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

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03/11/2019 | 06:05am EDT
The following discussion should be read in conjunction with Part II, Item 8,
"Financial Statements and Supplementary Data" of this report. Information
contained in the following discussion of our results of operations and financial
condition contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, Section 21E of the Exchange Act of
1934, as amended, and the Private Securities Litigation Reform Act of 1995, and,
as such, is based on current expectations and is subject to certain risks and
uncertainties. The reader should not place undue reliance on these
forward-looking statements for many reasons, including those risks discussed
under Item 1A, "Risk Factors," and elsewhere in this document. See "Disclosure
Regarding Forward-Looking Statements" that precedes Part I of this report. We
undertake no obligation to publicly update or revise any forward-looking
statements as a result of new information, future events or otherwise.



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 7 without definition are defined in Item 1,
"Business" of this report.



Amounts presented in this Item 7 are rounded. As such, there may be rounding
differences in period over period changes and percentages reported throughout
this Item 7.



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 casino 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 concession agreements, management
agreements, 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 our operating segments into reportable segments:






            Reportable Segment  Operating Segment
            Canada              Century Casino & Hotel - Edmonton
            CanadaCentury Casino St. Albert
            Canada              Century Casino Calgary
            Canada              Century Downs Racetrack and Casino
            Canada              Century Bets
            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 through wholly-owned subsidiaries:



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


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


 ·  The Century Casino Calgary in 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.



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 December 31, 2018,

owned eight casino licenses and operated seven casinos throughout Poland.

· 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 racetrack 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.

Rocky Mountain Turf Club ("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. The pari-mutuel network consists of sourcing of common pool

pari-mutuel wagering content and live video to off-track betting parlors

    throughout southern Alberta.


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

· As of December 31, 2018, we operated 11 ship-based casinos through concession

    agreements with three cruise lines.



In May 2017, we began operating the ship-based casinos onboard the Mein Schiff 6, a new 2,500 passenger cruise ship.




The concession agreements for the casinos on the Mein Schiff 1, Marella
Discovery and Wind Star ended in April 2018, October 2018 and November 2018,
respectively. The concession agreement for the casino on the Wind Spirit of
Windstar Cruises ended in January 2019. We will not renew the concession
agreements for the remaining four ships with Windstar Cruises that expire in
March, April and May 2019 because the cruise line intends to use the casino
space for other purposes. As a result, our revenue and associated expenses from
ship-based casinos will decrease in 2019.



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 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 IPJC 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 service 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.



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

GHL. We consolidate GHL as a majority-owned subsidiary for which we have a

controlling financial interest. 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 purchased an additional 2.85% ownership

interest in MCL on October 4, 2018 for $0.2 million, resulting in a total

ownership interest in MCL of 9.21%. 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 entertainment and gaming club in the Cao
Bang province of Vietnam that is 300 feet from the Vietnamese - Chinese border
station. The hotel offers 32 rooms, and the entertainment and gaming club
currently offers nine electronic table games for non-Vietnamese passport holders
under a provincial investment certificate that allows for up to 26 electronic
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, under which GHL is managing the operations at the hotel
and entertainment and gaming club in exchange for receiving a portion of MCL's
net profit. The Company accounts for GHL's interest in MCL as an equity
investment. GHL is included in the Corporate and Other reportable segment. See
Notes 1 and 4 to the Consolidated Financial Statements included in Item 8.
"Financial Statements and Supplementary Data" of this report 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
will 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 61.5 million ($45.1 million
based on the exchange rate in effect as of December 31, 2018) and the REC will
open on April 1, 2019. We are financing the project with $25.0 million of the
$34.4 million received from the common stock offering we completed in November
2017, of which $24.2 million has been used as of December 31, 2018. The balance
of the Century Mile construction is being financed through increased borrowing
capacity under the BMO Credit Agreement and with available cash.



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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.






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





                                    For the year
                                 ended December 31,                 % Change
Average Rates               2018        2017        2016      2018/2017   2017/2016
Canadian dollar (CAD)       1.2960      1.2981      1.3256        0.2%        2.1%
Euros (EUR)                 0.8473      0.8871      0.9041        4.5%        1.9%
Polish zloty (PLN)          3.6103      3.7764      3.9455        4.4%        4.3%
British pound (GBP)         0.7497      0.7767      0.7410        3.5%       (4.8%)
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 US 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 US dollar would
decrease the earnings from our foreign operations when translated into US
dollars. An increase in the value of these currencies in relation to the value
of the US dollar would increase the earnings from our foreign operations when
translated into US dollars. See Note 2, "Significant Accounting Policies -
Foreign Currency" to the Consolidated Financial Statements included in Part II,
Item 8, "Financial Statements and Supplementary Data" of this report.



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DISCUSSION OF RESULTS

Years ended December 31, 2018, 2017 and 2016

Century Casinos, Inc. and Subsidiaries








                                        For the year
                                     ended December 31,                     2018/2017               2017/2016
Amounts in thousands           2018          2017          2016        $ Change   % Change     $ Change   % Change
Gaming Revenue             $  140,301$  137,871$  123,355$   2,430       1.8%    $  14,516      11.8%
Hotel Revenue                   1,986         1,943         1,906           43       2.2%           37       1.9%
Food and Beverage
Revenue                        15,742        14,513        12,500        1,229       8.5%        2,013      16.1%
Other Revenue                  10,909        10,128        10,416          781       7.7%         (288)     (2.8%)
Gross Revenue                 168,938       164,455       148,177        4,483       2.7%       16,278      11.0%
Less Promotional
Allowances (1)                       -      (10,386)       (8,943)     (10,386)   (100.0%)       1,443      16.1%
Net Operating Revenue         168,938       154,069       139,234       14,869       9.7%       14,835      10.7%
Gaming Expenses               (73,328)      (66,364)      (58,928)       6,964      10.5%        7,436      12.6%
Hotel Expenses                   (727)         (660)         (541)          67      10.2%          119      22.0%
Food and Beverage
Expenses                      (15,854)      (12,959)      (10,945)       2,895      22.3%        2,014      18.4%
General and
Administrative Expenses       (60,194)      (50,526)      (44,306)       9,668      19.1%        6,220      14.0%
Total Operating Costs
and Expenses                 (159,502)     (139,454)     (123,069)      20,048      14.4%       16,385      13.3%
Earnings from Equity
Investment                         23              -             -          23     100.0%             -          -
Earnings from Operations        9,459        14,615        16,165       (5,156)    (35.3%)      (1,550)     (9.6%)
Income Tax Expense             (1,917)       (4,560)       (1,787)      (2,643)    (58.0%)       2,773     155.2%
Net Earnings
Attributable to
Non-controlling
Interests                        (612)       (1,632)       (4,598)      (1,020)    (62.5%)      (2,966)    (64.5%)
Net Earnings
Attributable to Century
Casinos, Inc.
Shareholders                    3,394         6,259         9,215       (2,865)    (45.8%)      (2,956)    (32.1%)
Adjusted EBITDA (2)        $   23,377$   26,086$   25,762$  (2,709)    (10.4%)   $     324       1.3%

Earnings Per Share
Attributable to Century
Casinos, Inc.
Shareholders
Basic Earnings Per Share   $     0.12$     0.25$     0.38$   (0.13)    (52.0%)   $   (0.13)    (34.2%)
Diluted Earnings Per
Share                      $     0.11$     0.24$     0.37$   (0.13)    (54.2%)   $   (0.13)    (35.1%)



(1) See Note 2, "Significant Accounting Policies," to the Consolidated Financial

Statements included in Part II, Item 8, "Financial Statements and

Supplementary Data" 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 (loss) attributable to Century Casinos, Inc. shareholders, see

      Item 6, "Selected Financial Data" of this report.





Factors impacting year-over-year comparability of the results include the following:

· We began operating CSA in October 2016. CSA contributed a total of $9.1 million

in net operating revenue and $1.1 million in net earnings for the year ended

December 31, 2018; $8.8 million in net operating revenue and $1.2 million in

net earnings for the year ended December 31, 2017 and $2.0 million in net

    operating revenue and $0.3 million in net earnings for the year ended
    December 31, 2016.



· We released the $2.2 million Canadian valuation allowance on CDR's deferred tax

assets, resulting in a tax benefit for the year ended December 31, 2016.

· We released the $5.7 million US valuation allowance on our US deferred tax

assets, resulting in a tax benefit for the year ended December 31, 2017. The

tax benefit from the release of the US valuation allowance was offset by

increased tax expense of $5.4 million resulting from the tax law changes made

in the Tax Act that became effective in the 2017 tax year. The increased

income tax expense decreased net earnings attributable to Century Casinos, Inc.

shareholders for the year ended December 31, 2017. See Note 11, "Income Taxes"

to the Consolidated Financial Statements included in Part II, Item 8,

"Financial Statements and Supplementary Data" of this report for a discussion

    of the impact of the Tax Act.



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

license tender awards in Poland impacted comparability of results for CPL

beginning in 2017. See the Poland discussion below for additional information.




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· In November 2017, we closed a public offering of 4,887,500 shares of our common

stock. The additional shares of common stock decreased earnings per share

attributable to Century Casinos Inc. shareholders by $0.01 for the year ended

    December 31, 2017.



· We began operating CCB in May 2018. CCB contributed a total of $2.7 million in

net operating revenue and ($2.1) million in net losses for the year ended

December 31, 2018 and ($0.3) million in net losses for the year ended December

    31, 2017 before the casino began operating.




Net operating revenue increased by $14.9 million, or 9.7%, and by $14.8 million,
or 10.7%, for the year ended December 31, 2018 compared to the year ended
December 31, 2017 and for the year ended December 31, 2017 compared to the year
ended December 31, 2016, respectively. Following is a breakout of net operating
revenue by segment for the year ended December 31, 2018 compared to the year
ended December 31, 2017 and for the year ended December 31, 2017 compared to the
year ended December 31, 2016.



· Canada increased by $3.6 million, or 6.3%, and by $7.5 million, or 14.9%.

· United States increased by $1.3 million, or 4.1%, and by $2.0 million, or 6.7%.

· Poland increased by $8.4 million, or 14.1%, and by $4.9 million, or 8.9%.

· Corporate Other increased by $1.5 million, or 34.1%, and by $0.4 million, or

    10.4%.




Operating costs and expenses increased by $20.0 million, or 14.4%, and by $16.4
million, or 13.3%, for the year ended December 31, 2018 compared to the year
ended December 31, 2017 and for the year ended December 31, 2017 compared to the
year ended December 31, 2016, respectively. Following is a breakout of operating
costs and expenses by segment for the year ended December 31, 2018 compared to
the year ended December 31, 2017 and for the year ended December 31, 2017
compared to the year ended December 31, 2016.



· Canada increased by $3.6 million, or 8.4%, and by $6.1 million, or 16.4%.

· United States increased by $1.0 million, or 3.9%, and by $1.1 million, or 4.4%.

· Poland increased by $10.9 million, or 19.0%, and by $7.7 million, or 15.6%.

· Corporate Other increased by $4.5 million, or 36.2%, and by $1.5 million, or

    13.1%.




Earnings from operations decreased by ($5.2) million, or (35.3%), and by ($1.6)
million, or (9.6%), for the year ended December 31, 2018 compared to the year
ended December 31, 2017 and for the year ended December 31, 2017 compared to the
year ended December 31, 2016, respectively. Following is a breakout of earnings
from operations by segment for the year ended December 31, 2018 compared to the
year ended December 31, 2017 and for the year ended December 31, 2017 compared
to the year ended December 31, 2016.



· Canada remained constant and increased by $1.4 million, or 10.8%.

· United States increased by $0.3 million, or 5.1%, and by $0.9 million, or

19.0%.

· Poland decreased by ($2.4) million, or (94.4%), and by ($2.8) million, or

(52.2%).

· Corporate Other decreased by ($3.0) million, or (36.9%), and by ($1.0) million,

    or (14.6%).




Net earnings decreased by ($2.9) million, or (45.8%), and by ($3.0) million, or
(32.1%), for the year ended December 31, 2018 compared to the year ended
December 31, 2017 and for the year ended December 31, 2017 compared to the year
ended December 31, 2016, respectively. 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 interests. For a discussion of these items, see
"Non-Operating Income (Expense)" and "Taxes" below in this Item 7.



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Reportable Segments



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




Canada
                                      For the year
                                   ended December 31,                   2018/2017               2017/2016
Amounts in thousands          2018         2017         2016       $ Change   % Change     $ Change   % Change
Gaming                    $  40,470$  39,866$  34,009$     604       1.5%    $   5,857      17.2%
Hotel                           542          554          561          (12)     (2.2%)          (7)     (1.2%)
Food and Beverage            10,528       10,017        8,501          511       5.1%        1,516      17.8%
Other Revenue                 9,821        8,427        8,035        1,394      16.5%          392       4.9%
Gross Revenue                61,361       58,864       51,106        2,497       4.2%        7,758      15.2%
Less Promotional
Allowances (1)                     -      (1,132)        (869)      (1,132)   (100.0%)         263      30.3%
Net Operating Revenue        61,361       57,732       50,237        3,629       6.3%        7,495      14.9%
Gaming Expenses             (12,105)     (12,296)     (10,725)        (191)     (1.6%)       1,571      14.6%
Hotel Expenses                 (205)        (203)        (185)           2       1.0%           18       9.7%
Food and Beverage
Expenses                     (8,610)      (7,981)      (6,790)         629       7.9%        1,191      17.5%
General and
Administrative Expenses     (22,597)     (19,217)     (16,302)       3,380      17.6%        2,915      17.9%
Total Operating Costs
and Expenses                (46,728)     (43,124)     (37,051)       3,604       8.4%        6,073      16.4%
Earnings from
Operations                   14,633       14,608       13,186           25       0.2%        1,422      10.8%
Income Tax Expense           (2,536)      (3,008)        (796)        (472)    (15.7%)       2,212     277.9%
Net Earnings
Attributable to
Non-controlling
Interests                      (722)        (996)      (3,137)        (274)    (27.5%)      (2,141)    (68.2%)
Net Earnings
Attributable to Century
Casinos, Inc.
Shareholders                  7,715        7,681        8,448           34       0.4%         (767)     (9.1%)
Adjusted EBITDA           $  19,522$  18,171$  16,262$   1,351       7.4%    $   1,909      11.7%



(1) See Note 2, "Significant Accounting Policies," to the Consolidated Financial

Statements included in Part II, Item 8, "Financial Statements and

Supplementary Data" of this report for a discussion of the impact of the

adoption of ASU 2014-09 on the presentation of promotional allowances.





On October 1, 2016, our subsidiary, Century Casino St. Albert Inc., acquired
100% of the issued and outstanding shares of several entities that collectively
owned and operated the Apex Casino in St. Albert, Edmonton, Canada, as well as
the related real property (the "Apex Acquisition"). In October 2016, we began
operating CSA.



CDR began hosting thoroughbred horse races, in addition to standardbred horse
races, in September 2017. Previously, CDR conducted only standardbred horse
races. The thoroughbred races have generated additional customers and increased
gaming and food and beverage revenue. We released the $2.2 million Canadian
valuation allowance on CDR's deferred tax assets, resulting in a tax benefit for
the year ended December 31, 2016.



Construction on the Century Mile project began in July 2017. Century Mile will open on April 1, 2019.



                                       40


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Years ended December 31, 2018 and 2017

The following discussion highlights results for the year ended December 31, 2018 compared to the year ended December 31, 2017.

Results in US dollars were impacted by a 0.2% exchange rate increase in the average rate between the US dollar and Canadian dollar for the year ended December 31, 2018 compared to the year ended December 31, 2017.




Revenue Highlights




   In CAD                                   In US dollars
?  At CRA, net operating revenue         ?  At CRA, net operating revenue
   decreased by (CAD 0.1) million, or       decreased by ($0.1) million, or
   (0.4%), due to lower food and            (0.4%).
   beverage revenue. The decreased food
   and beverage revenue was due to a
   continued trend of lower spending per
   customer.
?  At CSA, net operating revenue         ?  At CSA, net operating revenue

increased by CAD 0.5 million, or increased by $0.3 million, or 3.9%.

   4.0%, due to increased gaming and
   food and beverage revenue. We have
   been focusing on enhancing player
   comfort in 2018 and have seen growth
   in customers and revenue.
?  At CAL, net operating revenue         ?  At CAL, net operating revenue

increased by CAD 0.6 million, or increased by $0.5 million, or 6.6%.

   6.5%, due to increased food and
   beverage revenue and increased
   revenue from Century Sports, our
   bowling and mini golf area.
?  At CDR, net operating revenue         ?  At CDR, net operating revenue

increased by CAD 3.9 million, or increased by $3.0 million, or 17.2%.

   17.4%, due to increased gaming,
   pari-mutuel and food and beverage
   revenue. The thoroughbred racing
   season was three weeks longer in 2018
   compared to 2017. Thoroughbred racing
   attracts patrons that tend to spend
   more on gaming and food and beverage.




Operating Expense Highlights



   In CAD                                   In US dollars

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

   by CAD 0.2 million, or 1.1%, due to      by $0.2 million, or 1.1%.
   increased payroll expense as a result
   of increased minimum wage, offset by

decreased gaming-related expenses. ? At CSA, operating expenses increased ? At CSA, operating expenses increased

   by CAD 0.3 million, or 3.9%, due         by $0.3 million, or 4.0%.
   primarily to increased payroll
   expense as a result of an increased

minimum wage. ? At CAL, operating expenses increased ? At CAL, operating expenses increased

   by CAD 0.4 million, or 3.5%,             by $0.3 million, or 3.6%.
   primarily due to increased payroll
   costs as a result of an increased
   minimum wage and increased operating
   expenses related to operating Century
   Sports.

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

   by CAD 1.8 million, or 11.7%, due to     by $1.4 million, or 11.4%.
   increased payroll costs as a result
   of an increased minimum wage and
   increased operating expenses
   primarily related to horse racing.




                                       41


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Operating expenses and losses from operations related to the Century Mile
project increased by $1.7 million for the year ended December 31, 2018 compared
to the year ended December 31, 2017 primarily due to expense related to the land
lease.


We also operate the Southern Alberta pari-mutuel off-track betting network through CBS. Earnings from operations at CBS remained constant, for the year ended December 31, 2018 compared to the year ended December 31, 2017.

A reconciliation of net earnings attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion in Item 6, "Selected Financial Data" of this report.

Years ended December 31, 2017 and 2016

The following discussion highlights results for the year ended December 31, 2017 compared to the year ended December 31, 2016.

Results in US dollars were impacted by a 2.1% exchange rate increase in the average rate between the US dollar and Canadian dollar for the year ended December 31, 2017 compared to the year ended December 31, 2016.




Revenue Highlights



   In CAD                                   In US dollars
?  At CRA, net operating revenue         ?  At CRA, net operating revenue
   decreased by (CAD 1.1) million, or       decreased by ($0.4) million, or
   (3.9%), due to lower gaming and food     (1.7%).
   and beverage revenue. Increased
   competition from a casino that opened
   in the downtown Edmonton area in 2016
   contributed to the decline in gaming
   revenue. In addition, the decreased
   food and beverage revenue was due to
   fewer shows presented in our showroom
   throughout the year and lower
   spending per customer.
?  At CSA, net operating revenue         ?  At CSA, net operating revenue

increased by CAD 8.7 million, or increased by $6.8 million, or 335.6%.

   322.9%, due to operating the casino
   for a full year in 2017 versus three
   months in 2016.
?  At CAL, net operating revenue         ?  At CAL, net operating revenue

decreased by (CAD 0.2) million, or increased by $0.1 million, or 0.7%.

   (1.6%), due to lower gaming and food
   and beverage revenue and increased
   promotional allowances. In the fourth
   quarter of 2017, we completed the
   addition of an 18 hole miniature golf
   course that, together with the 30
   lane bowling alley, is operated as
   Century Sports.
?  At CDR, net operating revenue         ?  At CDR, net operating revenue

increased by CAD 1.4 million, or increased by $1.4 million, or 8.5%.

   6.4%, due to increased gaming and
   food and beverage revenue. The
   increased revenue was due to the
   addition of 40 slot machines during
   the second quarter of 2017 and our
   introduction of thoroughbred racing
   during the fourth quarter of 2017.
   Thoroughbred racing attracts patrons
   that tend to spend more on gaming and
   food and beverage.





                                       42


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Operating Expense Highlights




   In CAD                                   In US dollars

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

   by (CAD 0.9) million, or (4.4%), due     by ($0.3) million, or (2.3%).
   to decreased cost of goods as a
   result of lower food and beverage
   sales; decreased marketing expenses
   due to fewer shows presented in the
   showroom; and decreased payroll costs

due to labor efficiencies. ? At CSA, operating expenses increased ? At CSA, operating expenses increased

by CAD 6.3 million, or 324.3%, due to by $4.9 million, or 336.8%.

operating the casino for a full year

in 2017 versus three months in 2016. ? At CAL, operating expenses increased ? At CAL, operating expenses increased

   by CAD 0.5 million, or 4.9%,             by $0.5 million, or 7.2%.
   primarily due to increased payroll
   costs due in part to staffing changes
   in upper management and increased
   marketing expense related to
   marketing the new entertainment
   center.

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

   by CAD 1.2 million, or 8.6%, due to      by $1.2 million, or 10.9%.
   increased payroll costs and operating
   expenses primarily related to
   operating thoroughbred racing
   beginning in September 2017.



Operating expenses related to the Century Mile project were less than $0.1 million for the year ended December 31, 2017.

We also operate the Southern Alberta pari-mutuel off-track betting network through CBS. Earnings from operations at CBS decreased by ($0.1) million, or (30.5%), for the year ended December 31, 2017 compared to the year ended December 31, 2016.

A reconciliation of net earnings attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion in Item 6, "Selected Financial Data" of this report.



                                       43


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United States
                                      For the year
                                   ended December 31,                   2018/2017               2017/2016
Amounts in thousands          2018         2017         2016       $ Change   % Change     $ Change   % Change
Gaming                    $  27,736$  34,610$  32,398$  (6,874)    (19.9%)   $   2,212       6.8%
Hotel                         1,444        1,389        1,345           55       4.0%           44       3.3%
Food and Beverage             3,931        3,782        3,397          149       3.9%          385      11.3%
Other Revenue                   372          334          352           38      11.4%          (18)     (5.1%)
Gross Revenue                33,483       40,115       37,492       (6,632)    (16.5%)       2,623       7.0%
Less Promotional
Allowances (1)                     -      (7,961)      (7,357)      (7,961)   (100.0%)         604       8.2%
Net Operating Revenue        33,483       32,154       30,135        1,329       4.1%        2,019       6.7%
Gaming Expenses             (12,897)     (13,273)     (12,723)        (376)     (2.8%)         550       4.3%
Hotel Expenses                 (522)        (457)        (356)          65      14.2%          101      28.4%
Food and Beverage
Expenses                     (3,935)      (2,810)      (2,463)       1,125      40.0%          347      14.1%
General and
Administrative Expenses      (8,069)      (7,610)      (7,398)         459       6.0%          212       2.9%
Total Operating Costs
and Expenses                (27,601)     (26,555)     (25,428)       1,046       3.9%        1,127       4.4%
Earnings from
Operations                    5,882        5,599        4,707          283       5.1%          892      19.0%
Income Tax Expense           (1,508)      (2,128)      (1,815)        (620)    (29.1%)         313      17.2%
Net Earnings
Attributable to Century
Casinos, Inc.
Shareholders                  4,373        3,469        2,890          904      26.1%          579      20.0%
Adjusted EBITDA           $   8,061$   8,005$   7,197$      56       0.7%    $     808      11.2%



(1) See Note 2, "Significant Accounting Policies," to the Consolidated Financial

Statements included in Part II, Item 8, "Financial Statements and

Supplementary Data" of this report for a discussion of the impact of the

adoption of ASU 2014-09 on the presentation of promotional allowances.





We continue to see growth at our Colorado properties and anticipate slow growth
in these markets in the coming years. We continue to explore an expansion at CRC
to provide additional hotel rooms for our existing casino and hotel. We are
currently updating our potential plans for expansion at CRC and estimate that
this project, if undertaken, will cost between $6.5 million and $20.0 million
depending on the scope of the project ultimately chosen.



Years ended December 31, 2018 and 2017

The following discussion highlights results for the year ended December 31, 2018 compared to the year ended December 31, 2017.

Market Share Highlights

Market share is calculated by dividing our property's AGP into the market's AGP for the same time period, as reported by the Colorado Division of Gaming.

· The Central City market increased by 9.9% and CTL's share of the Central City

market was 26.8% compared to 29.3% for the year ended December 31, 2017. We

attribute the increase in the Central City market share 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 3.5% and CRC's share of the Cripple Creek

market was 10.4% compared to 10.1% for the year ended December 31, 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 $0.5 million, or 2.4%, primarily due

to increased gaming revenue and decreased promotional allowances.

· At CRC, net operating revenue increased by $0.9 million, or 6.6%, primarily due

    to increased gaming revenue.




Operating Expense Highlights

· At CTL, operating expenses increased by $0.7 million, or 4.3%, primarily due to

increased gaming-related expenses and increased payroll costs.

· At CRC, operating expenses increased by $0.3 million, or 3.3%, primarily due to

    increased gaming-related expenses and increased payroll costs.



A reconciliation of net earnings attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion in Item 6, "Selected Financial Data" of this report.



                                       44


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Years ended December 31, 2017 and 2016

The following discussion highlights results for the year ended December 31, 2017 compared to the year ended December 31, 2016.

Market Share Highlights

Market share is calculated by dividing our property's AGP into the market's AGP for the same time period, as reported by the Colorado Division of Gaming.

· The Central City market increased by 3.2% and CTL's share of the Central City

market was 29.3% compared to 28.2% for the year ended December 31, 2016.

· The Cripple Creek market increased by 2.5% and CRC's share of the Cripple Creek

    market was 10.1% compared to 9.9% for the year ended December 31, 2016.




Revenue Highlights

· At CTL, net operating revenue increased by $1.2 million, or 6.9%, primarily due

to increased gaming and food and beverage revenue, offset by increased

promotional allowances.

· At CRC, net operating revenue increased by $0.8 million, or 6.4%, primarily due

    to increased gaming and decreased promotional allowances.




Operating Expense Highlights

· At CTL, operating expenses increased by $1.0 million, or 6.6%, due to increased

gaming-related expenses, increased payroll costs and increased cost of goods

sold related to increased food and beverage sales. These increases were offset

by a decrease in advertising expenses.

· At CRC, operating expenses increased by $0.1 million, or 1.1%, primarily due to

    increased payroll costs.



A reconciliation of net earnings attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion in Item 6, "Selected Financial Data" of this report.


                                       45



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Poland
                                      For the year
                                   ended December 31,                   2018/2017               2017/2016
Amounts in thousands          2018         2017         2016       $ Change   % Change     $ Change   % Change
Gaming                    $  67,289$  60,180$  54,791$   7,109      11.8%    $   5,389       9.8%
Food and Beverage               782          714          602           68       9.5%          112      18.6%
Other Revenue                   138          158          214          (20)    (12.7%)         (56)    (26.2%)
Gross Revenue                68,209       61,052       55,607        7,157      11.7%        5,445       9.8%
Less Promotional
Allowances (1)                     -      (1,256)        (717)      (1,256)   (100.0%)         539      75.2%
Net Operating Revenue        68,209       59,796       54,890        8,413      14.1%        4,906       8.9%
Gaming Expenses             (44,632)     (38,308)     (33,582)       6,324      16.5%        4,726      14.1%
Food and Beverage
Expenses                     (2,714)      (2,168)      (1,692)         546      25.2%          476      28.1%
General and
Administrative Expenses     (17,653)     (13,986)     (11,778)       3,667      26.2%        2,208      18.7%
Total Operating Costs
and Expenses                (68,064)     (57,209)     (49,482)      10,855      19.0%        7,727      15.6%
Earnings from
Operations                      145        2,587        5,408       (2,442)    (94.4%)      (2,821)    (52.2%)
Income Tax Expense             (595)      (1,388)      (1,265)        (793)    (57.1%)         123       9.7%
Net Loss (Earnings)
Attributable to
Non-controlling
Interests                        75         (636)      (1,461)        (711)   (111.8%)        (825)    (56.5%)
Net (Loss) Earnings
Attributable to Century
Casinos, Inc.
Shareholders                   (153)       1,280        2,921       (1,433)   (112.0%)      (1,641)    (56.2%)
Adjusted EBITDA           $   4,890$   6,406$   8,139$  (1,516)    (23.7%)   $  (1,733)    (21.3%)



(1) See Note 2, "Significant Accounting Policies," to the Consolidated Financial

Statements included in Part II, Item 8, "Financial Statements and

Supplementary Data" 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. Before a gaming license expires, there is a public
notification of the available license and 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 for the year ended December 31, 2018 compared to the year
ended December 31, 2017 by the additional costs and expenses associated with the
closure of several of its casinos during 2018. The following is a summary of
changes in and comparability of the casinos operated by CPL in 2018 and 2017.



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

years ended December 31, 2018, 2017 and 2016.

· 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, which has been operating since 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 the casino

opened 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.

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

not awarded a new license for this city.

· 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.




For the year ended December 31, 2018, we estimate that the closures of four of
the casinos listed above decreased CPL's net operating revenue by PLN 35.2
million ($9.8 million based on the average exchange rate for the year ended
December 31, 2018), net income attributable to Century Casinos, Inc.
shareholders by PLN 7.4 ($2.1 million based on the average exchange rate for the
year ended December 31, 2018), and Adjusted EBITDA by PLN 12.0 ($3.3 million
based on the average exchange rate for the year ended December 31, 2018).



                                       46


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In April 2019, CPL will transfer one of its two casino licenses at the Marriott
Hotel in Warsaw to the Hilton Hotel in Warsaw. CPL also is expanding the gaming
floor at the Marriott Hotel by adding an additional six table games utilizing
its new casino license awarded in July 2018 to operate the Marriott Hotel. See
"Overview of Operations - Poland" in Item 1, "Business" of this report for more
information.



Effective April 2017, the Polish gaming laws permit online gaming and slot
arcades operated through a state run company. The first slot arcades opened in
Poland in June 2018 and online gaming began in December 2018. We have not
experienced a negative impact to our results of operations in Poland from slot
arcades or online gaming; however, increased competition could occur and
adversely affect our results of operations in the future.



Years ended December 31, 2018 and 2017

The following discussion highlights results for the year ended December 31, 2018 compared to the year ended December 31, 2017.

Results in US dollars were impacted by a 4.4% exchange rate increase in the average rate between the US dollar and Polish zloty for the year ended December 31, 2018 compared to the year ended December 31, 2017.



Revenue Highlights


   In PLN                                   In US dollars

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

   PLN 21.2 million, or 9.4%, due to        $8.4 million, or 14.1%.
   additional gaming revenue from the
   casinos that opened in 2018 as
   described above, which was offset in
   part by reduced gaming revenue from
   the casinos that closed permanently
   in 2018. A large portion of the
   increase in revenue was due to the
   operation of the casino at the Hilton
   Warsaw Hotel for the full year 2018
   compared to seven months in 2017.





Operating Expense Highlights


   In PLN                                   In US dollars

? Operating expenses increased by PLN ? Operating expenses increased by

31.2 million, or 14.5%, primarily due $10.9 million, or 19.0%.

to increased gaming-related expenses

as a result of increased gaming

revenue, increased payroll costs, as

well as additional rent costs to

maintain casino space and additional

payroll costs to retain employees

while licensing decisions were

pending. The closures of the Poznan

and Plock casinos resulted in

additional expenses of PLN 2.4

million ($0.7 million based on the

exchange rate in effect on December

31, 2018) during 2018.

A reconciliation of net earnings (loss) attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion in Item 6, "Selected Financial Data" of this report.



                                       47


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Years ended December 31, 2017 and 2016

The following discussion highlights results for the year ended December 31, 2017 compared to the year ended December 31, 2016.

Results in US dollars were impacted by a 4.3% exchange rate increase in the average rate between the US dollar and Polish zloty for the year ended December 31, 2017 compared to the year ended December 31, 2016.



Revenue Highlights



   In PLN                                   In US dollars

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

   PLN 9.0 million, or 4.1%, due to         $4.9 million, or 8.9%.
   increased gaming revenue offset by
   increased promotional allowances.
   Revenue increased at all locations in
   Poland. However, the increases were
   offset by decreased revenue at our
   closed casino locations in Wroclaw,
   Katowice, Sosnowiec and the LIM
   Center in Warsaw. Our casinos in
   Warsaw continued to generate the
   majority of revenue for CPL. In 2017,
   the table hold percentage, which
   represents the percentage of PLN bet
   that we retained, decreased 24%,
   primarily related to fourth quarter
   table game results at our Warsaw
   casinos.





Operating Expense Highlights



   In PLN                                   In US dollars

? Operating expenses increased by PLN ? Operating expenses increased by

19.8 million, or 10.1%, primarily due $7.7 million, or 15.6%.

to increased gaming-related expenses

of PLN 3.1 million, payroll costs of

PLN 10.1 million and increased

marketing expenses of PLN

1.5 million. In addition, we had a

PLN 0.5 million impairment on

leasehold improvements at the LIM

Center casino. Payroll costs

increased as the result of salary

increases and additional payroll

expenses related to increased staff

required to operate the casino at the

   Hilton Warsaw Hotel.




A reconciliation of net earnings (loss) attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion in Item 6, "Selected Financial Data" of this report.



                                       48


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Corporate and Other
                                      For the year
                                   ended December 31,                   2018/2017               2017/2016
Amounts in thousands          2018         2017         2016       $ Change   % Change     $ Change   % Change
Gaming                    $   4,806$   3,215$   2,157$   1,591      49.5%    $   1,058      49.0%
Food and Beverage
Revenue                         501             -            -         501     100.0%             -          -
Other Revenue                   578        1,209        1,815         (631)    (52.2%)        (606)    (33.4%)
Gross Revenue                 5,885        4,424        3,972        1,461      33.0%          452      11.4%
Less Promotional
Allowances (1)                     -         (37)            -         (37)   (100.0%)          37     100.0%
Net Operating Revenue         5,885        4,387        3,972        1,498      34.1%          415      10.4%
Gaming Expenses              (3,694)      (2,487)      (1,898)       1,207      48.5%          589      31.0%
Food and Beverage
Expenses                       (595)            -            -         595     100.0%             -          -
General and
Administrative Expenses     (11,875)      (9,713)      (8,828)       2,162      22.3%          885      10.0%
Total Operating Costs
and Expenses                (17,109)     (12,566)     (11,108)       4,543      36.2%        1,458      13.1%
Earnings from Equity
Investment                       23             -            -          23     100.0%             -          -
Losses from Operations      (11,201)      (8,179)      (7,136)      (3,022)    (36.9%)      (1,043)    (14.6%)
Income Tax Benefit            2,722        1,964        2,089          758      38.6%         (125)     (6.0%)
Net Loss Attributable
to Non-controlling
Interests                        35             -            -          35     100.0%             -          -
Net Loss Attributable
to Century Casinos,
Inc. Shareholders            (8,541)      (6,171)      (5,044)      (2,370)    (38.4%)      (1,127)    (22.3%)
Adjusted EBITDA           $  (9,096)$  (6,496)$  (5,836)$  (2,600)    (40.0%)   $    (660)    (11.3%)



(1) See Note 2, "Significant Accounting Policies," to the Consolidated Financial

Statements included in Part II, Item 8, "Financial Statements and

Supplementary Data" of this report for a discussion of the impact of the

adoption of ASU 2014-09 on the presentation of promotional allowances.

Years ended December 31, 2018 and 2017




We began operating the ship-based casino 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 $0.1 million in net operating revenue and
less than $0.1 million in net income attributable to Century Casinos, Inc.
shareholders for the year ended December 31, 2018. The concession agreements to
operate the ship-based casinos onboard the Marella Discovery and Wind Star ended
in October 2018 and November 2018, respectively. The Marella Discovery
contributed $0.3 million in net operating revenue and less than ($0.1) million
in net losses attributable to Century Casinos, Inc. shareholders for the year
ended December 31, 2018 and the Wind Star contributed less than $0.1 million in
net operating revenue and less than ($0.1) million in net losses attributable to
Century Casinos, Inc. shareholders for the year ended December 31, 2018.



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 entertainment and gaming
club in the Cao Bang province of Vietnam, under which GHL manages MCL and owns
9.21% of its outstanding shares. We consolidate GHL as a majority-owned
subsidiary for which we have 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.


The following discussion highlights results for the year ended December 31, 2018 compared to the year ended December 31, 2017.

Revenue Highlights

· Net operating revenue for Cruise Ships & Other decreased by ($1.3) million, or

(29.2%), due to decreased revenue of ($0.4) million due to the termination of

the consulting agreement with Norwegian in May 2017; decreased revenue from the

termination of the management agreement for the casino at the Hilton Aruba

Caribbean Resort & Casino in November 2017; decreased revenue from the

concession agreements that ended in 2018, as described above; and decreased

revenue from fewer sailing days for the Glory Sea.

· Net operating revenue for CCB was GBP 2.1 million. In US dollars, net operating

    revenue was $2.7 million.




                                       49


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Operating Expense Highlights

· Total operating costs and expenses for Cruise Ships & Other decreased by

($0.9) million, or (24.9%), primarily due to decreased operating expenses from

the concession agreements that ended in 2018 and decreased expenses from fewer

sailing days for the Glory Sea.

· Operating expenses for CCB were GBP 4.0 million. In US dollars, operating

expenses were $5.3 million. Prior to the opening of the casino, during 2017,

CCB had operating expenses of GBP 0.2 million, which were $0.3 million in US

    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 (3.8%), for the year ended December 31, 2018 compared to the
year ended December 31, 2017 due to increased general and administrative
expenses. This increased the net loss attributable to Century Casinos, Inc.
shareholders for the year ended December 31, 2018.



A reconciliation of net loss attributable to Century Casinos, Inc. shareholders
to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA"
discussion in Item 6, "Selected Financial Data" of this report.



Years ended December 31, 2017 and 2016

The following discussion highlights results for the year ended December 31, 2017 compared to the year ended December 31, 2016.

Revenue Highlights

· Net operating revenue for Cruise Ships & Other increased by $0.4 million, or

10.4%, due to a full year of revenue from the Mein Schiff 5, Marella Discovery

and Glory Sea, which increased revenue by $0.7 million and revenue from the

Mein Schiff 6 of $0.2 million. The increased gaming revenue was offset by

decreased revenue of ($0.6) million due to the termination of the consulting

    agreement with Norwegian in May 2017.



Operating Expense Highlights

· Total operating costs and expenses for Cruise Ships & Other increased by

$0.7 million, or 20.9%, primarily due to a full year of operations onboard the

Mein Schiff 5, Marella Discovery and Glory Sea, the operation of the Mein

Schiff 6, as well as the $0.3 million charged to operating costs and expenses

related to the termination of the cooperation agreement with Dynamic Partners

International, Ltd. regarding the operations of the ship-based casino onboard

    Glory Sea.



Losses from operations attributable to CCB were ($0.3) million for the year ended December 31, 2017.




Losses from operations attributable to our Corporate Other operating segment,
which includes certain other corporate and management operations, increased by
($0.5) million, or (6.7%), for the year ended December 31, 2017 compared to the
year ended December 31, 2016 due to increased payroll and travel costs as well
as the acquisition costs related to CCB. This increased the net loss
attributable to Century Casinos, Inc. shareholders for the year ended December
31, 2017.



The net loss attributable to Century Casinos, Inc. shareholders from the
Corporate and Other segment was also impacted by the release of our $5.7 million
US valuation allowance on our US deferred tax assets, resulting in a tax benefit
for the year ended December 31, 2017. The tax benefit from the release of the US
valuation allowance was offset by increased tax expense of $5.4 million
resulting from the tax law changes made in the Tax Act that became effective in
the 2017 tax year, as discussed further in Taxes below.



A reconciliation of net loss attributable to Century Casinos, Inc. shareholders
to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA"
discussion in Item 6, "Selected Financial Data" of this report.







                                       50


--------------------------------------------------------------------------------

Non-Operating Income (Expense)




Non-operating income (expense) for the years ended December 31, 2018, 2017 and
2016 was as follows:






                                     For the year
                                  ended December 31,                2018/2017              2017/2016
Amounts in thousands         2018        2017        2016      $ Change    % Change   $ Change    % Change
Interest Income            $    103$     92$     72$     11      12.0%    $     20      27.8%
Interest Expense             (4,217)     (3,661)     (3,160)        556      15.2%         501      15.9%
Gain on Foreign Currency
Transactions, Cost
Recovery Income and
Other                           578       1,405       2,523        (827)    

(58.9%) (1,118) (44.3%) Non-Operating (Expense) $ (3,536)$ (2,164)$ (565)$ (1,372) (63.4%) $ (1,599) (283.0%)




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 our borrowings under
our third amended and restated credit agreement with the Bank of Montreal (the
"BMO Credit Agreement"), the fair value adjustments for our interest rate swap
agreements, our CPL and CCB borrowings, our capital lease agreements and
interest expense related to CDR's land lease.



Gain on foreign currency transactions, cost recovery income and other




Cost recovery income of $0.6 million and $2.2 million was received by CDR for
the years ended December 31, 2017 and 2016, respectively, related to
infrastructure built during the development of the Century Downs REC project.
The distribution to CDR's non-controlling shareholders through non-controlling
interest is part of a credit agreement between CRM and CDR. There was no cost
recovery income received by CDR for the year ended December 31, 2018.



                                       51


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Taxes


Our income tax expense by jurisdiction is summarized in the table below:





Amounts in                      For the year                                   For the year                                      For the year
thousands                 ended December 31, 2018                         ended December 31, 2017                           ended December 31, 2016
                   Pre-tax       Income tax                                       Income tax                                        Income tax
                    income         expense       Effective        Pre-tax           expense       Effective         Pre-tax           expense       Effective
                    (loss)        (benefit)      tax rate      income

(loss) (benefit) tax rate income (loss) (benefit)

   tax rate
United States    $     1,329$        694         52.2%    $         1,059    $        497          46.9%    $           138    $         85          61.7%
Canada                 7,410           1,573         21.2%              8,460           2,169          25.6%              9,889             149           1.5%
Poland                   660             606         91.8%              3,096           1,394          45.0%              5,523           1,264          22.9%
United Kingdom        (3,104)           (696)        22.4%               (312)            (25)          8.0%                   -               -              -
Mauritius*              (244)             23         (9.4%)               241               6           2.5%                480              11           2.3%
Austria                  (60)           (283)      (471.7%)               (93)            519        (558.1%)              (430)            278         (64.7%)
Hong Kong                (68)               -             -                  -               -              -                  -               -              -
Total            $     5,923$      1,917         32.4%    $        12,451$      4,560          36.6%    $        15,600$      1,787          11.5%

*Ship-based casinos



Our worldwide effective income tax rate for 2018 was 32.4%. Our effective income
tax rate for 2018 was impacted by the decrease of pre-tax income in Canada,
Mauritius, Poland and the United Kingdom. The comparison of pre-tax income of
$5.9 million for the year ended December 31, 2018, compared to pre-tax income of
$12.5 million for the year ended December 31, 2017, should be considered when
comparing tax rates year-over-year. The blended corporate income tax rate in the
United States for 2018 was 24.66%. The effective tax rate in the United States
for 2018 was 52.2% due to permanent addbacks including the finalization of the
accounting for the one-time transition tax, under the Tax Act, current tax on
global intangible-low taxed income ("GILTI") and nondeductible stock option
expense. A substantial portion of our earnings are from Canada, which has a 27%
income tax rate; the effective tax rate in Canada of 21.2% for 2018 was due
primarily to the impact of foreign currency exchange rates. Another substantial
portion of our earnings are from Poland, which has a 19% income tax rate. The
effective tax rate in Poland of 91.8% for 2018 was due to nondeductible payments
to certain governing authorities, contingent liability settlements, as well as
meals, entertainment, gifts and giveaways. A portion of our earnings are from
the U.K., where the income tax rate is 19%. The effective tax rate in the U.K.
of 22.4% is due to nondeductible initial startup fees and exchange rate
differences. The income tax rate for our earnings from Mauritius is 3%; the
effective tax rate of (9.4%) for 2018 was due to various permanent addbacks. A
portion of our earnings are from Austria, which has a 25% income tax rate, and
due primarily to the impact of foreign currency exchange rates, the effective
tax rate in Austria for 2018 was (471.7%). A portion of our earnings are from
Hong Kong, which has a 16.5% income tax rate. Because all earnings were derived
from outside sources that were not subject to the jurisdiction's tax, the
effective income tax rate is 0.0%. The movement of exchange rates for
intercompany loans denominated in US dollars further impacts the effective
income tax rate because foreign currency gains and losses generally are not
taxed until realized. Therefore, the overall effective income tax rate was
significantly impacted in 2018 and can be significantly impacted by foreign
currency gains or losses in the future.



The Tax Act, which was enacted on December 22, 2017, included significant
changes to the Internal Revenue Code including, among other items, a reduction
of the federal corporate tax rate from 35% to 21%, a one-time transition tax on
earnings of certain foreign subsidiaries that were previously deferred, and the
creation of new taxes on certain foreign earnings. The Tax Act subjects a US
stockholder to current tax on GILTI earned by certain foreign subsidiaries. In
addition, the Tax Act provides for foreign derived intangible income ("FDII") to
be taxed at a lower effective rate than the statutory rate by allowing a tax
deduction against the income. Interpretive guidance on the accounting for GILTI
states that an entity can make an accounting policy election to either recognize
deferred taxes for temporary basis differences expected to reverse as GILTI in
future years or provide for the tax expense related to GILTI in the year the tax
is incurred as a period expense only. We have elected to recognize the current
tax on GILTI as an expense in the period the tax is incurred. See Note 11 to the
Consolidated Financial Statements included in Part II, Item 8, "Financial
Statements and Supplementary Data" of this report for more discussion of
provisional amounts related to the Tax Act.







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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 December 31, 2018, our total debt under bank borrowings and other
agreements net of $0.5 million related to deferred financing costs was
$59.5 million, of which $42.0 million was long-term debt and $17.5 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. A principal amount of
approximately CAD 16.1 million ($11.8 million based on the exchange rate in
effect on December 31, 2018) under our BMO Credit Agreement is due in August
2019 and is presented in the current portion of long-term debt. We intend to
seek to refinance this portion of our BMO Credit Agreement and anticipate that
the refinancing will be completed in the third quarter of 2019. There is no set
repayment schedule for the CPL credit facilities, and we classify them as
short-term debt due to the nature of the agreements. We intend to repay the
current portion of our debt obligations with available cash. For a description
of our debt agreements, see Note 7 to the Consolidated Financial Statements
included in Part II, Item 8, "Financial Statements and Supplementary Data" of
this report. Net Debt was $14.4 million as of December 31, 2018 compared to
($17.7) million as of December 31, 2017, primarily due to the decrease in cash
to $45.6 million at December 31, 2018 from $74.7 million at December 31, 2017 as
a result of using $24.2 million to construct the Century Mile project. For the
definition and reconciliation of Net Debt to the most directly comparable GAAP
measure, see "Non-GAAP Measures - Net Debt" in Item 6, "Selected Financial Data"
of this report.


The following table lists the 2019 maturities of our debt:




Amounts in
thousands
                                                         Century
                                                       Casino Bath

Bank of Casinos Poland Casinos Poland Credit Century Downs

Montreal Credit Agreements Credit Facility Agreement Land Lease Capital Leases Total $ 15,679 $

            522    $           647    $       511    $               -   $           123    $   17,482

A loan agreement with UniCredit Bank Austria AG for a revolving line of credit is not included in the table above because no amounts were borrowed as of December 31, 2018.




Cash Flows

Cash, cash equivalents and restricted cash totaled $45.6 million and working
capital (current assets minus current liabilities) was  $5.0 million at December
31, 2018 compared to cash, cash equivalents and restricted cash of $76.4 million
and working capital of $49.9 million at December 31, 2017, and cash, cash
equivalents and restricted cash of $39.0 million and working capital of
$17.3 million at December 31, 2016. The decrease in cash, cash equivalents and
restricted cash from December 31, 2017 to December 31, 2018 is due to  $40.0
million for the construction of the Century Mile project, $16.8 million of cash
used to purchase property and equipment, $0.3 million for CRM's purchase of its
ownership interest in GHL, net of cash acquired, $0.6 million for GHL's purchase
of its ownership interest in MCL, a $0.6 million distribution to non-controlling
interests, $0.4 million in deferred financing payments, $0.3 million in
principal repayments of capital lease agreements and $2.0 million in exchange
rate changes, offset by $22.3 million of cash provided by operating activities,
$8.2 million in principal borrowings net of repayments, $0.3 million in proceeds
from the exercise of stock options and less than $0.1 million in proceeds from
the sale of assets.



Net cash provided by operating activities was $22.3 million, $19.4 million and
$22.3 million in 2018,  2017 and 2016, respectively. 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 also to the
consolidated statements of cash flows and to management's discussion of the
results of operations above in this Item 7 for a discussion of earnings from
operations.



Net cash used in investing activities of $57.7 million for the year ended
December 31, 2018 consisted of $40.0 million for construction costs related to
the Century Mile project; $7.8 million for the Century Casino Bath project; $5.1
million in leasehold improvements at the new casinos in Poland and additional
assets for the casinos in Poland; $0.8 million in racetrack improvements and a
barn at CDR; $0.6 million in slot machines for CTL and CRC; $0.2 million in
carpet replacement at CTL and CRC; $0.1 million in surveillance system upgrades
at CAL; $2.4 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 $0.6 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.



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Net cash used in investing activities of $13.0 million for the year ended
December 31, 2017 consisted of $4.3 million for the Century Mile project; $0.1
million for the Palace Hotel renovation project at CRC, which was placed on hold
during the first quarter of 2017; $0.3 million to purchase slot machines for CTL
and CRC; $0.1 million for the CRA casino renovation; $0.5 million for bowling
lane renovations and a miniature golf course at CAL; $0.8 million for a parking
lot and thoroughbred infrastructure at CDR; $0.1 million in new carpet for the
gaming floor at CSA; $2.1 million in leasehold improvements, gaming and other
equipment at the Hilton Hotel Warsaw and new CPL locations in Katowice and
Wroclaw; $0.5 million in gaming equipment upgrades at various CPL casinos; $1.2
million for the CCB leasehold renovations; $0.2 million for equipment for the
Mein Schiff 6; $0.9 million in other fixed asset additions at our properties, a
$1.5 million payment related to a working capital adjustment for the Apex
Acquisition and $0.4 million related to the acquisition of casino licenses for
CCB, offset by less than $0.1 million in proceeds from the disposition of fixed
assets.



Net cash used in investing activities of $26.8 million for the year ended
December 31, 2016 consisted of $19.7 million for the Apex Acquisition;
$2.0 million for the casino remodel at CRA; $1.7 million of development costs
for continued work related to landscaping, barns and equipment at CDR;
$0.8 million to purchase slot machines and table game equipment for the casinos
operated by Casinos Poland; $0.3 million for improvements to the LIM Center
casino operated by Casinos Poland; $0.4 million to purchase slot machines and
table game equipment for the Mein Schiff 5 and Marella Discovery ship-based
casinos; $0.2 million to purchase equipment and upgrade the casino onboard the
Glory Sea; $0.4 million to purchase slot machines and gaming equipment for our
Cripple Creek and Central City properties; $0.2 million in pre-construction
costs related to the Cripple Creek Hotel project; $0.1 million to renovate a bar
at CAL and $1.0 million in other fixed asset additions at our properties.



Net cash provided by financing activities of $7.2 million for the year ended
December 31, 2018 consisted of $8.2 million received from borrowings net of
principal repayments and $0.3 million from the exercise of stock options, offset
by $0.3 million of principal repayments for capital leases, $0.4 million
deferred financing costs paid and $0.6 million in distributions to
non-controlling interests in CBS and CPL.



Net cash provided by financing activities of $29.2 million for the year ended
December 31, 2017 consisted of $34.3 million in net proceeds received in the
common stock offering completed in November 2017 and less than $0.1 million from
the exercise of stock options, offset by $2.5 million of principal repayments
net of borrowings, $0.5 million of principal repayments for capital leases, and
$2.0 million in distributions to non-controlling interests in CDR, CBS and CPL.



Net cash provided by financing activities of $15.6 million for the year ended
December 31, 2016 consisted of $22.8 million received from borrowings under our
BMO Credit Agreement for the Apex Acquisition and $0.1 million from the exercise
of stock options, offset by $4.8 million of principal repayments, $0.4 million
of principal repayments for capital leases, $0.3 million deferred financing
costs paid and $1.9 million in distributions to non-controlling interests in CDR
and CPL.



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 US federal corporate
income tax rate from 35% to 21%, the tax on GILTI, and the FDII deduction.
While we believe that we have made reasonable estimates of the impact of the US
corporate income tax rate reduction, GILTI and the FDII, these estimates could
change as we continue to analyze IRS guidance related to the Tax Act as it is
released.



During 2018, the Company completed its accounting of the one-time transition tax
on undistributed and previously untaxed post-1986 foreign earnings and profits
imposed by the Tax Act. The Tax Act permits a company to pay the one-time
transition tax over eight years on an interest free basis. The Company paid $0.6
million of the transition tax in 2018. The remaining cash payments due related
to the transition tax total $0.9 million as set forth in the Contractual
Obligations and Contingencies table below.



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 in 2018,

2017 or 2016. The total amount remaining under the repurchase program was $14.7 million as of December 31, 2018. The repurchase program has no set expiration or termination date.



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Potential Sources and Uses 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 have used $24.2 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 December 31, 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. As discussed above, we will need to
refinance approximately CAD 16.1 million ($11.8 million based on the exchange
rate in effect on December 31, 2018) of the current portion of our BMO Credit
Agreement prior to maturity in August 2019. We have been successful in
refinancing and expanding our available borrowing capacity under the BMO Credit
Agreement since its inception in 2012, and we anticipate being able to refinance
this debt. We expect that the primary sources of cash will be from our gaming
operations and additional borrowings under the BMO Credit Agreement and other
credit arrangements. As of December 31, 2018, we had approximately CAD 26.1
million ($19.1 million based on the exchange rate in effect on December 31,
2018) available under the BMO Credit Agreement and $11.9 million available for
borrowing under other credit arrangements. See Note 7 to the Consolidated
Financial Statements included in Item 8, "Financial Statements and Supplementary
Data" of this report for further information regarding our credit arrangements
and the amounts available under those 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, completion of 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, including acquisitions. 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 61.5
million ($45.1 million based on the exchange rate in effect on December 31,
2018). We have used $24.2 million of the net proceeds from the common stock
offering for construction of the Century Mile project. The balance of the
Century Mile project is being financed with the BMO Credit Agreement, which was
amended in August 2018 to add additional borrowing capacity of CAD 33.0 million
($24.2 million based on the exchange rate in effect on December 31, 2018), and
with available cash.



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 US domestic cash resources will be sufficient to fund
our US 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 US than is generated by
our US operations either 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 or raise capital in the US through debt or equity issuances. Under
the newly-enacted Tax Act, a cash dividend from a foreign subsidiary to its US
parent would generally be exempt from US income taxation. We estimate that
approximately $25.8 million of our total $45.6 million in cash and cash
equivalents at December 31, 2018 is held by our foreign subsidiaries and is not
available to fund US operations unless repatriated. The determination of the
additional deferred taxes that would be provided for undistributed earnings has
not been determined because the hypothetical calculation is not practicable.



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Contractual Obligations and Contingencies




The following table summarizes our future commitments and contingency payments
as of December 31, 2018.





                                                       Payments due by Period
                                             Less
                                            than 1                                  After 5
Amounts in thousands            Total        Year       1-3 Years     3-5 Years      Years
Recorded contractual
obligations and
contingencies:
Long-term debt (1)           $  45,540$ 17,359$   18,313$    1,916$  7,952
Capital lease obligations          188         123            64             1            -
Other contingencies (2)            829            -             -             -           -
Unrecorded contractual
obligations and
contingencies:
Estimated interest
payments - long-term debt
(3)                             53,653       4,585         7,634         7,244      34,190
Operating leases (4)            51,730       4,079         5,531         5,346      36,774
US Tax Act obligations (5)         948            -             -          233         715
Purchase obligations (6)         2,925         355         2,570              -           -
Contractual obligations      $ 155,813$ 26,501$   34,112$   14,740$ 79,631

(1) Represents principal payments only, and excludes any fair market value

adjustments recorded in long-term debt under derivative and hedge accounting

rules. These amounts do not reflect the impact of future foreign exchange

rate changes. Payments due in less than one year represent the portion of the

BMO Credit Agreement expiring in August 2019. Payments due in one to three

years represent the portion of the BMO Credit Agreement expiring in September

2021. We currently intend to seek to extend the term of the BMO Credit

Agreement or otherwise refinance the portion of the loan expiring in 2019.

The CDR land lease is excluded from long-term debt because we are not

obligated to purchase the land. The CDR land lease is accounted for using the

financing method, and no principal payments will be made unless the land is

purchased. The first option to purchase the land at fair market value is

July 1, 2023. See Notes 7 and 12 to the Consolidated Financial Statements

      included in Item 8, "Financial Statements and Supplementary Data" of this
      report for further information.


 (2)  Estimated contingencies related to the CPL contingent liability are not

included in the table above because we are not able to make reasonably

reliable estimates of the period of cash settlement. See Note 14 to the

Consolidated Financial Statements included in Item 8, "Financial Statements

and Supplementary Data" of this report for further information.

(3) Estimated interest payments are based on principal amounts and expected

maturities of long-term debt outstanding as of December 31, 2018 and

management's forecasted rates for our BMO Credit Agreement, CDR land lease,

CPL credit agreements and CCB credit agreement. Estimated interest payments

do not reflect the impact of future foreign exchange rate changes. Fixed

payments related to the CDR land lease are presented as if we do not elect

the purchase options. The table above excludes the variable payments related

      to the CDR land lease.


 (4)  Operating leases do not include month-to-month lease agreements.

(5) Amounts reflect remaining cash payments due for the transition tax. The next

payment is due April 15, 2023. See Note 11 to the Consolidated Financial

Statements included in Part II, Item 8, "Financial Statements and

Supplementary Data" of this report for additional discussion of the effects

of the Tax Act.

(6) Amounts reflect purchase obligations related to the MCL agreement. See Note 4

to the Consolidated Financial Statements included in Part II, Item 8,

"Financial Statements and Supplementary Data" of this report for additional

      discussion of the MCL investment.



Off-Balance Sheet Arrangements


The unrecorded contractual obligations above are not expected to have a material
effect on our consolidated financial statements. We do not have any additional
off-balance sheet arrangements, transactions, obligations or other relationships
with unconsolidated entities that would be expected to have a material current
or future effect upon our consolidated financial statements.



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Critical Accounting Estimates


Management's discussion and analysis of our results of operations and liquidity
and capital resources are based on our consolidated financial statements. To
prepare our consolidated financial statements in accordance with accounting
principles generally accepted in the United States of America, we must make
estimates and assumptions that affect the amounts reported in the consolidated
financial statements. On an on-going basis, we evaluate these estimates. We base
our estimates on historical experience and on various other assumptions that we
believe to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ
materially from these estimates under different assumptions or conditions. Our
significant accounting policies are discussed in Note 2 to the Consolidated
Financial Statements included in Item 8, "Financial Statements and Supplementary
Data" of this report. Critical estimates inherent in these accounting policies
are discussed in the following paragraphs.



Property and Equipment  - We have significant capital invested in our property
and equipment, which represented approximately 67% of our total assets as of
December 31, 2018. Judgments are made in determining the estimated useful lives
of assets, salvage values to be assigned to assets and if or when an asset has
been impaired. The accuracy of these estimates affects the amount of
depreciation expense recognized in our financial results and the extent to which
we have a gain or loss on the disposal of the asset. We assign lives to our
assets based on our standard policy, which we believe is representative of the
useful life of each category of assets. We review the carrying value of our
property and equipment whenever events and circumstances indicate that the
carrying value of an asset may not be recoverable from the estimated future cash
flows expected to result from its use and eventual disposition. The factors we
consider in performing this assessment include current operating results, trends
and prospects, as well as the effect of obsolescence, demand, competition and
other economic factors. As of December 31, 2018, we believe that our investments
in property and equipment are recoverable. For the year ended December 31, 2017,
we wrote down the leasehold improvements at Casinos Poland's LIM Center casino
due to the transfer of the license to the Hilton Warsaw casino and charged $0.1
million to operating costs and expenses. For the year ended December 31, 2016,
we wrote down the leasehold improvements at Casinos Poland's Katowice casino
based on the loss of the license for that location and charged $0.4 million to
operating costs and expenses.



Goodwill - We test goodwill for impairment as of October 1 each year, or more
frequently as circumstances indicate it is necessary. Testing compares the
estimated fair values of our reporting units to the reporting units' carrying
values. Our reporting units with goodwill balances as of December 31, 2018
include CRA, CSA, CDR and CPL. We consider a variety of factors when estimating
the fair value of our reporting units, including estimates about the future
operating results of each reporting unit, multiples of earnings, various market
analyses, and recent sales of comparable businesses, if such information is
available to us. We make a variety of estimates and judgments about the
relevance of these factors to the reporting units in estimating their fair
values. If the carrying value of a reporting unit exceeds its estimated fair
value, the fair value of each reporting unit is allocated to the reporting
unit's assets and liabilities to determine the implied fair value of the
reporting unit's goodwill and whether impairment is necessary. No impairment
charges related to goodwill were recorded for the years ended December 31, 2018,
 2017 and 2016. As of December 31, 2018, the fair value of our goodwill at our
CSA reporting unit was 9% in excess of its related carrying value. Goodwill
related to our CSA reporting unit was $3.4 million as of December 31, 2018. Key
assumptions in the valuation of goodwill at the CSA reporting unit relate to
future earnings at CSA. A downturn in the Alberta economy could negatively
affect the key assumptions management used in its analysis.



Intangible Assets - Identifiable intangible assets include trademarks and casino
licenses. Our trademarks, CDR's licenses issued by the AGLC and HRA, CSA's
license issued by the AGLC and CCB's licenses issued by the Great Britain
Gambling Commission are indefinite-lived intangible assets and therefore are not
amortized. We test our trademarks and indefinite-lived licenses for impairment
as of October 1 each year, or more frequently as circumstances indicate it is
necessary. We test for impairment using the relief-from-royalty method. If the
fair value of an indefinite-lived intangible asset is less than its carrying
amount, we would recognize an impairment charge equal to the difference. No
impairment charges related to our trademarks or indefinite-lived licenses were
recorded for the years ended December 31, 2018,  2017 and 2016. Our casino
licenses related to CPL are finite-lived intangible assets and are amortized
over their respective useful lives. CPL licenses are evaluated for impairment
annually or more frequently if necessary. There were no impairment charges
recorded for the years ended December 31, 2018,  2017 and 2016. As of December
31, 2018, the fair value of our indefinite-lived intangible assets at our CSA
reporting unit was  17% in excess of its related carrying value. Intangible
assets related to our CSA reporting unit were $9.0 million as of December 31,
2018. Key assumptions in the valuation of intangible assets at the CSA reporting
unit relate to future earnings at CSA. A downturn in the Alberta economy could
negatively affect the key assumptions management used in its analysis.



                                       57


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Income Taxes - The determination of our provision for income taxes requires
management's judgment in the use of estimates and the interpretation and
application of complex tax laws. Judgment is also required in assessing the
timing and amounts of deductible and taxable items. We establish contingency
reserves for material, known tax exposures relating to deductions, transactions
and other matters involving some uncertainty as to the proper tax treatment of
the item. Our reserves reflect our judgment as to the resolution of the issues
involved if subject to judicial review. Several years may elapse before a
particular matter, for which we have established a reserve, is audited and
finally resolved or clarified. While we believe that our reserves are adequate
to cover reasonably expected tax risks, issues raised by a tax authority may be
finally resolved at an amount different from the related reserve. Such
differences could materially increase or decrease our income tax provision in
the current and/or future periods. When facts and circumstances change
(including a resolution of an issue or statute of limitations expiration), these
reserves are adjusted through the provision for income taxes in the period of
change. To the extent we determine that we will not realize the benefit of some
or all of the deferred tax assets, then these assets will be adjusted through
our provision for income taxes in the period in which this determination is
made.



The Tax Act, 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 2017 results included the
write-down of net deferred tax assets resulting from the reduction in the US
federal corporate income tax rate from 35% to 21%, which impacted the 2018
income tax expense by less than $0.1 million, and imposing a one-time transition
tax on certain unremitted earnings of foreign subsidiaries, which impacted the
2018 income tax expense by $0.4 million. Due to the complexities involved in
accounting for the enactment of the Tax Act, the SEC staff issued Staff
Accounting Bulletin No. 118 ("SAB 118"), which provided guidance on accounting
for the income tax effects of the Tax Act. SAB 118 provided a measurement period
that could not extend beyond one year from the Tax Act enactment date to
complete the accounting for the impact of the Tax Act. SAB 118 allowed us to
provide provisional estimates of the impact of the Tax Act in our financial
statements for the year ended December 31, 2017. As of December 31, 2018, we
have now completed our accounting for these amounts recorded in the 2017
financial statements and recognized adjustments of $0.4 million to the provision
amounts, which are included as a component of income tax expense in our
consolidated statement of earnings for the year ended December 31, 2018.



Additionally, the Tax Act created a new requirement that certain income, such as
GILTI, earned by  a controlled foreign corporation ("CFC") must be included
currently in the gross income of the CFC's US shareholder, effective in 2018.
Under US GAAP, we are allowed to make an accounting policy choice of either (1)
treating taxes due on future US inclusions in taxable income related to GILTI as
a current period expense when incurred (the "period cost method") or (2)
factoring such amounts into our measurement of our deferred taxes (the "deferred
method"). We have elected to account for GILTI in the year the tax is incurred
as a period expense and recorded a net tax expense of less than $0.1 million for
the year ended December 31, 2018. Additionally, the Tax Act provides US
companies with a new permanent deduction of 37.5% for FDII. We recorded a tax
benefit of less than $0.1 million related to the FDII deduction for the year
ended December 31, 2018.



Our undistributed foreign earnings were subject to the one-time transition tax
for the year ended December 31, 2017.  We continue to consider our foreign
earnings indefinitely reinvested. Based on our capital, debt and liquidity
position, there is no expected need for cash repatriation from foreign
subsidiaries, and all cash held in foreign jurisdictions is considered
permanently reinvested. These foreign earnings could become subject to
additional taxes, such as withholding taxes and local country taxes, if they are
repatriated to the United States.



See Note 11 to the Consolidated Financial Statements included in Part II, Item
8, "Financial Statements and Supplementary Data" of this report for additional
discussion of the Tax Act.

© Edgar Online, source Glimpses

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