the six months
ended June 30, 2018 compared to the six months ended June 30, 2017 is due
primarily to increased interest expense related to the BMO Credit Agreement and
the CDR land lease.



Taxes

Income tax expense is recorded relative to the jurisdictions that recognize book
earnings. During the six months ended June 30, 2018, we recognized an income tax
expense of $1.0 million on pre-tax income of $2.4 million, representing an
effective income tax rate of 41.2%, compared to an income tax expense of $1.9
million on pre-tax income of $6.8 million, representing an effective income tax
rate of 27.2% for the same period in 2017. For an analysis of our effective
income tax rate compared to the U.S. federal statutory income tax rate, the
change in the effective tax rate period over period and the impact of the Tax
Act, see Note 8, "Income Taxes," to our condensed consolidated financial
statements included in Part I, Item 1 of this report.



                                       54

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LIQUIDITY AND CAPITAL RESOURCES


Our business is capital intensive, and we rely heavily on the ability of our
casinos to generate operating cash flow. We use the cash flows that we generate
to maintain operations, fund reinvestment in existing properties for both
refurbishment and expansion projects, repay third party debt, and pursue
additional growth via new development and acquisition opportunities. When
necessary and available, we supplement the cash flows generated by our
operations with either cash on hand or funds provided by bank borrowings or
other debt or equity financing activities.



As of June 30, 2018, our total debt under bank borrowings and other agreements
net of $0.2 million related to deferred financing costs was $54.3 million, of
which $45.9 million was long-term debt and  $8.4 million was the current portion
of long-term debt. The current portion relates to payments due within one year
under our BMO Credit Agreement, the CPL credit facilities, the CCB loan
agreement and capital lease agreements. We intend to repay the current portion
of our debt obligations with available cash. For a description of our debt
agreements, see Note 6, "Long-Term Debt," to our condensed consolidated
financial statements included in Part I, Item 1 of this report. Net
Debt was $0.1 million as of June 30, 2018 compared to $16.2 million as of June
30, 2017, primarily due to the increase in cash to $54.4 million at June 30,
2018 from $38.8 million at June 30, 2017 as a result of the $34.3 million of net
proceeds that we received from our public offering of common stock in November
2017. For the definition and reconciliation of Net Debt to the most directly
comparable US GAAP measure, see "Non-GAAP Measures - Net Debt" above.



The following table lists the amount of 2018 maturities of our debt:





Amounts in
thousands
                  Casinos Poland      Century Casino
                      Credit           Bath Credit          Century Downs
    Bank of
   Montreal          Facility           Agreement            Land Lease         Capital Leases      Total
$        2,571$        2,782    $             132    $                 -   $           113    $   5,598




Cash Flows

At June 30, 2018, cash, cash equivalents and restricted cash totaled $55.2
million, and we had working capital (current assets minus current liabilities)
of $26.0 million compared to cash, cash equivalents and restricted cash of $76.4
million and working capital of $49.9 million at December 31, 2017.  The decrease
in cash, cash equivalents and restricted cash from December 31, 2017 is due
to $24.3 million used to purchase property and equipment primarily for the
Century Mile project and CCB, $0.6 million used for a distribution to
non-controlling interest, $0.3 million for CRM's purchase of its ownership
interest in GHL, net of cash acquired, $0.4 million for GHL's purchase of its
ownership interest in MCL and $0.9 million in exchange rate changes, offset
by $4.9 million of net cash provided by operating activities, $0.3 million in
borrowings net of principal payments and $0.2 million in proceeds from the
exercise of stock options.



Net cash provided by operating activities was $4.9 million for the six months
ended June 30, 2018 and $8.2 million for the six months ended June 30, 2017. The
decrease in cash provided by operating activities was primarily due to the $1.3
million payment related to the CPL contingent liability (see Note 7) and
increased taxes payable due to the impact of the Tax Act (see Note 8). Our cash
flows from operations have historically been positive and sufficient to fund
ordinary operations. Trends in our operating cash flows tend to follow trends in
earnings from operations, excluding non-cash charges. Please refer to the
condensed consolidated statements of cash flows in Part I, Item 1 of this Form
10-Q and to management's discussion of the results of operations above in this
Item 2 for a discussion of earnings from operations.



Net cash used in investing activities of $25.0 million for the six months ended
June 30, 2018 consisted of $10.6 million for the Century Mile project; $6.2
million for the Century Casino Bath project; $4.9 million in leasehold
improvements at the new casinos in Poland and additional assets for the casinos
in Poland; $0.3 million in slot machines for CTL and CRC; $0.1 million in
racetrack improvements at CDR,  $2.2 million in other fixed asset additions at
our properties, $0.3 million for CRM's purchase of its ownership interest in
GHL, net of cash acquired, and $0.4 million for GHL's purchase of its ownership
interest in MCL,  offset by less than $0.1 million in proceeds from the
disposition of assets.



Net cash used in investing activities of $4.7 million for the six months ended
June 30, 2017 consisted of $0.1 million for the Palace Hotel renovation project
at CRC, which was placed on hold during the first quarter of 2017; $0.1 million
to purchase slot machines for CTL and CRC; $0.1 million for the CRA casino
renovation; $0.2 million for bowling lane renovations at CAL; $0.3 million for a
parking lot and thoroughbred infrastructure at CDR; $0.3 million in leasehold
improvements at the Hilton Hotel Warsaw; $0.1 million for the CCB leasehold
renovations; $0.4 million for the Century Mile project; $1.5 million in other
fixed asset additions at our properties; the $1.5 million payment related to a
working capital adjustment for the Apex Acquisition and $0.1 million payment
related to the CCB license acquisition, offset by less than $0.1 million in
proceeds from the disposition of fixed assets.



                                       55

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Net cash used in financing activities of $0.2 million for the six months ended
June 30, 2018 consisted of $0.6 million in distributions to non-controlling
interest and less than $0.1 million in deferred financing cost payments, offset
by $0.3 million of proceeds from borrowings net of principal repayments on our
long-term debt and $0.2 million in proceeds from the exercise of stock options.



Net cash used in financing activities of $3.6 million for the six months ended
June 30, 2017 consisted of $3.0 million of principal repayments on our long-term
debt and $0.6 million in distributions to non-controlling interests, offset by
less than $0.1 million in cash from the exercise of stock options.



Tax Act


The Tax Act, which was enacted on December 22, 2017, made significant changes to
the Internal Revenue Code effective for 2018, although certain provisions
affected our 2017 financial results. The changes impacting our 2018 results
include, but are not limited to, the reduction in the U.S. federal corporate
income tax rate from 35% to 21% and the tax on Global Intangible Low-Taxed
Income ("GILTI").  We have not completed our accounting for the income tax
effects of the Tax Act and the provisional amounts will be refined as needed
during the measurement period allowed by SAB 118 and ASU 2018-05. While we
believe that we have made reasonable estimates of the impact of the U.S.
corporate income tax rate reduction and GILTI, these estimates could change as
we continue to analyze IRS guidance related to the Tax Act as it is released. In
addition to the Tax Act changes impacting our 2018 results, further changes
could result as we refine our calculations surrounding the changes that impacted
our 2017 results including the remeasurement of our deferred tax balances, as
well as our calculations of earnings and profits as used in the computation of
the transition tax. For further discussion of the Tax Act, see Note 8, "Income
Taxes," to our condensed consolidated financial statements included in Part I,
Item 1 of this report.


Common Stock Repurchase Program


Since 2000, we have had a discretionary program to repurchase our outstanding
common stock. In November 2009, we increased the amount available to be
repurchased to $15.0 million. We did not repurchase any common stock during the
six months ended June 30, 2018. The total amount remaining under the repurchase
program was $14.7 million as of June 30, 2018. The repurchase program has no set
expiration or termination date.



Potential Sources of Liquidity, Short-Term Liquidity


Historically, our primary sources of liquidity and capital resources have been
cash flow from operations, bank borrowings, sales of existing casino operations
and proceeds from the issuance of equity securities upon the exercise of stock
options. In November 2017, we closed a public offering of 4,887,500 shares of
our common stock. The net proceeds from the offering were approximately $34.4
million. As discussed below, we plan to use up to $25.0 million of the net
proceeds for construction of the Century Mile project. We intend to use the
remaining net proceeds to invest in additional gaming projects and for working
capital and other general corporate purposes.



We believe that our cash at June 30, 2018, as supplemented by cash flows from
operations,  will be sufficient to fund our anticipated operating costs, capital
expenditures at existing properties and current debt repayment obligations for
at least the next 12 months. We expect that the primary source of cash will be
from our gaming operations and additional borrowings under the BMO Credit
Agreement and other credit arrangements. In addition to the payment of operating
costs, expected uses of cash within one year include capital expenditures for
our existing properties, interest and principal payments on outstanding debt,
the construction of Century Mile, an expansion at CRC to provide additional
hotel rooms for our existing casino and hotel, and other potential new projects.
We will continue to evaluate our planned capital expenditures at each of our
existing locations in light of the operating performance of the facilities at
such locations.



We estimate that the Century Mile project will cost approximately CAD 60.0
million ($45.6 million based on the exchange rate in effect on June 30, 2018).
We plan to use up to $25.0 million of the net proceeds from the common stock
offering for construction of the Century Mile project, of which we have used
$14.1 million as of June 30, 2018. The balance of the Century Mile project will
be financed with the BMO Credit Agreement or with available cash. On May 4,
2018, we were approved to increase the borrowing capacity on the BMO Credit
Agreement by CAD 35.0 million ($26.6 million based on the exchange rate in
effect on June 30, 2018) for the Century Mile project. The debt financing for
the Century Mile project will be in the form of a term loan and line of credit
with BMO, which we expect to finalize in the third quarter of 2018.



                                       56

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We have a shelf registration statement with the SEC that became effective in
July 2017 under which we may issue, from time to time, up to $100 million of
common stock, preferred stock, debt securities and other securities and under
which we undertook the common stock offering in November 2017. If necessary, we
may seek to obtain further term loans, mortgages or lines of credit with
commercial banks or other debt or equity financings to supplement our working
capital and investing requirements. A financing transaction may not be available
on terms acceptable to us, or at all, and a financing transaction may be
dilutive to our current stockholders.



In addition, we expect our U.S. domestic cash resources will be sufficient to
fund our U.S. operating activities and cash commitments for investing and
financing activities. While we currently do not have an intent nor foresee a
need to repatriate funds, we could require more capital in the U.S. than is
generated by our U.S. operations for operations, capital expenditures or
significant discretionary activities such as acquisitions of businesses and
share repurchases. If so, we could elect to repatriate earnings from foreign
jurisdictions in the form of a cash dividend, which would generally be exempt
from taxation with the exception of the adverse impact of withholding taxes. We
also could elect to raise capital in the U.S. through debt or equity issuances.
 We estimate that approximately $26.7 million of our total $54.4 million in cash
and cash equivalents at June 30, 2018 is held by our foreign subsidiaries and is
not available to fund U.S. operations unless repatriated.

© Edgar Online, source Glimpses

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