UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~2018

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ___________

Commission file number 0-22900

CENTURY CASINOS, INC.

(Exact name of registrant as specified in its charter)


DELAWARE	84-1271317
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

455 E. Pikes Peak Ave., Suite 210, Colorado Springs, Colorado 80903

(Address of principal executive offices, including zip code)

(719) 527-8300

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☑
Non-accelerated filer ☐		Smaller reporting company ☐
~~(Do not check if a smaller reporting company)~~		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

~~24,472,320~~29,439,179 shares of common stock, $0.01 par value per share, were outstanding as of October ~~30, 2017.~~31, 2018.

INDEX


Part I	FINANCIAL INFORMATION	Page
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of September 30, ~~2017~~2018 and December 31, ~~2016~~2017	3
	Condensed Consolidated Statements of Earnings for the Three and Nine Months Ended September 30, ~~2017~~2018 and ~~2016~~2017	5
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three and Nine Months Ended September 30, ~~2017~~2018 and ~~2016~~2017	6
	Condensed Consolidated Statements of Equity as of September 30, ~~2017~~2018 and ~~2016~~2017	7
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2017~~2018 and ~~2016~~2017	8
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3335
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5557
Item 4.	Controls and Procedures	5557
Part II	OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5657
Item 6.	Exhibits	5758
Signatures		5859

PART I – FINANCIAL INFORMATION

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


	September 30,			December 31,	September 30,			December 31,
Amounts in thousands, except for share and per share information	2017			2016	2018			2017
ASSETS
Current Assets:
Cash and cash equivalents	$	44,254	$	38,837	$	46,818	$	74,677
Receivables, net		4,680		4,706		7,029		6,281
Prepaid expenses		1,788		1,224		1,859		1,482
Inventories		607		568		803		740
Restricted cash		1,013		0		—		1,023
Other current assets		106		613		247		118
Total Current Assets		52,448		45,948		56,756		84,321

Property and equipment, net		146,970		140,763		185,548		152,778
Goodwill		14,868		13,387		14,607		15,162
Deferred income taxes		7,115		1,705		467		1,522
Casino licenses		13,826		12,140		15,455		15,065
Trademarks		1,779		1,558		1,784		1,859
Cost investment		1,000		1,000		1,000		1,000
Equity investment						432		—
Deposits and other		3,259		1,337		3,500		3,169
Total Assets	$	241,265	$	217,838	$	279,549	$	274,876

LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt	$	5,647	$	5,583	$	20,079	$	5,697
Accounts payable		2,053		1,864		8,162		4,765
Accrued liabilities		9,322		9,088		16,002		10,434
Accrued payroll		5,786		5,313		6,866		6,894
Taxes payable		5,469		4,661		4,861		4,815
Contingent liability (note 8)		1,713		2,099
Contingent liability (Note 7)						830		1,833
Total Current Liabilities		29,990		28,608		56,800		34,438

Long-term debt, net of current portion and deferred financing costs (note 7)		52,652		50,026
Long-term debt, net of current portion and deferred financing costs (Note 6)						33,206		51,016
Taxes payable and other		825		620		1,785		2,104
Total Liabilities		83,467		79,254		91,791		87,558
Commitments and Contingencies
Commitments and Contingencies (Note 7)

See notes to unaudited condensed consolidated financial statements.

- Continued -

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)



	September 30,			December 31,	September 30,			December 31,
Amounts in thousands, except for share and per share information	2017			2016	2018			2017
Equity:
Preferred stock; $0.01 par value; 20,000,000 shares authorized; no shares issued or outstanding		0		0		—		—
Common stock; $0.01 par value; 50,000,000 shares authorized; 24,472,320 and 24,451,582 shares issued and outstanding		245		245
Common stock; $0.01 par value; 50,000,000 shares authorized; 29,434,018 and 29,359,820 shares issued and outstanding						294		294
Additional paid-in capital		78,608		78,174		113,955		113,068
Retained earnings		77,995		66,386		75,549		72,662
Accumulated other comprehensive loss		(6,495)		(12,609)		(9,232)		(6,127)
Total Century Casinos, Inc. shareholders' equity		150,353		132,196		180,566		179,897
Non-controlling interest		7,445		6,388
Non-controlling interests						7,192		7,421
Total Equity		157,798		138,584		187,758		187,318
Total Liabilities and Equity	$	241,265	$	217,838	$	279,549	$	274,876

See notes to unaudited condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)



	For the three months				For the nine months				For the three months				For the nine months
	ended September 30,				ended September 30,				ended September 30,				ended September 30,
Amounts in thousands, except for per share information	2017		2016		2017		2016		2018		2017		2018		2017
Operating revenue:
Gaming	$	36,914	$	30,554	$	102,814	$	89,615	$	35,983	$	36,914	$	102,595	$	102,814
Hotel		560		534		1,491		1,469		575		560		1,534		1,491
Food and beverage		3,868		3,030		10,622		8,950		4,290		3,868		11,630		10,622
Other		2,449		2,811		7,604		9,536		2,716		2,449		8,075		7,604
Gross revenue		43,791		36,929		122,531		109,570
Operating revenue										43,564		43,791		123,834		122,531
Less: Promotional allowances(1)		(2,743)		(2,403)		(7,756)		(6,616)		—		(2,743)		—		(7,756)
Net operating revenue		41,048		34,526		114,775		102,954		43,564		41,048		123,834		114,775
Operating costs and expenses:
Gaming		17,094		14,601		48,796		42,228		18,490		17,094		52,666		48,796
Hotel		171		143		468		416		197		171		551		468
Food and beverage		3,388		2,673		9,452		7,884		4,148		3,388		11,708		9,452
General and administrative		13,392		11,141		36,819		33,708		15,174		13,392		44,781		36,819
Depreciation and amortization		2,226		2,133		6,330		6,260		2,323		2,226		6,645		6,330
Total operating costs and expenses		36,271		30,691		101,865		90,496		40,332		36,271		116,351		101,865
Income from equity investment										2		—		1		—
Earnings from operations		4,777		3,835		12,910		12,458		3,234		4,777		7,484		12,910
Non-operating income (expense):
Interest income		21		18		69		49		74		21		107		69
Interest expense		(829)		(667)		(2,667)		(2,247)		(904)		(829)		(3,023)		(2,667)
Gain on foreign currency transactions, cost recovery income and other		70		20		555		1,778		182		70		431		555
Non-operating (expense) income, net		(738)		(629)		(2,043)		(420)		(648)		(738)		(2,485)		(2,043)
Earnings before income taxes		4,039		3,206		10,867		12,038		2,586		4,039		4,999		10,867
Income tax benefit (expense)		3,913		(793)		2,054		(2,559)
Income tax (expense) benefit										(791)		3,913		(1,784)		2,054
Net earnings		7,952		2,413		12,921		9,479		1,795		7,952		3,215		12,921
Net earnings attributable to non-controlling interest		(322)		(526)		(1,329)		(3,062)
Net earnings attributable to non-controlling interests										(155)		(322)		(328)		(1,329)
Net earnings attributable to Century Casinos, Inc. shareholders	$	7,630	$	1,887	$	11,592	$	6,417	$	1,640	$	7,630	$	2,887	$	11,592

Earnings per share attributable to Century Casinos, Inc. shareholders:
Basic	$	0.31	$	0.08	$	0.47	$	0.26	$	0.06	$	0.31	$	0.10	$	0.47
Diluted	$	0.31	$	0.08	$	0.47	$	0.26	$	0.05	$	0.31	$	0.10	$	0.47
Weighted average shares outstanding - basic		24,470		24,440		24,464		24,452		29,425		24,470		29,388		24,464
Weighted average shares outstanding - diluted		24,891		24,675		24,905		24,644		29,987		24,891		29,986		24,905

See notes to unaudited condensed consolidated financial statements.

(1)

See Note 2 for a discussion of the impact of the adoption of ASU 2014-09 on the presentation of promotional allowances.

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)

For the three months

For the nine months

ended September 30,

ended September 30,

Amounts in thousands

2017

2016

2017

2016

Net earnings

$
7,952

$
2,413

$
12,921

$
9,479

Other comprehensive income

Foreign currency translation adjustments

2,740

394

7,299

2,813
Other comprehensive income

2,740

394

7,299

2,813
Comprehensive income

$
10,692

$
2,807

$
20,220

$
12,292

Comprehensive income attributable to non-controlling interest

Net earnings attributable to non-controlling interest

(322)

(526)

(1,329)

(3,062)
Foreign currency translation adjustments

(238)

(235)

(1,185)

(233)
Comprehensive income attributable to Century Casinos, Inc. shareholders

$
10,132

$
2,046

$
17,706

$
8,997



	For the three months				For the nine months
	ended September 30,				ended September 30,

Amounts in thousands	2018		2017		2018		2017

Net earnings	$	1,795	$	7,952	$	3,215	$	12,921

Other comprehensive income (loss)
Foreign currency translation adjustments		1,810		2,740		(3,535)		7,299
Other comprehensive income (loss)		1,810		2,740		(3,535)		7,299
Comprehensive income (loss)	$	3,605	$	10,692	$	(320)	$	20,220

Comprehensive income (loss) attributable to non-controlling interests
Net earnings attributable to non-controlling interests		(155)		(322)		(328)		(1,329)
Foreign currency translation adjustments		(216)		(238)		430		(1,185)
Comprehensive income (loss) attributable to Century Casinos, Inc. shareholders	$	3,234	$	10,132	$	(218)	$	17,706

See notes to unaudited condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)


Amounts in thousands, except share information	Common Shares		Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Century Casinos Shareholders' Equity		Noncontrolling Interest		Total Equity	Common Shares		Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Century Casinos Shareholders' Equity		Noncontrolling Interests		Total Equity
BALANCE AT January 1, 2016	24,414,083	$	244	$	77,318	$	(12,683)	$	57,171	$	122,050	$	4,737	$	126,787
Net earnings	0		0		0		0		6,417		6,417		3,062		9,479
Foreign currency translation adjustment	0		0		0		2,580		0		2,580		233		2,813
Amortization of stock-based compensation	0		0		573		0		0		573		0		573
Distribution to non-controlling interest	0		0		0		0		0		0		(1,896)		(1,896)
Exercise of stock options	30,488		0		97		0		0		97		0		97
BALANCE AT September 30, 2016	24,444,571	$	244	$	77,988	$	(10,103)	$	63,588	$	131,717	$	6,136	$	137,853

BALANCE AT January 1, 2017	24,451,582	$	245	$	78,174	$	(12,609)	$	66,386	$	132,196	$	6,388	$	138,584	24,451,582	$	245	$	78,174	$	(12,609)	$	66,386	$	132,196	$	6,388	$	138,584
Cumulative effect of accounting change (1)	0		0		(17)		0		17		0		0		0
Cumulative effect of accounting change																—		—		(17)		—		17		—		—		—
Net earnings	0		0		0		0		11,592		11,592		1,329		12,921	—		—		—		—		11,592		11,592		1,329		12,921
Foreign currency translation adjustment	0		0		0		6,114		0		6,114		1,185		7,299	—		—		—		6,114		—		6,114		1,185		7,299
Amortization of stock-based compensation	0		0		419		0		0		419		0		419	—		—		419		—		—		419		—		419
Distribution to non-controlling interest	0		0		0		0		0		0		(1,457)		(1,457)	—		—		—		—		—		—		(1,457)		(1,457)
Exercise of stock options	20,738		0		32		0		0		32		0		32	20,738		—		32		—		—		32		—		32
BALANCE AT September 30, 2017	24,472,320	$	245	$	78,608	$	(6,495)	$	77,995	$	150,353	$	7,445	$	157,798	24,472,320	$	245	$	78,608	$	(6,495)	$	77,995	$	150,353	$	7,445	$	157,798

BALANCE AT January 1, 2018																29,359,820	$	294	$	113,068	$	(6,127)	$	72,662	$	179,897	$	7,421	$	187,318
Net earnings																—		—		—		—		2,887		2,887		328		3,215
Foreign currency translation adjustment																—		—		—		(3,105)		—		(3,105)		(430)		(3,535)
Amortization of stock-based compensation																—		—		613		—		—		613		—		613
Distribution to non-controlling interest																—		—		—		—		—		—		(572)		(572)
Fair value of non-controlling interest																—		—		—		—		—		—		445		445
Incremental direct costs of common stock issuance																—		—		(59)		—		—		(59)		—		(59)
Exercise of stock options																74,198		—		333		—		—		333		—		333
BALANCE AT September 30, 2018																29,434,018	$	294	$	113,955	$	(9,232)	$	75,549	$	180,566	$	7,192	$	187,758

See notes to unaudited condensed consolidated financial statements.

~~(1)~~

Cumulative effect of accounting change relates to the adoption of Accounting Standards Update 2016-09. See Note 2 of the unaudited condensed consolidated financial statements for further details on the adoption of this accounting standard.

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	For the nine months				For the nine months
	ended September 30,				ended September 30,
Amounts in thousands	2017		2016		2018		2017

Cash Flows from Operating Activities:
Net earnings	$	12,921	$	9,479	$	3,215	$	12,921
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		6,330		6,260		6,645		6,330
Loss on disposition of fixed assets		466		42		1,229		466
Adjustment of contingent liability (Note 7)						99		—
Unrealized gain on interest rate swaps		(366)		(25)		(51)		(366)
Amortization of stock-based compensation expense		419		573		613		419
Amortization of deferred financing costs		118		86		92		118
Deferred taxes		(5,273)		(561)		1,629		(5,273)
Income from unconsolidated subsidiary						(1)		—
Changes in Operating Assets and Liabilities, Net of Acquisition:
Receivables, net		156		(595)		70		156
Prepaid expenses and other assets		(2,512)		(1,938)		(1,929)		(1,013)
Accounts payable		306		(273)		295		306
Accrued liabilities		1,455		1,972		3,919		1,455
Inventories		6		(8)		(86)		6
Other operating assets		0		(20)
Other operating liabilities		100		4		1,348		100
Accrued payroll		296		356		162		296
Taxes payable		883		234		(1,647)		883
Contingent liability payment		(824)		0		(999)		(824)
Net cash provided by operating activities		14,481		15,586		14,603		15,980

Cash Flows used in Investing Activities:
Purchases of property and equipment		(5,168)		(5,020)		(40,001)		(5,168)
Acquisition of Century Casino St. Albert (net of cash acquired) (Note 3)		(1,494)		(23,175)
Acquisition of Saw Close Casino, Ltd. licenses (Note 1)		(126)		0
Acquisition of Century Casino St. Albert (net of cash acquired)						—		(1,494)
Acquisition of Saw Close Casino, Ltd. licenses (Note 4)						—		(126)
Acquisition of Golden Hospitality Ltd., net of $0.2 million cash acquired (Note 3)						(337)		—
Investment in Minh Chau Ltd. (Note 3)						(445)		—
Proceeds from disposition of assets		1		10		6		1
Net cash used in investing activities		(6,787)		(28,185)		(40,777)		(6,787)

– Continued –

See notes to unaudited condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (continued)


	For the nine months				For the nine months
	ended September 30,				ended September 30,
Amounts in thousands	2017		2016		2018		2017

Cash Flows (used in) provided by Financing Activities:
Cash Flows used in Financing Activities:
Proceeds from borrowings		2,680		22,788		2,707		2,680
Principal payments		(4,312)		(3,668)		(4,326)		(4,312)
Payment of deferred financing costs		0		(209)		(92)		—
Distribution to non-controlling interest		(2,043)		(1,896)		(642)		(2,043)
Proceeds from exercise of stock options		32		97		333		32
Net cash (used in) provided by financing activities		(3,643)		17,112
Net cash used in financing activities						(2,020)		(3,643)

Effect of Exchange Rate Changes on Cash	$	1,366	$	(913)	$	(711)	$	1,445

Increase in Cash and Cash Equivalents	$	5,417	$	3,600
(Decrease) Increase in Cash, Cash Equivalents and Restricted Cash					$	(28,905)	$	6,995

Cash and Cash Equivalents at Beginning of Period	$	38,837	$	29,366
Cash and Cash Equivalents at End of Period	$	44,254	$	32,966
Cash, Cash Equivalents and Restricted Cash at Beginning of Period					$	76,444	$	39,020
Cash, Cash Equivalents and Restricted Cash at End of Period					$	47,539	$	46,015

Supplemental Disclosure of Cash Flow Information:
Interest paid	$	4,286	$	2,124	$	3,336	$	4,286
Income taxes paid	$	1,935	$	2,639	$	2,605	$	1,935

Non-Cash Investing Activities:
Purchase of property and equipment on account	$	383	$	324	$	8,395	$	383
Non-Cash Financing Activities:
Assets acquired under capital lease obligation	$	105	$	502	$	—	$	105

See notes to unaudited condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Century Casinos, Inc. (“CCI” or the “Company”) is an international casino entertainment company. As of September 30, ~~2017,~~2018, the Company owned casino operations in North ~~America;~~America and England; was developing ~~a casino in England and~~ a racetrack and entertainment center (“REC”) in Edmonton, Canada; had eight casino licenses in Poland, and held a majority ownership interest in ~~six~~seven casinos ~~throughout Poland,~~that were currently operating in Poland; held a majority ownership interest in a REC in Calgary, Canada, and the pari-mutuel off-track betting network in southern Alberta, Canada; managed cruise ship-based casinos on international waters; managed a ~~casino~~hotel, international entertainment and gaming club in ~~Aruba~~Vietnam through a majority-owned subsidiary, and provided gaming services in Argentina.

The Company currently owns, operates and manages the following casinos through wholly-owned subsidiaries in North ~~America:~~America and England:

The Century Casino & Hotel in Edmonton, Alberta, Canada (“Century Resorts Alberta” or “CRA”)

The Century Casino St. Albert in Edmonton, Alberta, Canada (“CSA”)

The Century Casino Calgary, Alberta, Canada (“CAL”)

The Century Casino & Hotel in Central City, Colorado (“CTL”)~~; and~~

The Century Casino & Hotel in Cripple Creek, Colorado (“CRC”); and

The Century Casino Bath (formerly Saw Close Casino) in Bath, England (“CCB”)

The Company currently has a controlling financial interest through its wholly-owned subsidiary Century Resorts Management GmbH (formerly Century Casinos Europe ~~GmbH~~GmbH) (“~~CCE”~~CRM”) in the following majority-owned subsidiaries:

The Company owns 66.6% of Casinos Poland Ltd (“CPL” or “Casinos Poland”). As of September 30, 2018, CPL ~~is the owner and operator of six~~owned licenses for eight casinos throughout ~~Poland.~~Poland, seven of which were operating. CPL is consolidated as a majority-owned subsidiary for which the Company has a controlling financial interest. Polish Airports Company (“Polish Airports”) owns the remaining 33.3% of CPL, which is reported as a non-controlling financial interest.

The Company owns 75% of United Horsemen of Alberta Inc. dba Century Downs Racetrack and Casino (“CDR” or “Century Downs”). CDR operates Century Downs Racetrack and Casino, a REC in Balzac, a north metropolitan area of Calgary, Alberta, Canada. CDR is consolidated as a majority-owned subsidiary for which the Company has a controlling financial interest. The remaining 25% of CDR is owned by unaffiliated shareholders and is reported as a non-controlling financial interest.

The Company owns 75% of Century Bets! Inc. (“CBS” or “Century Bets”). CBS operates the pari-mutuel off-track betting network in Southern Alberta, Canada. CBS is consolidated as a majority-owned subsidiary for which the Company has a controlling financial interest. Rocky Mountain Turf Club (“RMTC”) owns the remaining 25% of CBS, which is reported as a non-controlling financial interest.

The Company has the following concession, management and consulting service agreements:

~~The~~As of September 30, 2018, the Company ~~operates 14~~operated 13 ship-based casinos through concession agreements with four cruise ship owners. The ~~Company began operating~~concession agreement to operate the ship-based casino onboard the Mein Schiff ~~6, a new 2,500 passenger~~1 ended in April 2018 when the ship was transferred from the TUI Cruises fleet to another cruise ~~ship,~~line. The concession agreements to operate the ship-based casinos onboard the Wind Star and Marella Discovery will end in ~~May 2017.~~the fourth quarter of 2018.

In connection with a concession agreement with Diamond Cruise International Co., Ltd. (“Diamond”) for the operation of the ship-based casino onboard Glory Sea, the Company has a Cooperation Agreement with Dynamic Partners International, Ltd. (“Dynamic”). Under this agreement, Dynamic markets and promotes the casino to VIP players along with facilitating the concession agreement between Diamond and the Company, for which the Company pays Dynamic a portion of the net profit from the casino onboard Glory Sea.

In March 2015, in connection with an agreement with Norwegian Cruise Line Holdings (“Norwegian”) to terminate the Company’s concession agreements with Oceania Cruises (“Oceania”) and Regent Seven Seas Cruises (“Regent”), the Company entered into a two-year consulting agreement, which became effective on June 1, 2015, under which the Company provided limited consulting services for the ship-based casinos of Oceania and Regent in exchange for receiving a consulting fee of $2.0 million, which was payable $250,000 per quarter through May 2017.

The Company has a management agreement to direct the operation of the casino at the Hilton Aruba Caribbean Resort & Casino from which the Company receives a monthly management fee. The management agreement was not extended by the Company and ends on November 30, 2017.

The Company, through its subsidiary ~~CCE,~~CRM, has a 7.5% ownership interest in Mendoza Central Entretenimientos S.A., an Argentina company (“MCE”). The shares are reported on the condensed consolidated balance sheet using the cost method of accounting. MCE has an exclusive concession agreement with Instituto Provincial de Juegos y Casinos to lease slot machines and provide related services to Casino de Mendoza, a casino located in Mendoza, Argentina and owned by the Province of Mendoza. In addition, ~~CCE~~CRM and MCE have entered into a consulting services agreement pursuant to which ~~CCE~~CRM provides advice on casino matters and receives a service fee consisting of a fixed fee plus a percentage of MCE’s earnings before interest, taxes, depreciation and amortization (“EBITDA”). See Note 43 for additional information related to MCE.

On April 25, 2018, the Company’s subsidiary CRM entered into a Shareholder’s Agreement with Golden Hospitality Ltd. (“GHL”) and GHL’s shareholders, pursuant to which CRM purchased a 51% ownership interest in GHL. The Company consolidates GHL as a majority-owned subsidiary for which the Company has a controlling financial interest. The remaining 49% of GHL is owned by unaffiliated shareholders and is reported by the Company as a non-controlling financial interest. For its ownership interest in GHL, the Company recognized assets of $0.5 million, including $0.2 million in cash, and assumed liabilities of $0.1 million as of the date of acquisition. GHL is included in the Corporate and Other reportable segment.

GHL entered into an agreement with Minh Chau Ltd. (“MCL”) and MCL’s owners, pursuant to which GHL purchased an initial 6.36% ownership interest in MCL and agreed to purchase an additional ownership interest of up to a total of 51% of MCL over a three-year period for approximately $3.6 million. GHL has the option to purchase an additional 19% ownership interest in MCL for a total of 70% of MCL under certain conditions. MCL is the owner of a small hotel and international entertainment and gaming club in the Cao Bang province of Vietnam that is 300 feet from the Vietnamese – Chinese border station. The hotel offers 30 rooms, and the international entertainment and gaming club currently offers seven electronic table games for non-Vietnamese passport holders under a provincial investment certificate that allows for up to 26 electronic games. GHL and MCL also entered into a management agreement which provides that GHL will manage the operations at the hotel and international entertainment and gaming club in exchange for receiving a portion of MCL’s net profit. The Company accounts for GHL’s interest in MCL as an equity investment. The Company valued the management agreement with MCL at $0.1 million, which is recorded in deposits and other on its consolidated balance sheet as of the date of its acquisition of its ownership interest in GHL. See Note 3 for additional information related to GHL and MCL.

Additional Projects and Other Developments

~~In September 2016, the~~The Company ~~was selected by Horse Racing Alberta (“HRA”) as the successful applicant to own, build and operate~~is building a horse racing facility in the Edmonton market area, which ~~the Company~~it is planning to operate as Century Mile Racetrack and Casino. ~~In March 2017, the Company received approval for the Century Mile project from the Alberta Gaming and Liquor Commission (“AGLC”).~~ Century Mile will be a one-mile horse racetrack and a multi-level REC. ~~The multi-level REC is expected to have 550 slot machines, restaurants, bars, delis, an off-track betting parlor and grandstand and to hold a minimum of 100 horse races per year.~~ The project is located on Edmonton International Airport land close to the city of Leduc, south of Edmonton. The Company began construction on the Century Mile project in July 2017 and estimates that the casino will ~~be approximately 30 miles from both CRA and CSA. The Company estimates this project will cost approximately~~open in April 2019. On August 24, 2018, the Company’s borrowing capacity under its credit agreement with the Bank of Montreal (“BMO”) was increased by CAD ~~60.0~~33.0 million ($~~48.1~~25.5 million based on the exchange rate in effect on September 30, 2017). Construction of the Century Mile project began in July 2017. The Company estimates that construction of this project will take approximately 15 months and that it will be completed during the fourth quarter of 2018. The Company is seeking2018) to ~~obtain financing~~provide additional funding for the Century Mile project.

In June 2017, the Company’s subsidiary, CCE, entered into a Share Purchase Agreement (the “Agreement”), by and among Global Gaming Ventures (Group) Limited, Saw Close Casino Ltd. (“SCCL”), Anthony Wollenberg and CCE pursuant to which CCE has acquired 100% of the outstanding common stock of SCCL as well as casino licenses held by SCCL (the “SCCL License Acquisition”) for a total consideration of GBP 0.6 million ($0.8 million based on the exchange rate in effect on September 30, 2017) as well as assumed liabilities of GBP 0.2 million ($0.3 million based on the exchange rate in effect on September 30, 2017). The Company will utilize the casino licenses to develop and operate a casino in Bath, England. The Company paid GBP 0.1 million ($0.1 million) at closing. Payment of the remaining purchase consideration will be made after the receipt of certain regulatory and governmental approvals and the opening of the casino. Payment of the assumed liabilities is subject to certain performance criteria being met once the casino is in operation. The Company estimates that construction of the casino will cost GBP 5.0 million ($6.7 million based on the exchange rate in effect on September 30, 2017) and that the casino will open in the first half of 2018.

In August 2017, the Company announced that, together with the owner of the Hamilton Princess Hotel & Beach Club in Hamilton, Bermuda, it 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 ~~prive. The Bermudan government will issue~~privé. In September 2017, the Bermuda Casino Gaming Commission granted a provisional casino gaming license, aswhich is subject to certain conditions and approvals including the ~~next step in the application process. The conditions~~adoption of ~~the provisional casino license must be agreed upon~~certain rules and regulations by the ~~Bermudan government and the company awarded the license. The Company currently has no estimated time frame on when this will be completed, and there is no guarantee that a license will be awarded.~~Parliament of Bermuda. The Company’s subsidiary, ~~CCE,~~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 a license is awarded. ~~CCE~~CRM will also provide a $5.0 million loan for the purchase of casino equipment if the license is awarded.

Preparation of Financial Statements

The accompanying condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial reporting, the rules and regulations of the Securities and Exchange Commission which apply to interim financial statements and the instructions to Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated.

In the opinion of management, all adjustments considered necessary for the fair presentation of financial position, results of operations and cash flows of the Company have been included. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017. The results of operations for the ~~period~~quarter ended September 30, ~~2017~~2018 are not necessarily indicative of the operating results for the full year.

Presentation of Foreign Currency Amounts

The Company’s functional currency is the U.S. dollar (“USD” or “$”). Foreign subsidiaries with a functional currency other than the U.S. dollar translate assets and liabilities at current exchange rates at the end of the reporting periods, while income and expense accounts are translated at average exchange rates for the respective periods. The Company and its subsidiaries enter into various transactions made in currencies different from their functional currencies. These transactions are typically denominated in the Canadian dollar (“CAD”), Euro (“EUR”), Polish zloty (“PLN”) and British pound (“GBP”). Gains and losses resulting from changes in foreign currency exchange rates related to these transactions are included in income from operations as they occur.

The exchange rates to the U.S. dollar used to translate balances at the end of the reported periods are as follows:



	September 30,	December 31,	September 30,	December 31,
Ending Rates	2017	2016	2018	2017
Canadian dollar (CAD)	1.2480	1.3427	1.2945	1.2545
Euros (EUR)	0.8466	0.9476	0.8619	0.8334
Polish zloty (PLN)	3.6506	4.2065	3.6395	3.4841
British pound (GBP)	0.7466	0.8106	0.7671	0.7396

The average exchange rates to the U.S. dollar used to translate balances during each reported period are as follows:

For the three months

For the nine months

ended September 30,

ended September 30,

Average Rates

2017

2016

% Change

2017

2016

% Change
Canadian dollar (CAD)

1.2531

1.3049

4.0%

1.3072

1.3224

1.1%
Euros (EUR)

0.8512

0.8965

5.1%

0.8997

0.8962

(0.4%)
Polish zloty (PLN)

3.6219

3.8890

6.9%

3.8379

3.9057

1.7%
British pound (GBP)

0.7641

0.7619

(0.3%)

0.7845

0.7194

(9.0%)
Source: Pacific Exchange Rate Service



	For the three months			For the nine months
	ended September 30,			ended September 30,
Average Rates	2018	2017	% Change	2018	2017	% Change
Canadian dollar (CAD)	1.3068	1.2531	(4.3%)	1.2874	1.3072	1.5%
Euros (EUR)	0.8601	0.8512	(1.1%)	0.8377	0.8997	6.9%
Polish zloty (PLN)	3.6981	3.6219	(2.1%)	3.5581	3.8379	7.3%
British pound (GBP)	0.7676	0.7641	(0.5%)	0.7405	0.7845	5.6%
Source: Pacific Exchange Rate Service

~~Correction of Prior Period Balances~~

Subsequent to the issuance of the Company’s Quarterly Report on Form 10-Q for the three and nine month periods ended September 30, 2016, the Company determined that it had erroneously recognized a reduction in pari-mutuel revenue for CBS totaling $0.7 million in its condensed consolidated statement of earnings for the nine months ended September 30, 2016. This error also affected the Company’s income tax expense, net earnings attributable to non-controlling interest and consolidated statements of comprehensive income, equity, cash flows and Note 12 “Segment Information” for the nine months ended September 30, 2016.

The prior period amounts within the Company’s condensed consolidated financial statements for the nine months ended September 30, 2016 have been revised to reflect the correct balances as presented below.

Condensed Consolidated Statement of Earnings for the nine months ended September 30, 2016:
Amounts in thousands, except for per share information

As Previously Reported

Correction

As Corrected
Operating Revenue:

Other

$
8,839

$
697

$
9,536
Gross revenue

108,873

697

109,570
Net operating revenue

102,257

697

102,954
Earnings from operations

11,761

697

12,458
Earnings before income taxes

11,341

697

12,038
Income tax expense

(2,378)

(181)

(2,559)
Net earnings

8,963

516

9,479
Net earnings attributable to non-controlling interest

(2,933)

(129)

(3,062)
Net earnings attributable to Century Casinos, Inc. shareholders

6,030

387

6,417

Earnings per share attributable to Century Casinos, Inc. shareholders:

Basic and Diluted

$
0.25

$
0.01

$
0.26

Condensed Consolidated Statement of Comprehensive Income for the nine months ended September 30, 2016:
Amounts in thousands

As Previously Reported

Correction

As Corrected
Net earnings

$
8,963

$
516

$
9,479

Other comprehensive income

Foreign currency translation adjustments

2,841

(28)

2,813
Other comprehensive income

2,841

(28)

2,813
Comprehensive income

$
11,804

$
488

$
12,292

Comprehensive income attributable to non-controlling interest

Net earnings attributable to non-controlling interest

(2,933)

(129)

(3,062)
Foreign currency translation adjustments

(240)

7

(233)
Comprehensive income attributable to Century Casinos, Inc. shareholders

$
8,631

$
366

$
8,997

Condensed Consolidated Statement of Equity for the nine months ended September 30, 2016:
Amounts in thousands

As Previously Reported

Correction

As Corrected
Accumulated other comprehensive income

Accumulated other comprehensive income (loss) balance at January 1, 2016

$
(12,704)

$
21

$
(12,683)
Foreign currency translation adjustment

2,601

(21)

2,580

Retained earnings

Retained earnings balance at January 1, 2016

57,558

(387)

57,171
Net earnings

6,030

387

6,417

Total Century Casinos shareholders' equity

Total Century Casinos shareholders' equity balance at January 1, 2016

122,416

(366)

122,050
Net earnings

6,030

387

6,417
Foreign currency translation adjustment

2,601

(21)

2,580

Non-controlling interest

Non-controlling interest balance at January 1, 2016

4,859

(122)

4,737
Net earnings

2,933

129

3,062
Foreign currency translation adjustment

240

(7)

233

Total equity

Total equity balance at January 1, 2016

127,275

(488)

126,787
Net earnings

8,963

516

9,479
Foreign currency translation adjustment

2,841

(28)

2,813

Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2016:
Amounts in thousands

As Previously Reported

Correction

As Corrected
Cash Flows from Operating Activities:

Net earnings

$
8,963

$
516

$
9,479
Changes in Operating Assets and Liabilities:

Receivables, net

64

(659)

(595)
Taxes payable

63

171

234
Net cash provided by operating activities

15,558

28

15,586
Effect of Exchange Rate Changes on Cash

(885)

(28)

(913)

Note 12: Segment Information for the nine months ended September 30, 2016:
Amounts in thousands

As Previously Reported

Correction

As Corrected
Canada

Net operating revenue

$
37,470

$
697

$
38,167
Net earnings attributable to Century Casinos, Inc. shareholders

5,076

387

5,463
Income taxes

1,477

181

1,658
Non-controlling interest

1,918

129

2,047
Adjusted EBITDA

11,316

697

12,013

Consolidated results in Note 12 “Segment Information” for the nine months ended September 30, 2016 have been updated as presented in the condensed consolidated statement of earnings table above. Consolidated Adjusted EBITDA for the nine months ended September 30, 2016 was corrected by $0.7 million, adjusting the previously reported Consolidated Adjusted EBITDA of $18.7 million to $19.4 million.

2. SIGNIFICANT ACCOUNTING POLICIES

Recently Issued Accounting Pronouncements - In ~~May 2014,~~February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ~~No. 2014-09,~~ ~~Revenue from Contracts with Customers~~ (“ASU 2014-09”). The objective of ASU 2014-09 is to clarify the principles for recognizing revenue and to develop a common revenue standard under US GAAP and International Financial Reporting Standards. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016; provided, however, that in August 2015, the FASB issued ASU 2015-14, ~~Revenue from Contracts with Customers: Deferral of the Effective Date~~ (“ASU 2015-14”), which deferred the effective date of ASU 2014-09 for one year. ASU 2015-14 is effective for fiscal years and interim periods beginning after December 15, 2017. The standards permit retrospective application using either of the following methodologies: (i) restatement of each prior reporting period presented or (ii) recognition of a cumulative-effect adjustment as of the date of initial application. In addition, the FASB has issued four related ASUs on principal versus agent guidance (ASU 2016-08), identifying performance obligations and the licensing implementation guidance (ASU 2016-10), a revision of certain SEC Staff Observer comments (ASU 2016-11) and implementation guidance (ASU 2016-12). The Company plans to adopt the new revenue standards effective January 1, 2018 by recognizing the cumulative effect of initially applying the new standard as an adjustment to the opening balance of equity. The Company continues to analyze the impact that the new standard will have on the Company’s consolidated financial statements, including results of operations, cash flows and related disclosures. Upon adoption, management expects the presentation of goods and services furnished without charge that is currently deducted from total revenue as promotional allowances to arrive at net operating revenue will be presented on a net basis within related revenue categories. As a result, the line items for promotional allowances on the consolidated statement of earnings would be eliminated. Additional revenue disclosures will also be added to the Company’s consolidated financial statements. Management has determined that the changes to the financial statements and related footnotes from the adoption of this standard are not expected to be material.

~~In July 2015, the FASB issued ASU No. 2015-11,~~ ~~Inventory (Topic 330): Simplifying the Measurement of Inventory~~ (“ASU 2015-11”). The objective of ASU 2015-11 is to simplify the current guidance under which an entity must measure inventory at the lower of cost or market by requiring entities to measure most inventory at the lower of cost or net realizable value. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company has adopted ASU 2015-11. The Company will continue to measure inventory using the first-in, first-out method and will state inventory at the lower of cost or net realizable value. At September 30, 2017 and December 31, 2016, all inventory was stated at cost.

~~In February 2016, the FASB issued ASU No.~~ 2016-02, Leases (Topic 842) (“ASU 2016-02”). The objective of ASU 2016-02 is to recognize lease assets and lease liabilities by lessees for those leases classified as operating leases under previous US GAAP. ASU 2016-02 requires lessees to account for leases as finance leases or operating leases. Both finance and operating leases will result in the lessee recognizing a right-of-use asset and corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the ~~right-of use~~right-of-use asset and, for operating leases, the lessee would recognize a straight-line lease expense. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of ASU 2016-02 is permitted. The ~~Company has begun analyzing its operating lease agreements,~~standard must be adopted by recognizing and ~~management anticipates~~measuring leases at the ~~Company’s assets and liabilities will increase proportionally after~~beginning of the ~~adoption of ASU 2016-02. The changes to the Company’s consolidated balance sheet and the potential impact to its results of operations may be material.~~

earliest period being presented using a modified retrospective approach. In ~~March 2016,~~July 2018, the FASB issued ASU ~~No. 2016-09,~~2018-11, Leases (Topic 842) Targeted Improvements (“ASU 2018-11”), which provides that entities may elect not to ~~Employee Share-Based Payment Accounting~~ ~~(“ASU 2016-09”). The objective of ASU 2016-09 is to simplify~~recast the accounting for share-based payment transactions, including recording all excess tax benefits and tax deficiencies through income tax on the statement of earnings and eliminating the requirement that excess tax benefits be realized before they can be recognized. ASU 2016-09 also simplifies several other aspects of the accounting for employee share-based payments, including forfeitures, statutory tax withholdings requirements and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interimcomparative periods ~~within those fiscal years. The Company has adopted ASU 2016-09 using the modified retrospective method.~~presented upon transition. The Company has elected to ~~account for forfeitures~~use the transition package of ~~share-based payments as they occur.~~

~~In August 2016,~~practical expedients permitted within the ~~FASB issued ASU 2016-15,~~ ~~Classification~~new standard, which among other things, allows the carryforward of ~~Certain Cash Receipts and Cash Payments~~ (“ASU 2016-15”). The objective of ASU 2016-15 is to reduce diversity in the classification of cash receipts and payments for specific cash flow issues, including debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination and proceeds from the settlement of insurance claims. ASU 2016-15 is effective for fiscal years beginning after December 31, 2017, and interim periods within those fiscal years. Early adoption of ASU 2016-15 is permitted. ASU 2016-15 should be applied using a retrospective transition method.historical lease classification. The Company ~~plans to adopt ASU 2016-15 in its annual filing for~~expects the ~~year ending December 31, 2017. The~~ standard ~~is not expected~~ to have a material impact on its consolidated ~~financial statements.~~

~~In October 2016,~~balance sheet upon recognition of the ~~FASB issued ASU 2016-16,~~ ~~Intra-Entity Transfers of Assets Other Than Inventory~~ ~~(“ASU 2016-16”). The objective of ASU 2016-16 is~~right-of-use asset and lease liability due to ~~improve~~ the accounting for income tax consequences of intra-entity transfers of assets other than inventory. ASU 2016-16 is effective for fiscal years beginning after December 31, 2017, and interim periods within those fiscal years. Early adoption of ASU 2016-16 is permitted at the beginning of an annual period. ASU 2016-16 should be applied using a modified retrospective approach. The Company plans to adopt ASU 2016-16 effective January 1, 2018. The standard is not expected to have a material impact on its consolidated financial statements.

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Restricted Cash~~ (“ASU 2016-18”). The objective of ASU 2016-18 is to require the statement of cash flows to include restricted cash in explaining the change during the period in the total of cash and cash equivalents. ASU 2016-18 is effective for fiscal years beginning after December 31, 2017, and interim periods within those fiscal years. Early adoption of ASU 2016-18 is permitted. ASU 2016-18 should be applied using a retrospective transition method for each period presented. The Company plans to adopt ASU 2016-18 in its annual filing for the year ending December 31, 2017. The standard is expected to impact presentationsignificance of the Company’s ~~statement of cash flows only.~~operating lease portfolio.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Clarifying the Definition of a Business~~ (“ASU 2017-01”). The objective of ASU 2017-01 is to add guidance to assist entities in evaluating whether transactions should be accounted for as acquisitions or disposals of assets or of businesses. ASU 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. Early adoption is permitted for interim and annual periods in which the financial statements have not been issued or made available for issuance. The Company has adopted ASU 2017-01 and has used the guidance to evaluate the SCCL License Acquisition. See Note 1.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). The objective of ASU 2017-04 is to simplify the subsequent measurement of goodwill by entities performing their annual goodwill impairment tests by comparing the fair value of a reporting unit, including income tax effects from any tax-deductible goodwill, with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds fair value. ASU 2017-04 is effective for fiscal years beginning after December 31, 2021, and interim periods within those fiscal years. Early adoption of ASU 2017-04 is permitted on goodwill impairment tests performed after January 1, 2017. ASU 2017-04 should be applied on a prospective basis. The Company is currently evaluating the impact of adopting ASU 2017-04; however, the standard is not expected to have a material impact on its consolidated financial statements.

In ~~March 2017,~~February 2018, the FASB issued ASU ~~2017-09,~~2018-02, ~~Stock Compensation~~Reporting Comprehensive Income (“ASU ~~2017-09”~~2018-02”). The objective of ASU ~~2017-09~~2018-02 is to provide guidance ~~about which changes~~on the impacts of the Tax Cuts and Jobs Act (“Tax Act”). The guidance permits the reclassification of certain income tax effects of the Tax Act from other comprehensive income to ~~the terms or conditions of a share-based payment award require an entity to apply modification accounting. ASU 2017-09~~retained earnings (stranded tax effects). The guidance also requires certain new disclosures. The guidance is effective for ~~annual periods, and interim periods within those~~ annual periods beginning after December 15, ~~2017.~~2018, and interim periods within that reporting period. Early adoption is permitted. ~~ASU 2017-09 should be applied prospectively~~Entities may adopt the guidance using one of two transition methods: retrospective to ~~an award modified on~~each period or ~~after~~periods in which the income tax effects of the Tax Act related to the items remaining in other comprehensive income are recognized, or at the beginning of the period of adoption. The Company does not expect the adoption ~~date. The Company plans to adopt ASU 2017-09 effective January 1, 2018. The~~of this standard ~~is not expected~~ to have a material impact on its consolidated financial statements.

In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740) (“ASU 2018-05”). The objective of ASU 2018-05 is to amend guidance on the Tax Act provided in Staff Accounting ~~Policies~~

~~Inventories~~ – ~~Inventories, which consist primarily of food, beverage, retail merchandise~~Bulletin No. 118. The guidance is effective immediately upon issuance. The Company reviewed the guidance and ~~operating supplies, are stated at~~determined that it applied the ~~lower of cost or net realizable value. Cost is determined by~~guidance effectively in its Annual Report on Form 10-K for the ~~first-in, first-out method.~~year ended December 31, 2017.

~~Stock-Based Compensation~~In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) - ~~Stock-based compensation expense~~(“ASU 2018-13”). The objective of ASU 2018-13 is ~~measured at the grant date based~~to modify disclosure requirements on ~~the~~ fair value ofmeasurements. The guidance is effective for fiscal years beginning after December 31, 2019, and interim periods within those fiscal years. Early adoption is permitted. The amendments should be adopted using the ~~award~~prospective method for certain disclosures within the guidance and ~~is recognized as expense over~~retrospectively upon the ~~vesting period.~~effective date. The Company ~~accounts for forfeitures as they occur. The Company uses~~does not expect the ~~Black-Scholes option pricing model for all non-performance option grants and the Monte Carlo option pricing model for all performance option grants~~adoption of this standard to ~~determine the fair value of all option grants.~~have a material impact on its consolidated financial statements.

3.13

In August 2018, the FASB issued ASU 2018-15, ~~ACQUISITIONS~~Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) (“ASU 2018-15”). The objective of ASU 2018-15 is to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with those incurred to develop or obtain internal-use software. The guidance is effective for fiscal years beginning after December 31, 2019, and interim periods within those fiscal years. Early adoption is permitted. The amendments can be applied either retrospectively or prospectively. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

~~Apex Acquisition~~Changes Related to Adoption of ASU 2016-18

~~On October 1,~~

In November 2016, the ~~Company’s subsidiary, Century Casino St. Albert Inc., acquired 100%~~FASB issued ASU 2016-18, Restricted Cash (“ASU 2016-18”). The objective of ASU 2016-18 is to require the statement of cash flows to include restricted cash in explaining the change during the period in the total of cash and cash equivalents. The Company adopted ASU 2016-18 in its consolidated financial statements for the year ended December 31, 2017. The standard impacts the presentation of the ~~issued~~Company’s condensed consolidated statement of cash flows in its condensed consolidated financial statements for the nine months ended September 30, 2018 and ~~outstanding shares~~September 30, 2017, and the Company has added the following additional disclosures in this Note 2 about its restricted cash balances to its discussion of ~~Casino St. Albert Inc. (“CSAI”), Action ATM Inc. (“AAI”)~~cash and ~~MVP Sports Bar Ltd. (“MVP”), collectively operating~~cash equivalents.

Cash and Cash Equivalents

A reconciliation of cash, cash equivalents and restricted cash as stated in the ~~Apex Casino~~Company’s statement of cash flows is presented in ~~St. Albert, Edmonton, Canada as well as acquiring~~ the following table:


	September 30,		September 30,
Amounts in thousands	2018		2017
Cash and cash equivalents	$	46,818	$	44,254
Restricted cash		—		1,013
Restricted cash included in deposits and other		721		748
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	47,539	$	46,015

For the nine months ended September 30, 2018, restricted cash included $0.6 million in deposits and other related ~~land~~to a cash guarantee for the Company’s CCB loan agreement and ~~real property held by Game Plan Developments Ltd. (the “Apex Acquisition”). The Company merged CSAI, AAI~~$0.1 million in deposits and ~~MVP with Century Casino St. Albert Inc., the surviving company,~~other related to payments of prizes and renamed the casino Century Casino St. Albert. CSA is a 34,500 square foot casino facility located on approximately six acres of land that includes 407 slot machines, 11 live table games, 15 video lottery terminals, a restaurant, a bar, a lounge and a banquet facility that can accommodate up to 175 guests.giveaways for Casinos Poland.

The ~~Company paid~~prior period amounts within the Company’s condensed consolidated statement of cash flows have been revised to reflect the new presentation of restricted cash after the adoption of ASU 2016-18. The information below presents the impact of this presentation change on the Company’s condensed consolidated statement of cash flows for the acquisition using additional financing from the second amended and restated credit agreement with the Bank of Montreal (the “BMO Credit Agreement”) (see Note 7). The total consideration of CAD 31.9 million ($24.3 million based on the exchange rate in effect on October 1, 2016) (the “Purchase Price”) for the Apex Acquisition consisted of the following:nine months ended September 30, 2017.

~~CAD 27.7 million ($21.1 million), which was paid at closing on October 1, 2016.~~

~~CAD 2.0 million ($1.5 million) in excess working capital paid as part of the Purchase Price pursuant to the purchase agreement, which was paid in February 2017.~~

The remaining CAD 2.2 million ($1.7 million) of the Purchase Price remains subject to certain holdbacks for indemnities that are set forth in the purchase agreement. The holdbacks will be held in an escrow account until the expiration of the agreed upon timelines.


Condensed Consolidated Statement of Cash Flows
Amounts in thousands	As Previously Reported		Changes Related to Adoption of ASU 2016-18		Revised
For the nine months ended September 30, 2017
Cash Flows from Operating Activities:
Prepaid expenses and other assets	$	(2,512)	$	1,499	$	(1,013)

Effect of Exchange Rate Changes on Cash		1,366		79		1,445

Increase in Cash, Cash Equivalents and Restricted Cash		5,417		1,578		6,995

Cash, Cash Equivalents and Restricted Cash at Beginning of Period		38,837		183		39,020
Cash, Cash Equivalents and Restricted Cash at End of Period	$	44,254	$	1,761	$	46,015

Changes Related to Adoption of ~~October 1, 2016,~~ASU 2014-19

In May 2014, the ~~Company began consolidating Century Casino St. Albert Inc. as a wholly owned subsidiary. CSA contributed $2.3 million in net operating~~FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The objective of ASU 2014-09 is to clarify the principles for recognizing revenue and ~~$0.6 million~~to develop a common revenue standard under US GAAP and International Financial Reporting Standards. The Company adopted ASU 2014-09 in ~~net~~its condensed consolidated financial statements for 2018 using the modified retrospective approach. The Company applied ASU 2014-09 to contracts that were not completed as of January 1, 2018. The Company determined that all contractual performance obligations were completed as of December 31, 2017 and that no adjustment to retained earnings ~~attributable~~was required. The Company determined there was no impact to ~~Century Casinos, Inc. shareholders and $6.5 million~~its condensed consolidated balance sheet, condensed consolidated statement of comprehensive (loss) income or condensed consolidated statement of cash flows. The standard impacts the presentation of the Company’s condensed consolidated statement of earnings in ~~net operating revenue and $0.9 million in net earnings attributable to Century Casinos, Inc. shareholders~~its condensed consolidated financial statements for the three and nine months ended September 30, ~~2017, respectively.~~

~~The~~2018, and the Company ~~accounted for~~has added the ~~transaction as a business combination. Accordingly, CSA’s assets of $22.4 million (including $3.1 million~~following additional disclosures in ~~cash) and liabilities of $1.7 million were included in the Company’s consolidated balance sheet at October 1, 2016. Goodwill of $3.6 million is attributable~~this Note 2 related to the business expansion opportunity for the Company. The acquisition leverages the Company’s management specialties and expertise in the gaming industry, expands the Company’s casino offerings in the Edmonton market and creates operational synergies. Goodwill is not a tax deductible item for the Company.impact of ASU 2014-09.

The ~~fair value~~most significant impacts of adoption of the ~~assets acquired and liabilities assumed (excluding cash received) was determined to be $21.2 million~~new accounting standard were as ~~of the acquisition date. The fair value was determined using the following methods, which the Company believes provide the most appropriate indicators of fair value:~~

follows:

~~multi-period excess earnings method;~~Promotional Allowances: The Company recognizes revenue for goods and services provided to customers for free, as an inducement to gamble, as gaming revenue with an offset to gaming revenue based on the stand-alone selling price rather than an offset to promotional allowances. This change primarily resulted in a reclassification between revenue line items.

~~cost method;~~Loyalty Accounting: Complimentary points earned through game play at the Company’s casinos are identified as separate performance obligations and recorded as a reduction in gaming revenue when earned at the retail value of the benefits owed to the customer (less estimated breakage) and an increase to the loyalty program liability representing outstanding performance obligations. Such amounts are recognized as revenue in the line item of the corresponding good or service provided when the performance obligation is fulfilled.

~~capitalized cash flow method;~~Estimated Cost of Promotional Allowances: The Company no longer reclassifies the estimated direct cost of providing promotional allowances from other expense line items to the gaming expense line item. This change resulted in a reclassification between expense line items that reduced gaming expense and increased hotel and food and beverage expenses by $0.3 million and $0.9 million for the three and nine months ended September 30, 2018, respectively.

Revenue

The Company derives revenue from:

(1)

contracts with customers,

·(2)

~~discounted cash flow method;~~financial instruments,

(3)

cost recovery payments, and

·(4)

~~direct market value approach.~~dividends from its cost investment.

~~Details~~A breakout of the ~~purchase~~Company’s derived revenue is presented in the table ~~below~~below.


	For the three months				For the nine months
	ended September 30,				ended September 30,
Amounts in thousands	2018		2017		2018		2017
Revenue from contracts with customers	$	43,564	$	41,048	$	123,834	$	114,775
Interest income		74		21		107		69
Cost recovery income		—		—		—		—
Dividend revenue		—		—		—		—
Total revenue	$	43,638	$	41,069	$	123,941	$	114,844

The Company’s performance obligations related to contracts with customers consist of the following:

Gaming

The majority of the Company’s revenue is derived from gaming transactions involving wagers wherein, upon settlement, the Company either retains the customer’s wager, or returns the wager to the customer. Gaming revenue is reported as the net difference between wins and losses. Gaming revenue is reduced by the incremental amount of unpaid progressive jackpots in the period during which the jackpot increases and the dollar value of points earned through tracked play. In Canada, gaming revenue is also reduced by amounts retained by the Alberta Gaming and Liquor Commission (“AGLC”) and Horse Racing Alberta (“HRA”). Performance obligations are satisfied upon completion of the wager with liabilities recognized for points earned through play. The Company does not extend lines of credit to customers.

Hotel accommodations and food and beverage furnished without charge, coupons and downloadable credits provided to customers to entice play are considered marketing incentives to induce play and are presented as a reduction to gaming revenue at the retail value on the date of redemption. Members of the Company’s casinos’ player clubs earn points based on, ~~estimated fair values~~among other things, their volume of ~~assets and liabilities as~~play at the Company’s casinos. Players can accumulate points over time that they may redeem at their discretion under the terms of ~~October 1, 2016.~~the program. The ~~measurement period to make any adjustments to the fair~~ value of the ~~assets and liabilities recognized as~~points is offset against the revenue in the period in which the points were earned. The Company records a ~~result~~liability based on the redemption value of the ~~acquisition ended~~points earned with an estimate for breakage, and records a ~~year after~~corresponding reduction in gaming revenue. The value of unused or unredeemed points is included in accrued liabilities on the Company’s consolidated balance sheets.

Hotel, Bowling, Food and Beverage and Other Sales

Goods and services provided include hotel room rentals, food and beverage sales, bowling lane rentals and retail sales. Revenue is recognized over time as specified in the contract, however, the majority of the contracts are satisfied on the same day and revenue is recognized on the date of ~~acquisition~~the sale. Revenue that is collected before the date of sale is recorded as deferred revenue. In the normal course of business, the Company does not accept product returns. The Company has elected the practical expedient permitted under ASU 2014-09 and excludes taxes assessed by a governmental authority and collected by the Company from the transaction price.

Pari-Mutuel

Pari-mutuel revenue involves wagers on ~~October 1, 2017.~~horse racing. The Company facilitates wagers on horse racing through live racing at the Company’s racetrack, off-track betting parlors at the Company’s casinos, and the operation of the Southern Alberta off-track betting network. The Company has determined that it is the principal in the performance obligations through which amounts are wagered on horse races run at the Company’s racetrack. For these performance obligations, the Company records revenue as the commission retained on wagers with revenue recognized on the date of the wager. The Company has determined that it is acting as the agent for all wagers placed through the Company’s off-track betting parlors and the off-track betting network. For these performance obligations, the Company records pari-mutuel revenue as the commission retained on wagers less the expense for host fees to the host racetrack with revenue recognized on the date of the wager. Expenses related to licenses and HRA levies are expensed in the same month as revenue is recognized. The Company takes future bets for the Kentucky Derby only and recognizes wagers on the Kentucky Derby as deferred revenue.

Management and Consulting Fees

Revenue from the Company’s consulting services agreement with MCE and the management agreement with MCL are recorded monthly as services are provided. Payments are typically due within 30 days of the month to which the services relate. The agreed upon price in the contract does not contain variable consideration. The Company did not ~~make~~incur any ~~adjustments~~costs to obtain its current agreements with MCE or MCL.

The Company operates gaming establishments as well as related lodging, restaurant, horse racing (including off-track betting) and entertainment facilities around the ~~fair value~~world. The Company generates revenue at its properties by providing the following types of products and services: gaming, hotel, food and beverage, and pari-mutuel and other. Disaggregation of the ~~assets~~Company’s revenue from contracts with customers by type of revenue and ~~liabilities~~geographical location is presented in the tables below.



	For the three months ended September 30, 2018
Amounts in thousands		Canada		United States		Poland		Corporate Other		Total
Gaming	$	10,337	$	7,615	$	16,569	$	1,462	$	35,983
Hotel		129		446		—		—		575
Food and Beverage		2,691		1,194		205		200		4,290
Other		2,526		105		(27)		112		2,716
Net Operating Revenue	$	15,683	$	9,360	$	16,747	$	1,774	$	43,564


	For the three months ended September 30, 2017
Amounts in thousands		Canada		United States		Poland		Corporate Other		Total
Gaming	$	10,764	$	9,507	$	15,659	$	984	$	36,914
Hotel		139		421		—		—		560
Food and Beverage		2,557		1,139		172		—		3,868
Other		2,146		79		25		199		2,449
Promotional Allowances (1)		(321)		(2,107)		(306)		(9)		(2,743)
Net Operating Revenue	$	15,285	$	9,039	$	15,550	$	1,174	$	41,048


	For the nine months ended September 30, 2018
Amounts in thousands		Canada		United States		Poland		Corporate Other		Total
Gaming	$	30,190	$	21,056	$	48,010	$	3,339	$	102,595
Hotel		396		1,138		—		—		1,534
Food and Beverage		7,713		3,063		551		303		11,630
Other		7,391		285		134		265		8,075
Net Operating Revenue	$	45,690	$	25,542	$	48,695	$	3,907	$	123,834


	For the nine months ended September 30, 2017
Amounts in thousands		Canada		United States		Poland		Corporate Other		Total
Gaming	$	29,535	$	26,294	$	44,566	$	2,419	$	102,814
Hotel		409		1,082		—		—		1,491
Food and Beverage		7,232		2,877		513		—		10,622
Other		6,182		252		126		1,044		7,604
Promotional Allowances (1)		(874)		(6,023)		(822)		(37)		(7,756)
Net Operating Revenue	$	42,484	$	24,482	$	44,383	$	3,426	$	114,775

(1)

With the adoption of ASU 2014-19, promotional allowances are presented as a reduction in gaming revenue for the three and nine months ended September 30, 2018.

For the majority of the Company’s contracts with customers, payment is made in advance of the services and contracts are settled on the same day the sale occurs with revenue recognized ~~during~~on the date of the sale. For contracts that are not settled, a contract liability is created. The expected duration of the performance obligation is less than one year.

The amount of revenue recognized that was included in the opening contract liability balance was $0.2 million for each of the three and nine months ended September 30, 2018 and 2017. This revenue consists primarily of the Company’s deferred gaming revenue from player points earned through play at the Company’s casinos located in the United States. Activity in the Company’s contract receivables and liabilities is presented in the tables below.


~~Amounts in thousands~~
~~Cash~~	$	~~3,060~~
~~Accounts receivable~~		~~331~~
~~Prepaid expenses and other~~		~~136~~
~~Inventories~~		39
~~Property and equipment~~		~~9,542~~
~~Casino license~~		~~9,318~~
~~Accounts payable~~		~~(63)~~
~~Accrued liabilities~~		~~(383)~~
~~Accrued payroll~~		~~(37)~~
~~Deferred tax liability~~		~~(1,238)~~
~~Net identifiable assets acquired~~		~~20,705~~

~~Add: Goodwill~~		~~3,584~~
~~Net assets acquired~~	$	~~24,289~~

~~The following table details the purchase consideration net cash outflow.~~


~~Outflow of cash to acquire subsidiary, net of cash acquired~~
~~Cash consideration~~	$	~~24,289~~
~~Less: cash balances acquired~~		~~(3,060)~~
~~Net cash~~	$	~~21,229~~


	For the three months						For the three months
	ended September 30, 2018						ended September 30, 2017
Amounts in thousands	Receivables		Contract Asset		Contract Liability		Receivables		Contract Asset		Contract Liability
Opening	$	260		—		193		270		—		231
Closing		281		—		236		246		—		260
Increase/(Decrease)	$	21	$	—	$	43	$	(24)	$	—	$	29

	For the nine months						For the nine months
	ended September 30, 2018						ended September 30, 2017
Amounts in thousands	Receivables		Contract Asset		Contract Liability		Receivables		Contract Asset		Contract Liability
Opening	$	266	$	—	$	235	$	270	$	—	$	232
Closing		281		—		236		246		—		260
Increase/(Decrease)	$	15	$	—	$	1	$	(24)	$	—	$	28

Receivables are included in accounts receivable and contract liabilities are included in accrued liabilities on the Company’s condensed consolidated balance sheets. There were no impairment losses for the Company’s receivables or contract liabilities recognized for the three and nine months ended September 30, 2018.

Substantially all of the Company’s contracts and contract liabilities have an original duration of one year or less. The Company applies the practical expedient for such contracts and does not consider the effects of the time value of money. Further, because of the short duration of these contracts, the Company has not disclosed the transaction price for the remaining performance obligations as of the end of each reporting period or when the Company expects to recognize this revenue.

~~Pro forma results~~

The ~~following table provides unaudited pro forma information~~current period amounts within the Company’s condensed consolidated statement of the Company as if the Apex Acquisition had occurred at the beginning of the earliest comparable period presented. This pro forma information is not necessarily indicative either of the combined results of operations that actually wouldearnings have been ~~realized had~~revised in the ~~acquisition been consummated during~~table below to provide a comparison of revenue and the ~~periods~~direct cost of providing promotional allowances to the Company’s condensed consolidated statement of earnings for ~~which~~ the ~~pro forma information is presented, or of future results.~~three and nine months ended September 30, 2018.

For the three months

For the nine months
Amounts in thousands, except for per share information

ended September 30, 2016

ended September 30, 2016

(Unaudited)

(Unaudited)
Net operating revenue

$
36,445

$
108,209
Net earnings attributable to Century Casinos, Inc. shareholders

$
2,304

$
7,012
Basic and diluted earnings per share

$
0.09

$
0.29


Condensed Consolidated Statement of Earnings
Amounts in thousands	As Reported		Changes Related to Adoption of ASU 2014-09		Revised
For the three months ended September 30, 2018
Operating revenue:
Gaming	$	35,983	$	3,152	$	39,135
Operating revenue		43,564		3,152		46,716
Less: Promotional allowances		—		(3,152)		(3,152)
Net operating revenue		43,564		—		43,564
Operating costs and expenses
Gaming		18,490		325		18,815
Hotel		197		(10)		187
Food and beverage	$	4,148	$	(315)	$	3,833

For the nine months ended September 30, 2018
Operating revenue:
Gaming	$	102,595	$	8,621	$	111,216
Operating revenue		123,834		8,621		132,455
Less: Promotional allowances		—		(8,621)		(8,621)
Net operating revenue		123,834		—		123,834
Operating costs and expenses
Gaming		52,666		915		53,581
Hotel		551		(36)		515
Food and beverage	$	11,708	$	(879)	$	10,829

3.INVESTMENTS

4.~~COST INVESTMENT~~

Cost Investment

Mendoza Central Entretenimientos S.A.

On October 31, 2014, ~~CCE~~CRM entered into an agreement (the “MCE Agreement”) with Gambling and Entertainment LLC and its affiliates, pursuant to which ~~CCE~~CRM purchased 7.5% of the shares of MCE, a company formed in Argentina, for $1.0 million. Pursuant to the MCE Agreement, ~~CCE~~CRM is working with MCE to utilize MCE’s exclusive concession agreement with Instituto Provincial de Juegos y Casinos to lease slot machines and provide related services to Casino de Mendoza, a casino located in Mendoza, Argentina, and owned by the Province of Mendoza. MCE may also pursue other gaming opportunities. Under the MCE Agreement, ~~CCE~~CRM has appointed one director to MCE’s board of directors and ~~has the right to appoint additional directors to MCE’s board of directors based on its ownership percentage of MCE. In addition, CCE~~ had a three-year option through October 2017 to purchase up to 50% of the shares of MCE, which the Company did not exercise. The Company accounts for the $1.0 million investment in MCE using the cost method.

Equity Investment

Minh Chau Ltd.

On April 25, 2018, the Company’s subsidiary, CRM, acquired a 51% ownership interest in GHL for $0.6 million. GHL entered into an agreement with MCL and its owners, pursuant to which GHL purchased an initial 6.36% ownership interest in MCL for $0.4 million and agreed to purchase an additional ownership interest in MCL up to a total of 51% of MCL over a three-year period for approximately $3.6 million. GHL has the option to purchase an additional 19% ownership interest in MCL for a total of 70% of MCL under certain conditions. GHL and MCL also entered into a management agreement, which provides that GHL will manage the operations at MCL’s hotel and international 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. The Company excluded the presentation of MCL’s financial information after it determined that it is not significant compared to the Company’s consolidated results. At September 30, 2018, the Company’s maximum exposure to losses based on the value of the equity investment and GHL’s 51% purchase commitment in MCL was $3.6 million.

GHL purchased an additional 2.85% ownership interest in MCL on October 4, 2018, for $0.2 million.

5.4.GOODWILL AND INTANGIBLE ASSETS

Goodwill

The Company tests 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. The reporting units with goodwill balances as of September 30, ~~2017~~2018 include the operations at CRA, CDR, CSA and CPL. The Company considers a variety of factors when estimating the fair value of its 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. The Company makes a variety of estimates and judgments about the relevance and comparability 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. There have been no indications of impairment at CRA, CDR, CSA or CPL since the Company’s last annual analysis ~~or at CSA since the valuation as part of the acquisition,~~ that would necessitate additional impairment testing by the Company.

Changes in the carrying amount of goodwill related to CRA, CDR, CSA and CPL are as follows:



	Canada						Poland				Canada						Poland
Amounts in thousands	Century Resorts Alberta		Century Downs		Century Casino St. Albert		Casinos Poland		Total		Century Resorts Alberta		Century Downs		Century Casino St. Albert		Casinos Poland		Total
Balance – December 31, 2016	$	3,661	$	141	$	3,501	$	6,084	$	13,387
Balance – December 31, 2017											$	3,919	$	151	$	3,747	$	7,345	$	15,162
Effect of foreign currency translation		278		11		266		926		1,481		(120)		(5)		(116)		(314)		(555)
Balance -- September 30, 2017	$	3,939	$	152	$	3,767	$	7,010	$	14,868
Balance -- September 30, 2018											$	3,799	$	146	$	3,631	$	7,031	$	14,607

Intangible Assets

Trademarks

The Company currently owns two trademarks, the Century Casinos trademark and the Casinos Poland trademark, which are reported as intangible assets on the Company’s condensed consolidated balance sheets. Changes in the carrying amount of the trademarks are as follows:



Amounts in thousands	Century Casinos		Casinos Poland		Total		Century Casinos		Casinos Poland		Total
Balance – December 31, 2016	$	108	$	1,450	$	1,558
Balance – December 31, 2017							$	108	$	1,751	$	1,859
Effect of foreign currency translation		0		221		221		—		(75)		(75)
Balance -- September 30, 2017	$	108	$	1,671	$	1,779
Balance -- September 30, 2018							$	108	$	1,676	$	1,784

The Company has determined both trademarks have indefinite useful lives and therefore the Company does not amortize the trademarks. Rather, the Company tests its trademarks for impairment as of October 1 each year, or more frequently as circumstances indicate it is necessary. The Company tests trademarks for impairment using the relief-from-royalty method. If the fair value of an indefinite-lived intangible asset is less than its carrying amount, the Company would recognize an impairment charge equal to the difference. NoThere have been no indications of impairment ~~charges~~ related to the Century Casinos and Casinos Poland trademarks ~~have been recorded.~~since the Company’s last annual analysis that would necessitate additional impairment testing by the Company.

Casino Licenses

Casino licenses consist of the following:



	September 30,		December 31,		September 30,		December 31,
Amounts in thousands	2017		2016		2018		2017
Finite-lived
Casino licenses	$	1,740	$	2,029	$	2,979	$	2,992
Less: accumulated amortization		(1,267)		(1,362)		(608)		(1,434)
Total finite-lived casino licenses, net		473		667		2,371		1,558
Infinite-lived
Casino licenses		13,353		11,473		13,084		13,507
Total infinite-lived casino licenses		13,353		11,473		13,084		13,507
Casino licenses, net	$	13,826	$	12,140	$	15,455	$	15,065

Poland

As of September 30, ~~2017,~~2018, Casinos Poland had ~~six~~eight casino licenses, each with an original term of six years, which are finite-lived intangible assets and are amortized over their respective useful lives. Changes in the carrying amount of the Casinos Poland licenses are as follows:



Amounts in thousands		Casinos Poland
Balance – December 31, ~~2016~~2017	$	~~667~~1,558
New casino licenses		1,151
Amortization		~~(281)~~(307)
Effect of foreign currency translation		87 (31)
Balance -- September 30, ~~2017~~2018	$	~~473~~2,371

As of September 30, ~~2017,~~2018, estimated amortization expense for the CPL casino licenses over the next five years was as follows:



Amounts in thousands
2017	$	82
2018		154	$	124
2019		74		457
2020		59		443
2021		59		443
2022				428
Thereafter		45		476
	$	473	$	2,371

These estimates do not reflect the impact of future foreign exchange rate changes or the continuation of the licenses following their expiration. The weighted average period before the current CPL casino licenses expire is ~~1.4~~4.6 years. In Poland, gaming licenses are not renewable. Once a gaming license has expired, any gaming company can apply for the license. During the second quarter of 2018, CPL was awarded casino licenses in Krakow and Lodz, which had expired in early 2018. The ~~licenses~~casino in Krakow reopened in July 2018 and the casino in Lodz reopened in August 2018. In addition, in July 2018, CPL was awarded another casino license at the ~~Krakow, Lodz, Plock and Poznan casinos expire~~Marriott Hotel in ~~2018.~~Warsaw. The Company ~~intends to apply for~~anticipates that this casino will open in the first quarter of 2019. The Company was not awarded the licenses in ~~each~~Poznan and Plock, which expired and were fully amortized. No impairment charges related to the loss of ~~these cities.~~the license tenders was recorded relating to the licenses.

Canada and Corporate and Other

The licenses at CDR, CSA and ~~SCCL~~CCB are infinite-lived intangible assets that are not amortized. CDR holds licenses from the AGLC and HRA. CSA holds a license from the AGLC. ~~SCCL~~CCB holds licenses from the Great Britain Gambling Commission. No impairment charges related to the licenses have been recorded. Changes in the carrying amount of the licenses are as follows:

Canada

Corporate and Other
Amounts in thousands

Century Downs

Century Casino St. Albert

Saw Close Casino Ltd.
Balance – December 31, 2016

$
2,369

$
9,104

$
0
Purchase of Saw Close Casino Ltd.

0

0

952
Effect of foreign currency translation

180

690

58
Balance -- September 30, 2017

$
2,549

$
9,794

$
1,010



	Canada				Corporate and Other
Amounts in thousands	Century Downs		Century Casino St. Albert		Century Casino Bath
Balance – December 31, 2017	$	2,536	$	9,744	$	1,227
Effect of foreign currency translation		(78)		(301)		(44)
Balance -- September 30, 2018	$	2,458	$	9,443	$	1,183

6.5.PROMOTIONAL ALLOWANCES

Hotel accommodations and food and beverage furnished without charge ~~to customers are included in gross revenue at retail value~~ and ~~are deducted as promotional allowances to arrive at net operating revenue. The Company issues~~ coupons and downloadable ~~promotional~~ credits provided to customers ~~for~~to entice play are considered marketing incentives to induce play and are presented as a reduction to gaming revenue at the ~~purpose of generating future revenue. The~~retail value ~~of coupons and downloadable promotional credits redeemed is applied against the revenue generated~~ on the ~~day~~date of ~~the~~ redemption. ~~The estimated cost of provided promotional allowances is included in casino expenses.~~ The costs of providing promotional allowances were as follows:



	For the three months				For the nine months				For the three months				For the nine months
	ended September 30,				ended September 30,				ended September 30,				ended September 30,
Amounts in thousands	2017		2016		2017		2016		2018		2017		2018		2017
Hotel	$	11	$	9	$	36	$	37	$	10	$	11	$	36	$	36
Food and beverage		318		311		857		805		315		318		879		857
	$	329	$	320	$	893	$	842	$	325	$	329	$	915	$	893

See Note 2 for a discussion of the impact of the adoption of ASU 2014-09 on the presentation of promotional allowances.

Members of the Company’s casinos’ player clubs earn points based on, among other things, their volume of play at the Company’s casinos. Players can accumulate points over time that they may redeem at their discretion under the terms of the program. The Company records a liability based on the redemption value of the points earned, and records a corresponding reduction in casino revenue. Points can be redeemed for cash, downloadable promotional credits and/or various amenities at the casino, such as meals, hotel stays and gift shop items. The value of the points is offset against the revenue in the period in which the points were earned. The Company records a liability based on the redemption value of the points earned with an estimate for breakage, and records a corresponding reduction in casino revenue. The value of unused or unredeemed points is included in accrued liabilities on the Company’s condensed consolidated balance sheets. ~~The expiration of unused points results in a reduction of the liability.~~ As of September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, the outstanding balance of this liability was $0.7 million.

7.6. LONG-TERM DEBT

Long-term debt and the weighted average interest rates as of September 30, ~~2017~~2018 and December 31, ~~2016~~2017 consisted of the following:



Amounts in thousands	September 30, 2017			December 31, 2016			September 30, 2018			December 31, 2017
Credit agreement - Bank of Montreal	$	39,682	4.13%	$	40,495	4.04%	$	33,323	4.43%	$	38,203	4.19%
Credit agreement - CPL		0	0.00%		215	3.55%
Credit agreement - SCCL		2,679	1.93%		0	0.00%
Credit facilities - CPL								2,291	2.42%		—	—
Credit agreement - CCB								2,607	2.32%		2,704	4.94%
Financing obligation - CDR land lease		15,622	13.24%		14,520	13.54%		15,061	13.63%		15,541	13.44%
Capital leases		607	7.04%		791	7.11%		253	6.95%		523	6.89%
Total principal	$	58,590	6.61%	$	56,021	7.61%	$	53,535	6.78%	$	56,971	6.67%
Deferred financing costs		(291)			(412)			(250)			(258)
Total long-term debt	$	58,299		$	55,609		$	53,285		$	56,713
Less current portion		(5,647)			(5,583)			(20,079)			(5,697)
Long-term portion	$	52,652		$	50,026		$	33,206		$	51,016

Credit Agreement - Bank of Montreal

In May 2012, the Company, through its Canadian subsidiaries, entered into the CAD 28.0 million credit agreement with ~~the Bank of Montreal (“BMO”). On~~BMO. In August ~~15,~~ 2014, the Company, through its Canadian subsidiaries, entered into an amended and restated credit agreement with BMO that increased the Company’s borrowing capacity to CAD 39.1 million. In September 2016, the Company, through its Canadian subsidiaries, entered into ~~the~~a second amended and restated credit agreement with BMO ~~Credit Agreement to finance the Apex Acquisition~~ that increased the ~~Company’s~~ borrowing capacity to CAD 69.2 million. On August 24, 2018, the Company, through its Canadian subsidiaries, entered into a third amended and restated credit agreement with BMO (the “BMO Credit Agreement”) to provide additional financing for the Century Mile project and a leasing credit facility. Under the BMO Credit Agreement, the Company’s borrowing capacity was increased to CAD 102.2 million with an interest rate of BMO’s floating rate plus a ~~margin.~~margin, except for the rates for Credit Facility H, which will be determined upon execution of a lease agreement. As discussed further below, the Company has entered into interest rate swap agreements to fix the interest rate paid related to a portion of the outstanding balance on the BMO Credit Agreement. As of September 30, ~~2017,~~2018, the Company had borrowed CAD 63.9 million, of which the outstanding balance was CAD ~~49.5~~43.1 million ($~~39.7~~33.3 million based on the exchange rate in effect on September 30, ~~2017)~~2018) and the Company had approximately CAD ~~6.0~~39.8 million ($~~4.8~~30.8 million based on the exchange rate in effect on September 30, ~~2017)~~2018) available under the BMO Credit Agreement. In addition, the Company is using CAD 3.0 million ($~~2.4~~2.3 million based on the exchange rate in effect on September 30, ~~2017)~~2018) from Credit Facility E for the interest rate swap agreements discussed below.

The BMO Credit Agreement consists of the following ~~five~~ credit facilities:

Credit Facility A is a CAD 1.1 million revolving credit facility with a term of five years that expires in August 2019. Credit Facility A may be used for general corporate purposes, including for the payment of costs related to the BMO Credit Agreement, ongoing working capital requirements and operating regulatory requirements. As of September 30, ~~2017,~~2018, the Company had CAD 1.1 million ($~~0.9~~0.8 million based on the exchange rate in effect on September 30, ~~2017)~~2018) available for borrowing under Credit Facility A.

Credit Facility B is an approximately CAD 24.1 million committed, non-revolving, reducing standby facility with a term of five years that expires in August 2019. The Company used borrowings under Credit Facility B primarily to repay the Company’s mortgage loan related to CRA, pay for the additional 33.3% investment in CPL, pay for development costs related to CDR and for working capital and general corporate purposes. Once the principal amount of an advance has been repaid, it cannot be re-borrowed. As of September 30, ~~2017,~~2018, the Company had no additional available borrowings under Credit Facility B.

Credit Facility C is a CAD 11.0 million revolving credit facility with a term of five years that expires in August 2019. Credit Facility C may be used as additional financing for the development of CDR. The Company may re-borrow the principal amount within the limits described in the BMO Credit Agreement. As of September 30, ~~2017,~~2018, the Company had CAD ~~4.9~~5.7 million ($~~3.9~~4.4 million based on the exchange rate in effect on September 30, ~~2017)~~2018) available for borrowing under Credit Facility C.

Credit Facility D is aan approximately CAD 30.0 million committed, reducing term credit facility with a term of five years that expires in September 2021. The Company used ~~CAD 30.0 million~~the entire amount of the facility to pay for the ~~Apex Acquisition.~~Company’s acquisition of CSA in September 2016. Once the principal amount of an advance has been repaid, it cannot be re-borrowed. As of September 30, ~~2017,~~2018, the Company had no additional available borrowings under Credit Facility D.

Credit Facility E is a CAD 3.0 million treasury risk management facility. The Company may use this facility to hedge interest rate risk or currency exchange rate risk. Credit Facility E has a term of five ~~years.~~years mirroring the interest rate swap agreements discussed below. The Company is currently utilizing Credit Facility E to hedge interest rate risk as discussed below.

Credit Facility F is a CAD 33.0 million demand, non-revolving, construction credit facility for use for the construction and development of the Century Mile project. Upon the maturity of Credit Facility F on the facility termination date (which is the earliest of (i) the date on which demand for the payment is made by BMO; (ii) August 24, 2019; (iii) the Project Construction Completion Date, as defined in the BMO Credit Agreement; or (iv) the occurrence of event of default), the principal balance will be converted to Credit Facility G. Once funds are advanced from Credit Facility F, they cannot be re-borrowed. As of September 30, 2018, the Company had CAD 33.0 million ($25.5 million based on the exchange rate in effect on September 30, 2018) available for borrowing under Credit Facility F.

Credit Facility G is a committed, non-revolving, term credit facility that the Company will utilize at the maturity of Credit Facility F. Credit Facility G has a term of five years from the date of conversion of Credit Facility F. The Company cannot re-borrow funds that have been repaid under Credit Facility G.

Credit Facility H is a CAD 2.0 million equipment leasing credit facility for use for the Century Mile project pursuant to the Interim Funding Agreement and Master Lease Agreement described in the BMO Credit Agreement. The Company may re-borrow the principal amount within the limits described in the BMO Credit Agreement pursuant to the Interim Funding Agreement and Master Lease Agreement. Maturity dates will be set once the facility is utilized. As of September 30, 2018, the Company had CAD 2.0 million ($1.5 million based on the exchange rate in effect on September 30, 2018) available for borrowing under Credit Facility H.

Any funds not drawn down under specified facilities in the BMO Credit Agreement are subject to standby fees ranging from 0.50% to 0.75% payable quarterly in arrears. Standby fees of less than CAD 0.1 million (less than $0.1 million based on the exchange rates in effect on September 30, ~~2017~~2018 and ~~2016)~~2017) were recorded as interest expense in the condensed consolidated statements of earnings for each of the three and nine months ended September 30, ~~2017~~2018 and ~~2016.~~2017. The shares of the Company’s Canadian subsidiaries that own CRA, CAL, CSA and ~~CSA~~Century Mile and the Company's 75% interest in CDR are pledged as collateral for the BMO Credit Agreement. The BMO Credit Agreement contains a number of covenants applicable to the Canadian subsidiaries, including covenants restricting their incurrence of additional debt, a debt to EBITDA ratio less than 3:4:1, a fixed charge coverage ratio greater than ~~1.2:~~1:1, maintenance of a CAD 50.0 million equity balance and a capital expenditure limit of CAD 4.0 million ~~per year.~~for 2018. The Company was in compliance with all financial covenants of the BMO Credit Agreement as of September 30, ~~2017.~~2018.

The Company has entered into interest rate swap agreements to partially hedge the risk of future increases in the variable rate debt under the BMO Credit Agreement. The interest rate swap agreements are not designated as hedges for accounting purposes. As a result, changes in fair value of the interest rate swaps are recognized in interest expense on the Company’s condensed consolidated statements of earnings. As of September 30, ~~2017,~~2018, the Company had the following interest rate swap agreements set at a Canadian Dollar Offered Rate (“CDOR”):

Notional amount of CAD ~~8.1~~6.8 million ($~~6.5~~5.3 million based on the exchange rate in effect on September 30, ~~2017)~~2018) with a rate of 3.92% expiring in August 2019;

Notional amount of CAD ~~8.1~~6.8 million ($~~6.5~~5.3 million based on the exchange rate in effect on September 30, ~~2017)~~2018) with a rate of 3.89% expiring in August 2019; and

Notional amount of CAD ~~13.5~~12.0 million ($~~10.8~~9.3 million based on the exchange rate in effect on September 30, ~~2017)~~2018) with a rate of 4.08% expiring in December 2021.

Deferred financing costs consist of the Company’s costs related to the financing of the BMO Credit Agreement. Amortization expenses relating to deferred financing charges were $0.1 million for each of the nine months ended September 30, ~~2017~~2018 and ~~2016.~~2017. These costs are included in interest expense in the condensed consolidated statements of earnings.

Casinos Poland

As of September 30, ~~2017,~~2018, CPL had a short-term line of credit with Alior Bank (formerly BPH ~~Bank~~Bank) used to finance current operations. The line of credit bears an interest rate of one-month WIBOR plus 1.85% with a borrowing capacity of PLN 13.0 million, of which PLN 2.0 million may only be used to secure bank guarantees. The credit facility ~~is secured by a building owned by CPL in Warsaw, Poland and~~ terminates on ~~February 11, 2018. The~~March 20, 2019. As of September 30, 2018, the credit facility had noan outstanding balance as of ~~September 30, 2017 and December 31, 2016 and approximately~~ PLN ~~11.0~~5.0 million ($~~3.0~~1.4 million based on the exchange rate in effect on September 30, ~~2017)~~2018), Alior Bank had secured bank guarantees of PLN 3.1 million ($0.9 million based on the exchange rate in effect on September 30, 2018) and approximately PLN 4.9 million ($1.4 million based on the exchange rate in effect on September 30, 2018) was available for ~~borrowing as of September 30, 2017.~~borrowing. The credit facility contains a number of covenants applicable to CPL, including covenants that restrict the incurrence of additional debt and require CPL to maintain certain debt to EBITDA ratios. CPL was in compliance with all financial covenants of this credit facility as of September 30, ~~2017.~~2018.

As of September 30, 2018, CPL also had a short-term line of credit with mBank used to finance current operations that was entered into on April 9, 2018. The line of credit bears an interest rate of overnight WIBOR plus 1.40% with a borrowing capacity of PLN 5.0 million. The credit facility terminates on March 28, 2019. As of September 30, 2018, the credit facility had an outstanding balance of PLN 3.3 million ($0.9 million based on the exchange rate in effect on September 30, 2018) and approximately PLN 1.7 million ($0.5 million based on the exchange rate in effect on September 30, 2018) was available for additional borrowing as of September 30, 2018. The credit facility contains a number of covenants applicable to CPL, including covenants that require CPL to maintain certain liquidity and liability to asset ratios. CPL was in compliance with all financial covenants of this credit facility as of September 30, 2018.

In addition, under Polish gaming law, CPL is required to maintain PLN ~~3.6~~6.0 million in the form of deposits or bank guarantees for payment of casino jackpots and gaming tax obligations. mBank issued guarantees to CPL for this purpose totaling PLN ~~3.6~~6.0 million ($~~1.0~~1.7 million based on the exchange rate in effect on September 30, ~~2017)~~2018). The mBank guarantees are secured by land owned by CPL in Kolbaskowo, Poland as well as a deposit of PLN ~~0.7~~1.7 million ($~~0.2~~0.5 million based on the exchange rate in effect on September 30, ~~2017)~~2018) with mBank that terminates on October 31, 2019. In addition, CPL is required to maintain deposits or provide bank guarantees for payment of additional prizes and giveaways at the casinos. The amount of these deposits varies depending on the value of the prizes. CPL maintained PLN ~~0.5~~0.4 million ($0.1 million based on the exchange rate in effect on September 30, ~~2017)~~2018) in deposits for this purpose as of September 30, ~~2017.~~2018. These deposits are included in deposits and other on the Company’s condensed consolidated balance sheets.

~~Saw Close~~Century Casino ~~Ltd.~~Bath

In August 2017, the Company’s subsidiary ~~SCCL~~CCB entered into a GBP 2.0 million term loan with UniCredit Bank Austria AG (“UniCredit”). The loan matures in September 2023 and bears interest at the London Interbank Offered Rate (“LIBOR”) plus 1.625%. Proceeds from the loan ~~will be~~were used for construction and fitting out of ~~the Company’s Bath casino project.~~CCB. As of September 30, ~~2017,~~2018, the amount outstanding on the loan was GBP 2.0 million ($~~2.7~~2.6 million based on the exchange rate in effect on September 30, ~~2017)~~2018). ~~SCCL~~CCB has no further borrowing availability under the loan agreement. Repayment of the loan will begin in December 2018. The loan is guaranteed by a $0.6 million cash guarantee by ~~CCE. This~~CRM. The amount of this guarantee is included in ~~restricted cash~~deposits and other on the Company’s condensed consolidated balance sheets.

Century Downs Racetrack and Casino

CDR’s land lease is a financing obligation of the Company. Prior to the Company’s acquisition of its ownership interest in CDR, CDR sold a portion of the land on which the REC project is located and then entered into an agreement to lease back a portion of the land sold. The Company accounts for the lease using the financing method by accounting for the land subject to lease as an asset and the lease payments as interest on the financing obligation. Under the land lease, CDR has four options to purchase the land. The first option date is July 1, 2023. Due to the nature of the CDR land lease financing obligation, there are no principal payments due until the Company exercises its option to purchase the land. Lease payments are applied to interest only, and any change in the outstanding balance of the financing obligation relates to foreign currency translation. As of September 30, ~~2017,~~2018, the outstanding balance on the financing obligation was CAD 19.5 million ($~~15.6~~15.0 million based on the exchange rate in effect on September 30, ~~2017)~~2018).

Century Resorts Management

On August 13, 2018, the Company’s subsidiary, CRM, entered into a loan agreement with UniCredit (the “UniCredit Agreement”) for a revolving line of credit of up to EUR 7.0 million ($8.1 million based on the exchange rate in effect on September 30, 2018) to be used for acquisitions and capital expenditures at the Company’s existing operations or new operations. The borrowings may be denominated in EUR, bearing an interest rate of EURIBOR plus a margin of 1.5%, or USD, bearing an interest rate of LIBOR plus a margin of 1.5%. The line of credit is available until terminated by either party. Funds can be borrowed with terms of 1, 3, 6, 9 or 12 months. The UniCredit Agreement is secured by a EUR 7.0 million guarantee by the Company. The UniCredit Agreement contains customary events of default, including the failure to make required payments. Upon a failure to make required payments following a grace period, amounts due under the UniCredit Agreement may be accelerated.

Capital Lease Agreements

As of September 30, ~~2017,~~2018, the Company had the following capital leases:

CRA had two capital lease agreements for surveillance and general equipment with an outstanding balance of CAD ~~0.2~~0.1 million ($~~0.2~~0.1 million based on the exchange rate in effect on September 30, ~~2017)~~2018);

CAL ~~has a~~had two capital lease ~~agreement~~agreements for general equipment with an outstanding balance of ~~less than~~ CAD 0.1 million (less than $0.1 million based on the exchange rate in effect on September 30, ~~2017)~~2018);

CDR had ~~six~~three capital lease agreements for ~~surveillance, kitchen and~~ racing-related equipment with an outstanding balance of CAD ~~0.4~~0.1 million ($~~0.3~~0.1 million based on the exchange rate in effect on September 30, ~~2017)~~2018);

CSA had a capital lease agreement for general equipment with an outstanding balance of less than CAD 0.1 million (less than $0.1 million based on the exchange rate in effect on September 30, ~~2017)~~2018); and

the Century Mile project had a capital lease agreement for trailers with an outstanding balance of CAD 0.1 million ~~($0.1~~(less than $0.1 million based on the exchange rate in effect on September 30, ~~2017)~~2018).

As of September 30, ~~2017,~~2018, scheduled maturities related to long-term debt were as follows:


Amounts in thousands	Bank of Montreal		Saw Close Casino Ltd. Credit Agreement		Century Downs Land Lease		Capital Leases		Total		Bank of Montreal		Casinos Poland Credit Facilities		Century Casino Bath Credit Agreement		Century Downs Land Lease		Capital Leases		Total
2017	$	1,433	$	0	$	0	$	120	$	1,553
2018		5,117		134		0		311		5,562	$	1,382	$	2,291	$	130	$	—	$	56	$	3,859
2019		16,906		536		0		124		17,566		16,299		—		521		—		128		16,948
2020		2,404		536		0		41		2,981		2,317		—		521		—		50		2,888
2021		2,404		536		0		10		2,950		13,325		—		521		—		18		13,864
2022												—		—		521		—		1		522
Thereafter		11,418		937		15,622		1		27,978		—		—		393		15,061		—		15,454
Total	$	39,682	$	2,679	$	15,622	$	607	$	58,590	$	33,323	$	2,291	$	2,607	$	15,061	$	253	$	53,535

There is no set repayment schedule for the CPL credit facilities, and the Company classifies them as short-term debt due to the nature of the agreements. The UniCredit Agreement is not included in the table above because no amounts were borrowed as of September 30, 2018.

2526

8.7.COMMITMENTS AND CONTINGENCIES

Litigation

Since 2011, the Polish Internal Revenue Service (“Polish IRS”) has conducted a series of tax audits of CPL to review the calculation and payment of personal income tax by CPL employees for periods ranging from 2007 to ~~2011.~~2013. The Polish IRS has asserted that CPL should calculate, collect and remit to the Polish IRS personal income tax on tips received by CPL employees from casino customers and has prevailed in several court challenges by CPL. Through September 30, ~~2017,~~2018, CPL has paid PLN ~~9.4~~14.3 million ($~~2.9~~4.2 million) related to these audits. In April 2018, a Polish appeals court issued a verbal decision on the 2009 tax audit, ruling in favor of the Polish IRS. The Company previously paid the amount owed related to this audit. In May 2018, the Polish IRS issued an official decision on the 2012 and 2013 tax audits. As a result of ~~one court~~this decision, ~~currently on appeal, CPL’s tax records for 2009 remain open for audit.~~

~~In December 2016, the Polish IRS conducted a tax audit of December 2010 and the remaining open portion of the 2011 fiscal year. As a result,~~ CPL paid PLN ~~3.0~~4.9 million ($~~0.8~~1.3 million) in May 2018 related to ~~this audit in August 2017. CPL~~the 2012 and 2013 tax audits and has filed an appeal of the tax audit decision in September 2017 and expects a decision on the appeal in the fourth quarter of 2017. In addition, in June 2017, the Polish IRS began conducting a tax audit of the 2012 and 2013 fiscal years. The audit was completed in August 2017. CPL estimates it will be required to pay PLN 4.8 million ($1.3 million based on the exchange rate in effect on September 30, 2017) related to this audit. The Polish IRS has not issued an official decision on this audit. CPL plans to file an appeal if the tax decision would result in a payment to the Polish IRS.decision.

The balance of the potential liability on the Company’s condensed consolidated balance sheet for all open periods as of September 30, ~~2017~~2018 is PLN ~~6.3~~3.0 million ($~~1.7~~0.8 million based on the exchange rate in effect on September 30, ~~2017)~~2018). The Company has evaluated the contingent liability recorded on its condensed consolidated balance sheet as of September 30, ~~2017~~2018 and has concluded that it is properly accrued in light of the Company’s estimated obligation related to personal income tax on tips as of September 30, ~~2017.~~2018. Additional court decisions and other proceedings by the Polish IRS may expose the Company to additional employment tax obligations in the future. Any additional tax obligations are not probable or estimable and the Company has not recorded any additional obligation related to such taxes as of September 30, ~~2017.~~2018. Additional tax obligations assessed in the future as a result of these matters, if any, may be material to the Company’s financial position, results of operations and cash flows.

In October 2016, the Company filed a motion for arbitration in Poland against LOT Polish Airlines pursuant to an agreement with LOT Polish Airlines under which ~~previously owned a~~the Company acquired the additional 33.3% interest in CPL ~~that it sold to the Company~~ in 2013. The Company ~~is seeking to collect~~was awarded PLN 1.2 million ($0.3 million based on the exchange rate in effect on September 30, 2018) in amounts owed ~~to the Company~~ by LOT Polish Airlines in connection with the payments made to the Polish IRS for the tax periods December 1, 2007 to December 31, 2008 and January 1, 2011 to January 31, ~~2011 pursuant to an agreement with~~2011. LOT Polish Airlines ~~under which the Company acquired the additional 33.3%~~paid this amount, plus accrued interest, in CPL. In June 2017, the arbitrator awarded the Company PLN 1.2 million ($0.3 million based on the exchange rate in effect on September 30, 2017) related to its claim for the periods indicated. LOT Polish Airlines is appealing the decision.

July 2018.

9.8.INCOME TAXES

Income tax expense is recorded relative to the jurisdictions that recognize book earnings. For the nine months ended September 30, ~~2017,~~2018, the Company recognized an income tax expense of $1.8 million on pre-tax income of $5.0 million, representing an effective income tax rate of 35.7% compared to an income tax benefit of $2.1 million on pre-tax income of $10.9 million, representing an effective income tax rate of (18.9%) ~~compared to an income tax expense of $2.6 million on pre-tax income of $12.0 million, representing an effective income tax rate of 21.3%~~ for the same period in ~~2016.~~2017.

~~The difference between~~A number of items caused the reported income ~~taxes expected at~~tax expense for the nine months ended September 30, 2018 to exceed the U.S. federal statutory income tax rate of ~~34% and~~21%. During the ~~reported~~first quarter of 2018, CRM received an intercompany dividend, which increased income tax expense ~~are impacted~~ by $0.3 million for the nine months ended September 30, 2018 and caused a ~~number of items. The decrease in the effective tax rate compared~~12% increase to the ~~same period in 2016 is primarily the result of the release of the U.S. valuation allowance in the third quarter of 2017 described below.~~current period’s effective income tax rate. The Company’s effective tax rate also is ~~generally lower~~higher than the U.S. federal statutory income tax rate because there is a ~~lower~~27% statutory tax rate in ~~the countries~~Canada where the Company ~~pays taxes, such~~earns a significant portion of its income. In addition, nondeductible stock compensation expense in the United States and certain nondeductible business expenses in Poland contribute to the increased effective income tax rate as ~~Austria, Mauritius, Canada and Poland, when~~ compared to the ~~United States. There is also a lower effective~~U.S. federal statutory income tax ~~rate for the Company’s Canadian and Polish operations due to exchange rate benefits.~~rate.

During the third quarter of 2017, the Company released its $5.1 million U.S. valuation allowance on its U.S. deferred tax assets, resulting in a tax benefit. The Company analyzed the likelihood of future realization of the U.S.’s deferred tax assets, including recent cumulative earnings by taxing jurisdiction, expectations of future taxable income or loss, the amount of net operating loss carryforwards not subject to limitations, the number of periods ~~it will take~~necessary to realize the net operating loss carryforwards and other relevant factors. Based on this analysis, the Company concluded that ~~the~~its operations in the U.S. had attained a sustained level of profitability sufficient to realize its deferred tax assets in the U.S., and thus reduce its valuation allowance.

~~10.~~27

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 the Company’s 2017 financial results. The changes impacting 2018 results are from the reduction in the U.S. federal corporate income tax rate from 35% to 21% and the tax on Global Intangible Low-Taxed Income (“GILTI”). 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 was followed by ASU 2018-05. SAB 118 and ASU 2018-05 provide guidance on accounting for the income tax effects of the Tax Act. The issued guidance provides a measurement period that may not extend beyond one year from the Tax Act enactment date to complete the accounting for the impact of the Tax Act. This guidance allows the Company to provide provisional estimates of the impact of the Tax Act in its financial statements. The Company has not completed its analysis of the tax impact resulting from the enactment of the Tax Act, and the provisional amounts will be refined as needed during the measurement period allowed by SAB 118 and ASU 2018-05. While the Company believes that it has made reasonable estimates of the impact of the U.S. corporate income tax rate reduction and GILTI, these estimates could change as the Company continues to analyze IRS guidance related to the Tax Act as it is released. In addition to the Tax Act changes impacting the Company’s 2018 results, further changes could result as the Company refines its calculations surrounding the changes that impacted its 2017 results, including the remeasurement of its deferred tax balances, as well as its calculations of earnings and profits used in the computation of the transition tax.

Provisional amounts

Global Intangible Low-Taxed Income: The Tax Act creates 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 U.S. shareholder, effective in 2018. The Company is allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current period expense when incurred (the “period cost method”) or (2) factoring such amounts into the Company’s measurement of its deferred taxes (the “deferred method”). The Company has selected the period cost method and recorded a provisional amount of less than $0.1 million for the GILTI tax. Because the Tax Act does not address certain aspects of the calculation of the GILTI tax, leaving them open to interpretation, the U.S. Treasury Department is expected to issue regulations to provide clarification on calculating the GILTI tax. As the Company finalizes its analysis of the tax law changes in the Tax Act related to GILTI, the Company will update provisional amounts for this remeasurement.

Deferred tax assets and liabilities: During 2017, the Company remeasured deferred tax assets and liabilities using the rates at which the deferred taxes are expected to reverse in the future, which would be a blended rate of 24.66%, comprised of a 21% federal rate and a 3.66% state income tax rate net of federal benefit. The Company continues to use this blended tax rate of 24.66% for 2018. No updates have been made to the provisional amounts recorded for the remeasurement of the Company's deferred tax assets and liabilities in 2017. However, as the Company finalizes its analysis of the tax law changes in the Tax Act, including the impact on its tax return filing positions, the Company will update provisional amounts for this remeasurement. Additionally, due to the size and nature of the one-time transition tax discussed below, any change in the one-time transition tax provisional estimate could directly impact the remeasurement of deferred tax assets and liabilities.

U.S. taxation on foreign earnings: A key component of the Tax Act includes a one-time transition tax applied to foreign earnings that were not previously subject to U.S. tax. This one-time transition tax is based on total post-1986 foreign earnings and profits that were previously deferred from U.S. income taxes. During 2017, the Company recorded a provisional amount for the one-time transition tax liability based on its estimates of post-1986 foreign earnings and profits. Previously, the Company had not recorded a deferred tax liability related to these post-1986 foreign earnings because management did not expect to repatriate these earnings and subject them to U.S. taxation due to the nature of the Company’s foreign operations. Because the Tax Act does not address certain aspects of the calculation of the transition tax, leaving them open to interpretation, the U.S. Treasury Department is expected to issue regulations to provide clarification on calculating the transition tax. Additionally, the Company continues to gather post-1986 foreign earnings and profits support as well as substantiation for historical tax pool data, which will impact the provisional amount. No updates have been made to the provisional amounts recorded in 2017 at this time, but the Company expects to update its provisional amount following the issuance of regulations on the Tax Act by the U.S. Treasury Department and additional data gathering efforts.

The Company will continue to analyze the effects of the Tax Act on its financial statements and on its future results of operations. Certain aspects of the Tax Act, such as the reduction of the U.S. statutory rate to 21%, will lower the Company’s future effective tax rate. In contrast, other aspects of the Tax Act, such as GILTI, will increase the Company’s future effective tax rate. The Company will continue to disclose details of the future impact of Tax Act changes on its results of operations, and additional impacts from the enactment of the Tax Act will be recorded as they are identified during the measurement period as allowed by SAB 118 and ASU 2018-05.

9.EARNINGS PER SHARE

The calculation of basic earnings per share considers only weighted average outstanding common shares in the computation. The calculation of diluted earnings per share gives effect to all potentially dilutive stock options. The calculation of diluted earnings per share is based upon the weighted average number of common shares outstanding during the period, plus, if dilutive, the assumed exercise of stock options using the treasury stock method. Weighted average shares outstanding for the three and nine months ended September 30, ~~2017~~2018 and ~~2016~~2017 were as follows:



	For the three months				For the nine months				For the three months				For the nine months
	ended September 30,				ended September 30,				ended September 30,				ended September 30,
Amounts in thousands	2017		2016		2017		2016		2018		2017		2018		2017
Weighted average common shares, basic		24,470		24,440		24,464		24,452		29,425		24,470		29,388		24,464
Dilutive effect of stock options		421		235		441		192		562		421		598		441
Weighted average common shares, diluted		24,891		24,675		24,905		24,644		29,987		24,891		29,986		24,905

The following stock options are anti-dilutive and have not been included in the weighted average shares outstanding calculation:



	For the three months				For the nine months				For the three months				For the nine months
	ended September 30,				ended September 30,				ended September 30,				ended September 30,
Amounts in thousands	2017		2016		2017		2016		2018		2017		2018		2017
Stock options		0		35		0		35		102		—		60		—

~~11.~~10. FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS REPORTING

Fair Value Measurements

The Company follows fair value measurement authoritative accounting guidance for all assets and liabilities measured at fair value. That authoritative accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Market or observable inputs are the preferred sources of values, followed by assumptions based on hypothetical transactions in the absence of market inputs. The fair value hierarchy for grouping these assets and liabilities is based on the significance level of the following inputs:

Level 1 – quoted prices in active markets for identical assets or liabilities

Level 2 – quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations whose inputs are observable or whose significant value drivers are observable

Level 3 – significant inputs to the valuation model are unobservable

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The Company reflects transfers between the three levels at the beginning of the reporting period in which the availability of observable inputs no longer justifies classification in the original level.

Recurring Fair Value Measurements

The estimated fair value and basis of valuation of the Company’s financial liabilities that are measured at fair value on a recurring basis were as follows:


Amounts in thousands		September 30, 2017						December 31, 2016							September 30, 2018						December 31, 2017
		Level 1		Level 2		Level 3		Level 1		Level 2		Level 3			Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Interest rate swap asset (1)		$	0	$	224	$	0	$	0	$	0	$	0		$	—	$	315	$	—	$	—	$	275	$	—
Interest rate swap liability (1)		$	0	$	0	$	0	$	0	$	(129)	$	0

(1) See “Derivative Instruments Reporting” below for detailed information regarding the Company's interest rate swap agreements.	(1) See “Derivative Instruments Reporting” below for detailed information regarding the Company's interest rate swap agreements.													(1) See “Derivative Instruments Reporting” below for detailed information regarding the Company's interest rate swap agreements.

The Company determines the fair value of its interest rate swap agreements based on the notional amount of the swaps and the forward rate CAD-CDOR curve provided by Bloomberg and zero-coupon Canadian spot rates as of the valuation date. The Company classifies these instruments as Level 2 because the inputs into the valuation model can be corroborated utilizing observable benchmark market rates at commonly quoted intervals.

Non-Recurring Fair Value Measurements

The Company applies the provisions of the fair value measurement standard to its non-recurring, non-financial assets and liabilities measured at fair value. There were no assets or liabilities measured at fair value on a non-recurring basis as of September 30, 2017. During 2016, the Company determined that the fair value of the Katowice leasehold improvements was zero based on the expiration of the license for that casino. As a result, $0.4 million was charged to operating costs and expenses during the year ended December 31, 2016.2018.

Long-Term Debt – The carrying value of the ~~Company’s~~ BMO Credit Agreement approximates fair value based on the variable interest paid on the obligations and ~~SCCL~~the recent negotiation of additional borrowing capacity for the BMO Credit Agreement. The carrying value of the CPL credit facilities approximates fair value based on the short term nature of the facilities and the variable interest paid on the Alior Bank facility. The carrying value of the CCB loan agreement approximates fair value based on the variable interest paid on the ~~obligations.~~obligation. The estimated fair values of the outstanding balances under the BMO Credit Agreement, CPL credit facilities and ~~SCCL~~CCB loan agreement are designated as Level 2 measurements in the fair value hierarchy based on quoted prices in active markets for similar liabilities. The fair values of the Company’s capital lease obligations ~~and the CDR land lease~~ approximate fair value based on the similar terms and conditions currently available to the Company in the marketplace for similar financings. The fair value of the CDR land lease was CAD 28.6 million ($21.9 million based on the exchange rate in effect on September 30, 2018) as of September 30, 2018. The estimated fair values of the outstanding balances related to the Company’s capital lease obligations and the CDR land lease are designated as Level 3 measurements based on the unobservable nature of the inputs used to evaluate such liabilities. The Company entered into a line of credit agreement with UniCredit in August 2018. The Company had not borrowed against this line of credit as of September 30, 2018.

Other Estimated Fair Value Measurements – The estimated fair value of the Company’s other assets and liabilities, such as cash and cash equivalents, accounts receivable, inventory, accrued payroll and accounts payable, have been determined to approximate carrying value based on the short-term nature of those financial instruments. As of September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, the Company had no cash equivalents.

Derivative Instruments Reporting

As of April 2015, the Company began using interest rate swaps to mitigate the risk of variable interest rates under its BMO Credit Agreement. The interest rate swaps were not designated as accounting hedges. These interest rate swaps reset monthly, and the difference to be paid or received under the terms of the interest rate swap agreements is accrued as interest rates change and is recognized as an adjustment to interest expense for the related debt. See Note 76 for details of the Company’s three interest rate swap agreements.

Changes in the variable interest rates to be paid or received pursuant to the terms of the interest rate swap agreements are recognized in interest expense on the Company’s condensed consolidated statement of earnings. The location and effects of derivative instruments on the condensed consolidated statements of earnings were as follows:



Amounts in thousands
		For the three months				For the nine months					For the three months				For the nine months
Derivatives not designated as	Income Statement	ended September 30,				ended September 30,				Income Statement	ended September 30,				ended September 30,
ASC 815 hedges	Classification	2017		2016		2017		2016		Classification	2018		2017		2018		2017
Interest Rate Swaps	Interest Expense	$	(87)	$	97	$	294	$	417	Interest Expense	$	171	$	(87)	$	624	$	294

The location and fair value amounts of the Company’s derivative instruments in the condensed consolidated balance sheets were as follows:


Amounts in thousands		As of September 30, 2017						As of December 31, 2016							As of September 30, 2018						As of December 31, 2017
Derivatives not designated as ASC 815 hedges	Balance Sheet Classification	Gross Recognized Assets (Liabilities)		Gross Amounts Offset		Net Recognized Fair Value Assets (Liabilities)		Gross Recognized Assets (Liabilities)		Gross Amounts Offset		Net Recognized Fair Value Assets (Liabilities)		Balance Sheet Classification	Gross Recognized Assets (Liabilities)		Gross Amounts Offset		Net Recognized Fair Value Assets (Liabilities)		Gross Recognized Assets (Liabilities)		Gross Amounts Offset		Net Recognized Fair Value Assets (Liabilities)
Derivative assets:
Interest rate swaps - current	Other current assets	$	50	$	0	$	50	$	0	$	0	$	0	Other current assets	$	147	$	—	$	147	$	77	$	—	$	77
Interest rate swaps - non-current	Deposits and other		174		0		174		0		0		0	Deposits and other		168		—		168		198		—		198
Total derivative assets		$	224	$	0	$	224	$	0	$	0	$	0		$	315	$	—	$	315	$	275	$	—	$	275
Derivative liabilities:
Interest rate swaps - current	Accrued liabilities	$	0	$	0	$	0	$	(55)	$	0	$	(55)
Interest rate swaps - non-current	Taxes payable and other		0		0		0		(74)		0		(74)
Total derivative liabilities		$	0	$	0	$	0	$	(129)	$	0	$	(129)

2931

~~12.~~11.SEGMENT INFORMATION

The Company reports its financial performance in three reportable segments based on the geographical locations in which its casinos operate: the United States, Canada and Poland. Operating segments are aggregated within reportable segments based on their similar characteristics, types of customers, types of services and products provided, the regulatory environments in which they operate, and their management and reporting structure. The Company added Century Mile Racetrack and Casino ~~and Saw Close Casino Ltd.~~ to its operating segments based on the characteristics that ~~both properties~~the property will have once operational. The Company’s ~~casino properties provide gaming, hotel accommodations, dining facilities and other amenities to the Company’s customers. The Company’s~~ operations related to Century Casino Bath, its concession, management and consulting ~~agreements~~agreements; and certain other corporate and management operations have not been identified as separate reportable segments; therefore, these operations are included in Corporate and Other in the following segment disclosures to reconcile to consolidated results. The Company concluded that CCB did not meet the materiality threshold to create a separate reportable segment as of September 30, 2018. The Company will continue to evaluate CCB for this purpose. All intercompany transactions are eliminated in consolidation.

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


Reportable Segment	Operating Segment
Canada	Century Casino & Hotel - Edmonton
Canada	Century Casino Calgary
Canada	Century Downs Racetrack and Casino
Canada	Century Bets!
Canada	Century Casino St. Albert
Canada	Century Mile Racetrack and Casino
United States	Century Casino & Hotel – Central City
United States	Century Casino & Hotel – Cripple Creek
Poland	Casinos Poland
Corporate and Other	Cruise Ships & Other
Corporate and Other	~~Saw Close~~Century Casino ~~Ltd.~~Bath
Corporate and Other	Corporate Other

The Company’s chief operating decision maker is a management function comprised of two individuals. These two individuals are our Co-Chief Executive Officers. The Company’s chief operating decision makers and management utilize Adjusted EBITDA as athe primary profit measure for its reportable segments. Adjusted EBITDA is a non-U.S. GAAP measure defined as net earnings (loss) before interest expense (income), net, income taxes (benefit), depreciation, amortization, non-controlling interest (earnings) losses and transactions, pre-opening expenses, acquisition costs, non-cash stock-based compensation charges, asset impairment costs, (gain) loss on disposition of fixed assets, discontinued operations, (gain) loss on foreign currency transactions and other, gain on business combination and certain other one-time items. Intercompany transactions consisting primarily of management and royalty fees and interest, along with their related tax effects, are excluded from the presentation of net earnings (loss) and Adjusted EBITDA reported for each segment. Non-cash stock-based compensation expense is presented under Corporate and Other in the tables below as the expense is not allocated to reportable segments when reviewed by the Company’s chief operating decision makers.

3032

The following tables provide information regarding the Company’s ~~segments for the three and nine months ended September 30, 2017 and 2016:~~segments:


	For the Three Months Ended September 30, 2017											For the three months ended September 30, 2018
Amounts in thousands		Canada		United States		Poland		Corporate and Other		Total			Canada		United States		Poland		Corporate and Other		Total
Net operating revenue (1)		$	15,285	$	9,039	$	15,550	$	1,174	$	41,048		$	15,683	$	9,360	$	16,747	$	1,774	$	43,564

Earnings (loss) before income taxes		$	3,096	$	2,056	$	959	$	(2,072)	$	4,039		$	2,766	$	2,121	$	83	$	(2,384)	$	2,586

Net earnings attributable to Century Casinos, Inc. shareholders		$	2,611	$	1,276	$	464	$	3,279	$	7,630
Net earnings (loss) attributable to Century Casinos, Inc. shareholders													$	1,668	$	1,578	$	(81)	$	(1,525)	$	1,640
Interest expense (income), net			759		0		56		(7)		808			854		—		42		(66)		830
Income taxes (benefit)			392		780		266		(5,351)		(3,913)			880		543		204		(836)		791
Depreciation and amortization			877		596		657		96		2,226			762		545		717		299		2,323
Non-controlling interest			93		0		229		0		322
Net earnings (loss) attributable to non-controlling interests														218		—		(40)		(23)		155
Non-cash stock-based compensation			0		0		0		183		183			—		—		—		266		266
Loss (gain) on foreign currency transactions and cost recovery income			50		0		(222)		102		(70)
Gain on foreign currency transactions and cost recovery income														(1)		—		(109)		(72)		(182)
Loss on disposition of fixed assets			68		1		16		0		85			3		—		169		—		172
Acquisition costs			0		0		0		169		169
Pre-opening expenses			10		0		0		97		107			446		—		—		—		446
Other one-time income (2)														—		—		—		(91)		(91)
Adjusted EBITDA		$	4,860	$	2,653	$	1,466	$	(1,432)	$	7,547		$	4,830	$	2,666	$	902	$	(2,048)	$	6,350

(1)

Net operating revenue for Corporate and Other primarily relates to CCB and the Company’s cruise ship operations.

(2)

Other one-time income relates to the arbitration award from LOT Polish Airlines. See Note 7.


	For the Three Months Ended September 30, 2016											For the three months ended September 30, 2017
Amounts in thousands		Canada		United States		Poland		Corporate and Other		Total			Canada		United States		Poland		Corporate and Other		Total
Net operating revenue (1)		$	12,005	$	8,188	$	13,356	$	977	$	34,526		$	15,285	$	9,039	$	15,550	$	1,174	$	41,048

Earnings (loss) before income taxes		$	2,015	$	1,614	$	1,346	$	(1,769)	$	3,206		$	3,096	$	2,056	$	959	$	(2,072)	$	4,039

Net earnings (loss) attributable to Century Casinos, Inc. shareholders		$	1,467	$	1,000	$	684	$	(1,264)	$	1,887
Net earnings attributable to Century Casinos, Inc. shareholders													$	2,611	$	1,276	$	464	$	3,279	$	7,630
Interest expense (income), net			655		0		(1)		(5)		649			759		—		56		(7)		808
Income taxes (benefit)			365		614		319		(505)		793			392		780		266		(5,351)		(3,913)
Depreciation and amortization			775		624		629		105		2,133			877		596		657		96		2,226
Non-controlling interest			183		0		343		0		526
Net earnings attributable to non-controlling interests														93		—		229		—		322
Non-cash stock-based compensation			0		0		0		192		192			—		—		—		183		183
(Gain) loss on foreign currency transactions and cost recovery income			(71)		0		48		3		(20)
Loss (gain) on foreign currency transactions and cost recovery income														50		—		(222)		102		(70)
Loss on disposition of fixed assets			5		0		0		0		5			68		1		16		—		85
Acquisition costs			0		0		0		106		106			—		—		—		169		169
Pre-opening expenses														10		—		—		97		107
Adjusted EBITDA		$	3,379	$	2,238	$	2,022	$	(1,368)	$	6,271		$	4,860	$	2,653	$	1,466	$	(1,432)	$	7,547

(1)

Net operating revenue for Corporate and Other primarily relates to the Company’s cruise ship operations.

3133


	For the nine months ended September 30, 2018
Amounts in thousands		Canada		United States		Poland		Corporate and Other		Total
Net operating revenue (1)		$	45,690	$	25,542	$	48,695	$	3,907	$	123,834

Earnings (loss) before income taxes		$	8,288	$	4,844	$	(177)	$	(7,956)	$	4,999

Net earnings (loss) attributable to Century Casinos, Inc. shareholders		$	5,641	$	3,602	$	(329)	$	(6,027)	$	2,887
Interest expense (income), net			2,812		1		153		(50)		2,916
Income taxes (benefit)			2,101		1,242		316		(1,875)		1,784
Depreciation and amortization			2,433		1,631		2,040		541		6,645
Net earnings (loss) attributable to non-controlling interests			546		—		(164)		(54)		328
Non-cash stock-based compensation			—		—		—		613		613
(Gain) loss on foreign currency transactions and cost recovery income			(140)		—		(290)		(1)		(431)
Loss on disposition of fixed assets			6		1		1,027		1		1,035
Pre-opening expenses			1,135		—		405		350		1,890
Other one-time income (2)			—		—		—		(91)		(91)
Adjusted EBITDA		$	14,534	$	6,477	$	3,158	$	(6,593)	$	17,576

For the Nine Months Ended September 30, 2017
Amounts in thousands

Canada

United States

Poland

Corporate and Other

Total
Net operating revenue (1)

$
42,484

$
24,482

$
44,383

$
3,426

$
114,775

Earnings (loss) before income taxes

$
7,971

$
4,559

$
3,848

$
(5,511)

$
10,867

Net earnings attributable to Century Casinos, Inc. shareholders

$
5,923

$
2,827

$
1,982

$
860

$
11,592
Interest expense (income), net

2,544

1

72

(19)

2,598
Income taxes (benefit)

1,707

1,732

878

(6,371)

(2,054)
Depreciation and amortization

2,529

1,824

1,702

275

6,330
Non-controlling interest

341

0

988

0

1,329
Non-cash stock-based compensation

0

0

0

419

419
Loss (gain) on foreign currency transactions and cost recovery income

78

0

(685)

52

(555)
Loss on disposition of fixed assets

78

1

258

3

340
Acquisition costs

28

0

0

321

349
Pre-opening expenses

10

0

225

97

332
Adjusted EBITDA

$
13,238

$
6,385

$
5,420

$
(4,363)

$
20,680

(1)

Net operating revenue for Corporate and Other primarily relates to CCB and the Company’s cruise ship operations.

(2)

Other one-time income relates to the arbitration award from LOT Polish Airlines. See Note 7.


	For the nine months ended September 30, 2017
Amounts in thousands		Canada		United States		Poland		Corporate and Other			Total
Net operating revenue (1)		$	42,484	$	24,482	$	44,383	$	3,426	$	114,775

Earnings (loss) before income taxes		$	7,971	$	4,559	$	3,848	$	(5,511)	$	10,867

Net earnings attributable to Century Casinos, Inc. shareholders		$	5,923	$	2,827	$	1,982	$	860	$	11,592
Interest expense (income), net			2,544		1		72		(19)		2,598
Income taxes (benefit)			1,707		1,732		878		(6,371)		(2,054)
Depreciation and amortization			2,529		1,824		1,702		275		6,330
Net earnings attributable to non-controlling interests			341		—		988		—		1,329
Non-cash stock-based compensation			—		—		—		419		419
Loss (gain) on foreign currency transactions and cost recovery income			78		—		(685)		52		(555)
Loss on disposition of fixed assets			78		1		258		3		340
Acquisition costs			28		—		—		321		349
Pre-opening expenses			10		—		225		97		332
Adjusted EBITDA		$	13,238	$	6,385	$	5,420	$	(4,363)	$	20,680

(1)

Net operating revenue for Corporate and Other primarily relates to the Company’s cruise ship operations.

For the Nine Months Ended September 30, 2016
Amounts in thousands

Canada

United States

Poland

Corporate and Other

Total
Net operating revenue (1)

$
38,167

$
22,970

$
39,190

$
2,627

$
102,954

Earnings (loss) before income taxes

$
9,168

$
3,838

$
3,980

$
(4,948)

$
12,038

Net earnings (loss) attributable to Century Casinos, Inc. shareholders

$
5,463

$
2,378

$
2,029

$
(3,453)

$
6,417
Interest expense (income), net

2,189

0

22

(13)

2,198
Income taxes (benefit)

1,658

1,460

936

(1,495)

2,559
Depreciation and amortization

2,246

1,875

1,863

276

6,260
Non-controlling interest

2,047

0

1,015

0

3,062
Non-cash stock-based compensation

0

0

0

573

573
(Gain) loss on foreign currency transactions and cost recovery income

(1,616)

0

(174)

12

(1,778)
Loss on disposition of fixed assets

26

3

13

0

42
Acquisition costs

0

0

0

106

106
Adjusted EBITDA

$
12,013

$
5,716

$
5,704

$
(3,994)

$
19,439

~~(1)~~

~~Net operating revenue for Corporate and Other primarily relates to the Company’s cruise ship operations.~~

~~13.SUBSEQUENT EVENTS~~

In October 2017, the Company was awarded casino licenses for the Polish cities of Katowice and Bielsko-Biala. The licenses have not yet been issued by the Polish Minister of Finance, and the license awards to the Company have been appealed by its competitors. However, management believes the Company will receive the licenses and open the casinos in the first quarter of 2018.

3234

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements, Business Environment and Risk Factors

This quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. In addition, Century Casinos, Inc. (together with its subsidiaries, the “Company”) may make other written and oral communications from time to time that contain such statements. Forward-looking statements include statements as to industry trends and future expectations of the Company and other matters that do not relate strictly to historical facts and are based on certain assumptions by management at the time such statements are made. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. These statements are based on the beliefs and assumptions of the management of the Company based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, among others, the risks described in the section entitled “Risk Factors” under Item 1A in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017. We caution the reader to carefully consider such factors. Furthermore, such forward-looking statements speak only as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

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

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

EXECUTIVE OVERVIEW

Overview

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

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

3335

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


Reportable Segment	Operating Segment
Canada	Century Casino & Hotel - Edmonton
Canada	Century Casino Calgary
Canada	Century Downs Racetrack and Casino
Canada	Century Bets!
Canada	Century Casino St. Albert
Canada	Century Mile Racetrack and Casino
United States	Century Casino & Hotel – Central City
United States	Century Casino & Hotel – Cripple Creek
Poland	Casinos Poland
Corporate and Other	Cruise Ships & Other
Corporate and Other	~~Saw Close~~Century Casino ~~Ltd.~~Bath
Corporate and Other	Corporate Other

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

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

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

The Century Casino Calgary, Alberta, Canada;

The Century Casino & Hotel in Central City, Colorado; ~~and~~

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

The Century Casino Bath in Bath, England

~~On October 1, 2016, our subsidiary, Century Casino St. Albert, acquired the Apex Casino~~The casino at CCB opened in ~~Edmonton, Alberta (the “Apex Acquisition”)~~May 2018 with 56 slot and ~~renamed the casino Century Casino St. Albert. CSA is a 34,500 square foot casino facility located on approximately six acres of land that includes 407 slot~~electronic roulette machines ~~11 live~~and 13 table games, 15 video lottery terminals, a restaurant, a bar, a lounge and a banquet facility that can accommodate up to 175 guests. The purchase price for the acquisition was CAD 31.9 million ($24.3 million based on the exchange rate in effect on October 1, 2016).games.

We have controlling financial interests through our subsidiary ~~CCE~~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 September 30, ~~2017,~~2018, owned ~~and operated six~~licenses for eight casinos throughout Poland, ~~with~~seven of which were operating. CPL was awarded a license for an eighth casino in July 2018. As of September 30, 2018, CPL operated a total of ~~375~~419 slot machines and 77103 tables. The following table summarizes the Polish cities in which CPL operated casinos as of September 30, ~~2017, each casino’s location and the number of slots and tables at each casino.~~2018.

City
Location
Number of Slots
Number of Tables
Warsaw
Marriott Hotel
70
26
Warsaw
Hilton Hotel
70
24
Krakow*
Dwor Kosciuszko Hotel
64
8
Lodz*
Manufaktura Entertainment Complex
59
7
Poznan*
Hotel Andersia
60
8
Plock*
Hotel Plock
52
4


City	Location	License Expiration	Number of Slots	Number of Tables
Warsaw	Marriott Hotel	September 2022	70	27
Warsaw	Hilton Hotel	April 2019	70	24
Bielsko-Biala	Hotel President	October 2023	35	5
Katowice	Park Inn by Radisson	October 2023	65	14
Wroclaw	Double Tree Hilton Hotel	November 2023	70	17
Krakow	Dwor Kosciuszko Hotel	May 2024	60	6
Lodz	Manufaktura Entertainment Complex	June 2024	49	10

* The casinoCasino licenses are granted for ~~the Krakow, Lodz, Poznan and Plock casinos expire in 2018.~~

~~We have won~~six years. When a casino license ~~tender in the Polish city of Wroclaw and we have won casino licenses in the Polish cities of Katowice and Bielsko-Biala. The licenses have not yet been issued by~~expires, the Polish Minister of Finance notifies the public of its availability, and interested parties can submit an application for the casino license. Following approval of a casino license ~~awards for Katowice and Bielsko-Biala have been appealed~~ by ~~our competitors. However, management believes~~the Minister of Finance, there is a period in which applicants can appeal the decision. In July 2018, we ~~will receive~~were awarded a third casino license in Warsaw (our second license at the ~~licenses and~~Marriott Hotel). We expect to open ~~the casinos~~this casino in the first quarter of 2018. The Katowice casino will include 62 slot machines and 14 live table games, the Bielsko-Biala casino will include 50 slot machines and 5 live table games and the Wroclaw casino will include 70 slot machines and 18 live table games.2019.

We have a 75% ownership interest in CDR and we consolidate CDR as a majority-owned subsidiary for which we have a controlling financial interest. We account for and report the remaining 25% ownership interest in CDR as a non-controlling financial interest. CDR operates Century Downs Racetrack and Casino, a REC in Balzac, a north metropolitan area of Calgary, Alberta, Canada. CDR is the only horse race track in the Calgary area and is located less than one-mile north of the city limits of Calgary and 4.5 miles from the Calgary International Airport.

We have a 75% ownership interest in CBS and we consolidate CBS as a majority-owned subsidiary for which we have a controlling financial interest. RMTC owns the remaining 25% of CBS. We account for and report the 25% ownership interest of RMTC in CBS as a non-controlling financial interest. CBS operates the pari-mutuel network, consisting of the sourcing of common pool pari-mutuel wagering content and live video to off-track betting parlors throughout southern Alberta.

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

As of September 30, ~~2017,~~2018, we operated 1413 ship-based casinos through concession agreements with four cruise ship owners. ~~The 14 ship-based casinos that we operated had a total of 236 slot machines and 43 tables.~~ The following table summarizes the cruise lines and the associated ships on which we operated ship-based casinos as of September 30, ~~2017, and the number of slots and tables on each ship.~~2018.


Cruise Line	Ship	Number of Slots	Number of Tables	Ship	Number of Slots	Number of Tables
TUI Cruises	Mein Schiff 1	19	5
TUI Cruises	Mein Schiff 2	17	0	Mein Schiff 2	17	—
TUI Cruises	Mein Schiff 3	20	1	Mein Schiff 3	20	1
TUI Cruises	Mein Schiff 4	17	1	Mein Schiff 4	17	1
TUI Cruises	Mein Schiff 5	17	1	Mein Schiff 5	17	1
TUI Cruises	Mein Schiff 6	17	1	Mein Schiff 6	17	1
Windstar Cruises	Wind Surf	27	4	Wind Surf	27	4
Windstar Cruises	Wind Star	11	2	Wind Star	11	2
Windstar Cruises	Wind Spirit	12	2	Wind Spirit	12	2
Windstar Cruises	Star Pride	11	2	Star Pride	11	2
Windstar Cruises	Star Breeze	11	2	Star Breeze	11	2
Windstar Cruises	Star Legend	12	2	Star Legend	12	2
Thomson Cruises	TUI Discovery	17	3
Marella Cruises				Marella Discovery	17	3
Diamond Cruise	Glory Sea	28	17	Glory Sea	28	17

~~We began operating~~The concession agreement to operate the ship-based casino onboard the Mein Schiff ~~6, a new 2,500 passenger~~1 ended in April 2018 when the vessel was transferred to another cruise ~~ship in May 2017.~~

~~In July 2016, we entered into a cooperation agreement with Dynamic regarding the operations of~~line. The concession agreements to operate the ship-based ~~casino~~casinos onboard ~~Glory Sea. Under~~ the ~~cooperation agreement, we operate~~Wind Star and Marella Discovery will end in the ~~casino and Dynamic markets and promotes the casino to VIP players along with facilitating our concession agreement with Diamond, for which we pay Dynamic a portion~~fourth quarter of ~~the net profit from the casino onboard Glory Sea.~~2018.

In March 2015, in connection with an agreement with Norwegian to terminate our concession agreements with Oceania and Regent, we entered into a two-year consulting agreement with Norwegian that became effective on June 1, 2015. Under the consulting agreement, we ~~are providing~~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.

We have a management agreement to direct the operation of the casino at the Hilton Aruba Caribbean Resort and Casino from which we receive a monthly management fee. The management agreement was not extended by us and ends on November 30, 2017. We do not expect expiration of this management agreement to have a material effect on our results of operations.

Through our subsidiary ~~CCE,~~CRM, we have a 7.5% ownership interest in MCE and we report our ownership interest using the cost method of accounting. MCE has an exclusive concession agreement with Instituto Provincial de Juegos y Casinos to lease slot machines and provide related services to Casino de Mendoza, a casino located in Mendoza, Argentina and owned by the Province of Mendoza. MCE may also pursue other gaming opportunities. ~~CCE~~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, ~~CCE~~CRM and MCE have entered into a consulting services agreement pursuant to which ~~CCE~~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. GHL has the option to purchase an additional 19% ownership interest in MCL for a total of 70% of MCL under certain conditions.

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

Additional Projects Under Development

In September 2016, we were selected by HRA as the successful applicant to own, build and operate a horse racing facility in the Edmonton market area, which we are planning to operate as Century Mile Racetrack and Casino. In March 2017, we received approval for the Century Mile project from the AGLC. Century Mile will be a one-mile horse racetrack and a multi-level REC. The project is located on Edmonton International Airport land close to the city of Leduc, south of Edmonton. We began construction on the Century Mile project in July 2017. We estimate this project will cost approximately CAD 6060.0 million ($~~48.1~~46.4 million based on the exchange rate in effect as of September 30, ~~2017). We estimate that construction of this project will take approximately 15 months~~2018) and that itthe casino will ~~be completed during the fourth quarter of 2018.~~open in April 2019. We are ~~seeking to obtain~~ financing ~~for~~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 September 30, 2018. The balance of the Century Mile ~~project.~~

In June 2017, our subsidiary, CCE, acquired casinos licenses held by Saw Close Casino Ltd. in Bath, England (the “SCCL License Acquisition”). We are planning to develop and operate a 15,000 square foot casino usingproject will be financed through the casino licenses. The casino will include 35 slot machines, 18 table games and 24 automated live gaming terminals. The purchase price for the license acquisition was GBP 0.6 million ($0.8 million based on the exchange rate in effect on September 30, 2017), of which GBP 0.1 million ($0.1 million based on the exchange rate in effect on June 20, 2017) was paid at closing and GBP 0.5 million ($0.7 million based on the exchange rate in effect on September 30, 2017) is subject to certain regulatory and governmental approvals and opening of the casino. In addition, we assumed liabilities in the amount of GBP 0.2 million ($0.3 million based on the exchange rate in effect on September 30, 2017) that are repayable if certain performance criteria are met once the casino is in operation. We also have deposited GBP 0.8 million ($1.0 million based on the exchange rate in effect on September 30, 2017) into an escrow account to secure performance of certain obligationsincreased borrowing capacity under the ~~lease agreements~~BMO Credit Agreement or with the landlord of the property that will be released in connection with work performed by SCCL to fit out the casino. We estimate construction and fitting out of the casino will cost an additional GBP 5.0 million ($6.7 million based on the exchange rate in effect on September 30, 2017).available cash.

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 ~~prive. The Bermudan government will issue~~privé. In September 2017, the Bermuda Casino Gaming Commission granted a provisional casino gaming license, aswhich is subject to certain conditions and approvals including the ~~next step in the application process. The conditions~~adoption of ~~the provisional casino license must be agreed upon~~certain rules and regulations by the ~~Bermudan government and the company awarded the license. We currently have no estimated time frame on when this will be completed, and there is no guarantee that a license will be awarded. CCE~~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. ~~CCE~~CRM will also provide a $5.0 million loan for the purchase of casino equipment if the license is awarded.

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

3738

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



	For the three months			For the nine months			For the three months			For the nine months
	ended September 30,			ended September 30,			ended September 30,			ended September 30,
Average Rates	2017	2016	% Change	2017	2016	% Change	2018	2017	% Change	2018	2017	% Change
Canadian dollar (CAD)	1.2531	1.3049	4.0%	1.3072	1.3224	1.1%	1.3068	1.2531	(4.3%)	1.2874	1.3072	1.5%
Euros (EUR)	0.8512	0.8965	5.1%	0.8997	0.8962	(0.4%)	0.8601	0.8512	(1.1%)	0.8377	0.8997	6.9%
Polish zloty (PLN)	3.6219	3.8890	6.9%	3.8379	3.9057	1.7%	3.6981	3.6219	(2.1%)	3.5581	3.8379	7.3%
British pound (GBP)	0.7641	0.7619	(0.3%)	0.7845	0.7194	(9.0%)	0.7676	0.7641	(0.5%)	0.7405	0.7845	5.6%
Source: Pacific Exchange Rate Service

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

3839

DISCUSSION OF RESULTS

Century Casinos, Inc. and Subsidiaries


	For the three months							For the nine months							For the three months							For the nine months
	ended September 30,						%	ended September 30,						%	ended September 30,						%	ended September 30,						%
Amounts in thousands		2017		2016		Change	Change		2017		2016		Change	Change		2018		2017		Change	Change		2018		2017		Change	Change
Gaming Revenue	$	36,914	$	30,554	$	6,360	20.8%	$	102,814	$	89,615	$	13,199	14.7%	$	35,983	$	36,914	$	(931)	(2.5%)	$	102,595	$	102,814	$	(219)	(0.2%)
Hotel Revenue		560		534		26	4.9%		1,491		1,469		22	1.5%		575		560		15	2.7%		1,534		1,491		43	2.9%
Food and Beverage Revenue		3,868		3,030		838	27.7%		10,622		8,950		1,672	18.7%		4,290		3,868		422	10.9%		11,630		10,622		1,008	9.5%
Other Revenue		2,449		2,811		(362)	(12.9%)		7,604		9,536		(1,932)	(20.3%)		2,716		2,449		267	10.9%		8,075		7,604		471	6.2%
Gross Revenue		43,791		36,929		6,862	18.6%		122,531		109,570		12,961	11.8%
Total Operating Revenue																43,564		43,791		(227)	(0.5%)		123,834		122,531		1,303	1.1%
Less Promotional Allowances(1)		(2,743)		(2,403)		340	14.1%		(7,756)		(6,616)		1,140	17.2%		—		(2,743)		(2,743)	(100.0%)		—		(7,756)		(7,756)	(100.0%)
Net Operating Revenue		41,048		34,526		6,522	18.9%		114,775		102,954		11,821	11.5%		43,564		41,048		2,516	6.1%		123,834		114,775		9,059	7.9%
Gaming Expenses(2)		(17,094)		(14,601)		2,493	17.1%		(48,796)		(42,228)		6,568	15.6%		(18,490)		(17,094)		1,396	8.2%		(52,666)		(48,796)		3,870	7.9%
Hotel Expenses(2)		(171)		(143)		28	19.6%		(468)		(416)		52	12.5%		(197)		(171)		26	15.2%		(551)		(468)		83	17.7%
Food and Beverage Expenses(2)		(3,388)		(2,673)		715	26.7%		(9,452)		(7,884)		1,568	19.9%		(4,148)		(3,388)		760	22.4%		(11,708)		(9,452)		2,256	23.9%
General and Administrative Expenses		(13,392)		(11,141)		2,251	20.2%		(36,819)		(33,708)		3,111	9.2%		(15,174)		(13,392)		1,782	13.3%		(44,781)		(36,819)		7,962	21.6%
Total Operating Costs and Expenses		(36,271)		(30,691)		5,580	18.2%		(101,865)		(90,496)		11,369	12.6%		(40,332)		(36,271)		4,061	11.2%		(116,351)		(101,865)		14,486	14.2%
Earnings from Equity Investment																2		—		2	100.0%		1		—		1	100.0%
Earnings from Operations		4,777		3,835		942	24.6%		12,910		12,458		452	3.6%		3,234		4,777		(1,543)	(32.3%)		7,484		12,910		(5,426)	(42.0%)
Non-Controlling Interest		(322)		(526)		(204)	(38.8%)		(1,329)		(3,062)		(1,733)	(56.6%)		(155)		(322)		(167)	(51.9%)		(328)		(1,329)		(1,001)	(75.3%)
Net Earnings Attributable to Century Casinos, Inc. Shareholders		7,630		1,887		5,743	304.3%		11,592		6,417		5,175	80.6%		1,640		7,630		(5,990)	(78.5%)		2,887		11,592		(8,705)	(75.1%)
Adjusted EBITDA (1)	$	7,547	$	6,271	$	1,276	20.3%	$	20,680	$	19,439	$	1,241	6.4%
Adjusted EBITDA (3)															$	6,350	$	7,547	$	(1,197)	(15.9%)	$	17,576	$	20,680	$	(3,104)	(15.0%)

Earnings Per Share Attributable to Century Casinos, Inc. Shareholders
Basic Earnings Per Share	$	0.31	$	0.08	$	0.23	287.5%	$	0.47	$	0.26	$	0.21	80.8%	$	0.06	$	0.31	$	(0.25)	(80.6%)	$	0.10	$	0.47	$	(0.37)	(78.7%)
Diluted Earnings Per Share	$	0.31	$	0.08	$	0.23	287.5%	$	0.47	$	0.26	$	0.21	80.8%	$	0.05	$	0.31	$	(0.26)	(83.9%)	$	0.10	$	0.47	$	(0.37)	(78.7%)

(1)

With the adoption of ASU 2014-09, promotional allowances are presented as a reduction in gaming revenue for the three and nine months ended September 30, 2018. See Note 2, “Significant Accounting Policies,” to our condensed consolidated financial statements included in Part I, Item 1 of this report for a discussion of the impact of the adoption of ASU 2014-09 on the presentation of promotional allowances.

(2)

The adoption of ASU 2014-09 resulted in the elimination of a reclassification between expense line items that reduced gaming expense and increased hotel and food and beverage expenses by $0.3 million and $0.9 million for the three and nine months ended September 30, 2018, respectively. See Note 2, “Significant Accounting Policies,” and Note 5, “Promotional Allowances,” to our condensed consolidated financial statements included in Part I, Item 1 of this report.

(3)

For a discussion of Adjusted EBITDA and reconciliation of Adjusted EBITDA to net earnings attributable to Century Casinos, Inc. shareholders, see “Non-GAAP Measures – Adjusted EBITDA” below.

~~Factors that impacted~~In addition to the impact of the adoption of ASU 2014-09 on operating revenue and certain expenses, items impacting comparability ~~between periods~~of the results include the following:

WeThe casino at CCB began operating ~~CSA~~ in ~~October 2016. CSA~~May 2018. CCB contributed ~~$2.3~~a total of $1.1 million in net operating revenue and ~~$0.6~~($0.7) million in net ~~earnings~~losses for the ~~quarter~~three months ended September 30, ~~2017~~2018 and ~~$6.5~~$1.6 million in net operating revenue and ~~$0.9~~($1.5) million in net ~~earnings~~losses for the nine months ended September 30, ~~2017. CSA~~2018. CCB is reported in the ~~Canada~~Corporate and Other reportable segment.

~~We released a $5.1 million U.S. valuation allowance on our U.S. deferred tax assets~~The impact from casino closures due to license expirations and delays in license tender awards in Poland impacted quarter over quarter and year over year comparability of results for CPL. See the ~~quarter ended September 30, 2017, resulting in a tax benefit and increasing net earnings by the same amount~~Poland discussion below for ~~the three and nine months ended September 30, 2017.~~additional information.

Net operating revenue increased by ~~$6.5~~$2.5 million, or ~~18.9%~~6.1%, and by ~~$11.8~~$9.1 million, or ~~11.5%~~7.9%, for the three and nine months ended September 30, ~~2017~~2018 compared to the three and nine months ended September 30, ~~2016.~~2017. Following is a breakout of net operating revenue by segment for the three and nine months ended September 30, ~~2017~~2018 compared to the three and nine months ended September 30, ~~2016:~~2017:

Canada increased by ~~$3.3~~$0.4 million, or ~~27.3%~~2.6%, and by ~~$4.3~~$3.2 million, or ~~11.3%~~7.5%.

United States increased by ~~$0.9~~$0.3 million, or ~~10.4%~~3.6%, and by ~~$1.5~~$1.1 million, or ~~6.6%~~4.3%.

Poland increased by ~~$2.2~~$1.2 million, or ~~16.4%~~7.7%, and by ~~$5.2~~$4.3 million, or ~~13.3%~~9.7%.

Corporate and Other increased by ~~$0.2~~$0.6 million, or ~~20.2%~~51.1%, and by ~~$0.8~~$0.5 million, or ~~30.4%~~14.0%.

Operating costs and expenses increased by ~~$5.6~~$4.1 million, or ~~18.2%~~11.2%, and by ~~$11.4~~$14.5 million, or ~~12.6%~~14.2%, for the three and nine months ended September 30, ~~2017~~2018 compared to the three and nine months ended September 30, ~~2016.~~2017. Following is a breakout of ~~total~~ operating costs and expenses by segment for the three and nine months ended September 30, ~~2017~~2018 compared to the three and nine months ended September 30, ~~2016:~~2017:

Canada increased by ~~$2.0~~$0.7 million, or ~~21.0%~~6.0%, and by ~~$3.5~~$2.8 million, or ~~12.2%~~8.9%.

United States increased by ~~$0.4~~$0.3 million, or ~~6.2%~~3.7%, and by $0.8 million, or ~~4.1%~~3.9%.

Poland increased by ~~$2.8~~$2.0 million, or ~~23.4%~~13.4%, and by ~~$5.8~~$7.9 million, or ~~16.4%~~19.1%.

Corporate and Other increased by ~~$0.4~~$1.1 million, or ~~14.7%~~36.4%, and by ~~$1.3~~$3.0 million, or ~~17.5%~~33.8%.

Earnings from operations ~~increased~~decreased by ~~$0.9~~($1.5) million, or ~~24.6%~~(32.3%), and by ~~$0.5~~($5.4) million, or ~~3.6%~~(42.0%), for the three and nine months ended September 30, ~~2017~~2018 compared to the three and nine months ended September 30, ~~2016.~~2017. Following is a breakout of earnings from operations by segment for the three and nine months ended September 30, ~~2017~~2018 compared to the three and nine months ended September 30, ~~2016:~~2017:

Canada decreased by ($0.3) million, or (7.3%), and increased by ~~$1.3~~$0.4 million, or ~~50.3%, and by $0.9 million, or 8.7%~~3.5%.

United States increased by ~~$0.4~~$0.1 million, or ~~27.4%~~3.2%, and by ~~$0.7~~$0.3 million, or ~~18.8%~~6.3%.

Poland decreased by ($~~0.6)~~0.8) million, or ~~(43.1%~~(98.0%), and by ($~~0.6)~~3.5) million, or ~~(15.5%~~(109.7%).

Corporate and Other decreased by ($~~0.2)~~0.5) million, or ~~(11.6%~~(27.6%), and by ($~~0.5)~~2.5) million, or ~~(10.7%~~(46.2%).

Net earnings ~~increased~~decreased by ~~$5.7~~($6.0) million, or ~~304.3%~~(78.5%), and by ~~$5.2~~($8.7) million, or ~~80.6%~~(75.1%), for the three and nine months ended September 30, ~~2017~~2018 compared to the three and nine months ended September 30, ~~2016.~~2017. Items deducted from or added to earnings from operations to arrive at net earnings include interest income, interest expense, gains (losses) on foreign currency transactions and other, income tax expense and non-controlling interest.

Non-GAAP Measures – Adjusted EBITDA

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

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

The reconciliation of Adjusted EBITDA to net earnings (loss) attributable to Century Casinos, Inc. shareholders is presented below.


	For the Three Months Ended September 30, 2017											For the three months ended September 30, 2018
Amounts in thousands		Canada		United States		Poland		Corporate and Other		Total			Canada		United States		Poland		Corporate and Other		Total
Net earnings		$	2,611	$	1,276	$	464	$	3,279	$	7,630
Net earnings (loss) attributable to Century Casinos, Inc. shareholders													$	1,668	$	1,578	$	(81)	$	(1,525)	$	1,640
Interest expense (income), net			759		0		56		(7)		808			854		—		42		(66)		830
Income taxes (benefit)			392		780		266		(5,351)		(3,913)			880		543		204		(836)		791
Depreciation and amortization			877		596		657		96		2,226			762		545		717		299		2,323
Non-controlling interest			93		0		229		0		322
Net earnings (loss) attributable to non-controlling interests														218		—		(40)		(23)		155
Non-cash stock-based compensation			0		0		0		183		183			—		—		—		266		266
Loss (gain) on foreign currency transactions and cost recovery income			50		0		(222)		102		(70)
Gain on foreign currency transactions and cost recovery income														(1)		—		(109)		(72)		(182)
Loss on disposition of fixed assets			68		1		16		0		85			3		—		169		—		172
Acquisition costs			0		0		0		169		169
Pre-opening expenses			10		0		0		97		107			446		—		—		—		446
Other one-time income														—		—		—		(91)		(91)
Adjusted EBITDA		$	4,860	$	2,653	$	1,466	$	(1,432)	$	7,547		$	4,830	$	2,666	$	902	$	(2,048)	$	6,350


	For the Three Months Ended September 30, 2016											For the three months ended September 30, 2017
Amounts in thousands		Canada		United States		Poland		Corporate and Other		Total			Canada		United States		Poland		Corporate and Other		Total
Net earnings (loss)		$	1,467	$	1,000	$	684	$	(1,264)	$	1,887
Net earnings attributable to Century Casinos, Inc. shareholders													$	2,611	$	1,276	$	464	$	3,279	$	7,630
Interest expense (income), net			655		0		(1)		(5)		649			759		—		56		(7)		808
Income taxes (benefit)			365		614		319		(505)		793			392		780		266		(5,351)		(3,913)
Depreciation and amortization			775		624		629		105		2,133			877		596		657		96		2,226
Non-controlling interest			183		0		343		0		526
Net earnings attributable to non-controlling interests														93		—		229		—		322
Non-cash stock-based compensation			0		0		0		192		192			—		—		—		183		183
(Gain) loss on foreign currency transactions and cost recovery income			(71)		0		48		3		(20)
Loss (gain) on foreign currency transactions and cost recovery income														50		—		(222)		102		(70)
Loss on disposition of fixed assets			5		0		0		0		5			68		1		16		—		85
Acquisition costs			0		0		0		106		106			—		—		—		169		169
Pre-opening expenses														10		—		—		97		107
Adjusted EBITDA		$	3,379	$	2,238	$	2,022	$	(1,368)	$	6,271		$	4,860	$	2,653	$	1,466	$	(1,432)	$	7,547

4142


	For the Nine Months Ended September 30, 2017											For the nine months ended September 30, 2018
Amounts in thousands		Canada		United States		Poland		Corporate and Other		Total			Canada		United States		Poland		Corporate and Other		Total
Net earnings		$	5,923	$	2,827	$	1,982	$	860	$	11,592
Net earnings (loss) attributable to Century Casinos, Inc. shareholders													$	5,641	$	3,602	$	(329)	$	(6,027)	$	2,887
Interest expense (income), net			2,544		1		72		(19)		2,598			2,812		1		153		(50)		2,916
Income taxes (benefit)			1,707		1,732		878		(6,371)		(2,054)			2,101		1,242		316		(1,875)		1,784
Depreciation and amortization			2,529		1,824		1,702		275		6,330			2,433		1,631		2,040		541		6,645
Non-controlling interest			341		0		988		0		1,329
Net earnings (loss) attributable to non-controlling interests														546		—		(164)		(54)		328
Non-cash stock-based compensation			0		0		0		419		419			—		—		—		613		613
Loss (gain) on foreign currency transactions and cost recovery income			78		0		(685)		52		(555)
(Gain) loss on foreign currency transactions and cost recovery income														(140)		—		(290)		(1)		(431)
Loss on disposition of fixed assets			78		1		258		3		340			6		1		1,027		1		1,035
Acquisition costs			28		0		0		321		349
Pre-opening expenses			10		0		225		97		332			1,135		—		405		350		1,890
Other one-time income														—		—		—		(91)		(91)
Adjusted EBITDA		$	13,238	$	6,385	$	5,420	$	(4,363)	$	20,680		$	14,534	$	6,477	$	3,158	$	(6,593)	$	17,576


	For the Nine Months Ended September 30, 2016											For the nine months ended September 30, 2017
Amounts in thousands		Canada		United States		Poland		Corporate and Other			Total		Canada		United States		Poland		Corporate and Other		Total
Net earnings (loss)		$	5,463	$	2,378	$	2,029	$	(3,453)	$	6,417
Net earnings attributable to Century Casinos, Inc. shareholders													$	5,923	$	2,827	$	1,982	$	860	$	11,592
Interest expense (income), net			2,189		0		22		(13)		2,198			2,544		1		72		(19)		2,598
Income taxes (benefit)			1,658		1,460		936		(1,495)		2,559			1,707		1,732		878		(6,371)		(2,054)
Depreciation and amortization			2,246		1,875		1,863		276		6,260			2,529		1,824		1,702		275		6,330
Non-controlling interest			2,047		0		1,015		0		3,062
Net earnings attributable to non-controlling interests														341		—		988		—		1,329
Non-cash stock-based compensation			0		0		0		573		573			—		—		—		419		419
(Gain) loss on foreign currency transactions and cost recovery income			(1,616)		0		(174)		12		(1,778)
Loss (gain) on foreign currency transactions and cost recovery income														78		—		(685)		52		(555)
Loss on disposition of fixed assets			26		3		13		0		42			78		1		258		3		340
Acquisition costs			0		0		0		106		106			28		—		—		321		349
Pre-opening expenses														10		—		225		97		332
Adjusted EBITDA		$	12,013	$	5,716	$	5,704	$	(3,994)	$	19,439		$	13,238	$	6,385	$	5,420	$	(4,363)	$	20,680

4243

Non-GAAP Measures – Constant Currency

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


	For the three months					For the nine months					For the three months					For the nine months
	ended September 30,					ended September 30,					ended September 30,					ended September 30,
		2017		2016	% Change		2017		2016	% Change
Amounts in thousands												2018		2017	% Change		2018		2017	% Change
Net operating revenue as reported (GAAP)	$	41,048	$	34,526	19%	$	114,775	$	102,954	12%	$	43,564	$	41,048	6%	$	123,834	$	114,775	8%
Foreign currency impact vs. 2016		(1,685)					(1,381)
Foreign currency impact vs. 2017												1,023					(4,284)
Net operating revenue constant currency (non-GAAP)	$	39,363	$	34,526	14%	$	113,394	$	102,954	10%	$	44,587	$	41,048	9%	$	119,550	$	114,775	4%

Earnings from operations (GAAP)	$	4,777	$	3,835	25%	$	12,910	$	12,458	4%	$	3,234	$	4,777	(32%)	$	7,484	$	12,910	(42%)
Foreign currency impact vs. 2016		(212)					(129)
Earnings from operations (non-GAAP)	$	4,565	$	3,835	19%	$	12,781	$	12,458	3%
Foreign currency impact vs. 2017												148					(102)
Earnings from operations constant currency (non-GAAP)											$	3,382	$	4,777	(29%)	$	7,382	$	12,910	(43%)

Net earnings attributable to Century Casinos, Inc. shareholders as reported (GAAP)	$	7,630	$	1,887	304%	$	11,592	$	6,417	81%	$	1,640	$	7,630	(79%)	$	2,887	$	11,592	(75%)
Foreign currency impact vs. 2016		30					14
Foreign currency impact vs. 2017												83					40
Net earnings attributable to Century Casinos, Inc. shareholders constant currency (non-GAAP)	$	7,660	$	1,887	306%	$	11,606	$	6,417	81%	$	1,723	$	7,630	(77%)	$	2,927	$	11,592	(75%)

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

Non-GAAP Measures – Net Debt

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



Amounts in thousands	September 30, 2017		September 30, 2016		September 30, 2018		September 30, 2017
Total long-term debt, including current portion	$	58,299	$	58,356	$	53,285	$	58,299
Deferred financing costs		291		398		250		291
Total principal	$	58,590	$	58,754	$	53,535	$	58,590
Less: cash and cash equivalents	$	44,254	$	32,966	$	46,818	$	44,254
Net Debt	$	14,336	$	25,788	$	6,717	$	14,336

4344

Reportable Segments

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


Canada
	For the three months							For the nine months
	ended September 30,						%	ended September 30,						%
Amounts in thousands		2018		2017		Change	Change		2018		2017		Change	Change
Gaming	$	10,337	$	10,764	$	(427)	(4.0%)	$	30,190	$	29,535	$	655	2.2%
Hotel		129		139		(10)	(7.2%)		396		409		(13)	(3.2%)
Food and Beverage		2,691		2,557		134	5.2%		7,713		7,232		481	6.7%
Other		2,526		2,146		380	17.7%		7,391		6,182		1,209	19.6%
Total Operating Revenue		15,683		15,606		77	0.5%		45,690		43,358		2,332	5.4%
Less Promotional Allowances (1)		—		(321)		(321)	(100.0%)		—		(874)		(874)	(100.0%)
Net Operating Revenue		15,683		15,285		398	2.6%		45,690		42,484		3,206	7.5%
Gaming Expenses		(3,040)		(3,138)		(98)	(3.1%)		(9,004)		(9,080)		(76)	(0.8%)
Hotel Expenses		(53)		(51)		2	3.9%		(151)		(150)		1	0.7%
Food and Beverage Expenses		(2,182)		(2,049)		133	6.5%		(6,349)		(5,851)		498	8.5%
General and Administrative Expenses		(6,027)		(5,265)		762	14.5%		(16,793)		(14,281)		2,512	17.6%
Total Operating Costs and Expenses		(12,064)		(11,380)		684	6.0%		(34,730)		(31,891)		2,839	8.9%
Earnings from Operations		3,619		3,905		(286)	(7.3%)		10,960		10,593		367	3.5%
Non-Controlling Interest		(218)		(93)		125	134.4%		(546)		(341)		205	60.1%
Net Earnings Attributable to Century Casinos, Inc. Shareholders		1,668		2,611		(943)	(36.1%)		5,641		5,923		(282)	(4.8%)
Adjusted EBITDA	$	4,830	$	4,860	$	(30)	(0.6%)	$	14,534	$	13,238	$	1,296	9.8%

Canada

For the three months

For the nine months

ended September 30,

%

ended September 30,

%
Amounts in thousands

2017

2016

Change

Change

2017

2016

Change

Change
Gaming

$
10,764

$
8,006

$
2,758

34.4%

$
29,535

$
24,806

$
4,729

19.1%
Hotel

139

130

9

6.9%

409

422

(13)

(3.1%)
Food and Beverage

2,557

1,878

679

36.2%

7,232

5,926

1,306

22.0%
Other

2,146

2,217

(71)

(3.2%)

6,182

7,618

(1,436)

(18.9%)
Gross Revenue

15,606

12,231

3,375

27.6%

43,358

38,772

4,586

11.8%
Less Promotional Allowances

(321)

(226)

95

42.0%

(874)

(605)

269

44.5%
Net Operating Revenue

15,285

12,005

3,280

27.3%

42,484

38,167

4,317

11.3%
Gaming Expenses

(3,138)

(2,556)

582

22.8%

(9,080)

(7,659)

1,421

18.6%
Hotel Expenses

(51)

(49)

2

4.1%

(150)

(140)

10

7.1%
Food and Beverage Expenses

(2,049)

(1,566)

483

30.8%

(5,851)

(4,802)

1,049

21.8%
General and Administrative Expenses

(5,265)

(4,460)

805

18.0%

(14,281)

(13,579)

702

5.2%
Total Operating Costs and Expenses

(11,380)

(9,406)

1,974

21.0%

(31,891)

(28,426)

3,465

12.2%
Earnings from Operations

3,905

2,599

1,306

50.3%

10,593

9,741

852

8.7%
Non-Controlling Interest

(93)

(183)

(90)

(49.2%)

(341)

(2,047)

(1,706)

(83.3%)
Net Earnings

2,611

1,467

1,144

78.0%

5,923

5,463

460

8.4%
Adjusted EBITDA

$
4,860

$
3,379

$
1,481

43.8%

$
13,238

$
12,013

$
1,225

10.2%

(1)

See Note 2, “Significant Accounting Policies,” to our condensed consolidated financial statements included in Part I, Item 1 of this report for a discussion of the impact of the adoption of ASU 2014-09 on the presentation of promotional allowances.

~~On October 1, 2016, our subsidiary, Century Casino St. Albert Inc., completed~~In November 2017, CAL opened an 18-hole miniature golf course. We are marketing the ~~Apex Acquisition~~miniature golf course and ~~began operating CSA.~~

~~CDR began hosting thoroughbred horse races~~bowling alley as an entertainment center in ~~September 2017. Previously, CDR conducted standardbred horse races. The thoroughbred races have generated additional customers and increased gaming and food and beverage revenue.~~order to attract a new customer demographic to visit the casino.

Construction on the Century Mile project began in July ~~2017.~~2017, and we estimate the casino will open in April 2019.

Three Months Ended September 30, ~~2017~~2018 and ~~2016~~2017

The following discussion highlights results for the three months ended September 30, ~~2017~~2018 compared to the three months ended September 30, ~~2016.~~2017.

Results in U.S. dollars were impacted by a ~~4.0% increase~~4.3% exchange rate decrease in the average ~~exchange~~ rate between the U.S. dollar and the Canadian dollar for the three months ended September 30, ~~2017~~2018 compared to the three months ended September 30, ~~2016.~~2017.

Revenue Highlights


	In CAD		In U.S. dollars
	At CRA, net operating revenue increased by CAD 0.1 million, or ~~1.5%~~1.6%, due to increased gaming ~~revenue offset by decreased food~~ and ~~beverage~~other revenue.		At CRA, net operating revenue ~~increased~~decreased by ~~$0.3~~($0.1) million, or ~~5.7%~~(2.5%).
	At CSA, net operating revenue ~~was CAD 2.9 million.~~remained constant.		At CSA, net operating revenue ~~was $2.3 million.~~decreased by ($0.1) million, or (4.3%).
	At CAL, net operating revenue ~~increased~~decreased by ~~CAD 0.4~~(CAD 0.1) million, or ~~21.6%~~(4.5%), due to decreased gaming revenue, offset by increased ~~gaming revenue.~~revenue from the entertainment center.		At CAL, net operating revenue ~~increased~~decreased by ~~$0.4~~($0.2) million, or ~~26.6%~~(8.5%).
	At CDR, net operating revenue increased by CAD ~~0.5~~1.4 million, or ~~8.6%~~22.6%, due to increased ~~revenue in all categories offset by decreased other revenue from lower stall rentals for horses.~~gaming, food and beverage, and pari-mutuel revenue.		At CDR, net operating revenue increased by ~~$0.6~~$0.9 million, or ~~13.1%~~17.5%.

4445

Operating Expense Highlights


	In CAD		In U.S. dollars
	At CRA, operating expenses ~~decreased~~increased by ~~(CAD 0.3)~~CAD 0.1 million, or ~~(5.7%)~~2.6%, due to ~~decreased~~increased payroll ~~costs and marketing expenses.~~costs.		At CRA, operating expenses decreased by ($0.1) million, or (1.7%).
	At CSA, operating expenses ~~were~~increased by CAD ~~2.0 million.~~0.1 million, or 6.6%, primarily due to increased payroll costs.		At CSA, operating expenses ~~were $1.6 million.~~remained constant.
	At CAL, operating expenses increased by CAD 0.1 million, or ~~5.9%~~2.2%, primarily due to increased payroll ~~costs and marketing expenses.~~costs.		At CAL, operating expenses ~~increased by $0.2 million, or 10.2%.~~remained constant.
	At CDR, operating expenses increased by CAD ~~0.5~~0.7 million, or ~~12.4%~~16.5%, due to increased payroll costs and ~~general and administrative~~racing-related operating expenses.		At CDR, operating expenses increased by ~~$0.5~~$0.4 million, or ~~17.1%~~11.8%.

Operating expenses related to the Century Mile project were ~~less than $0.1~~$0.5 million for the three months ended September 30, 2018 related to the land that we are leasing from the Edmonton Airport.

Earnings from operations at CBS, which operates the Southern Alberta pari-mutuel off-track betting network, remained constant for the three months ended September 30, 2018 compared to the three months ended September 30, 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 (72.6%), for the three months ended September 30, 2017 compared to the three months ended September 30, 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 above.

Nine Months Ended September 30, 2018 and 2017 ~~and 2016~~

The following discussion highlights results for the nine months ended September 30, ~~2017~~2018 compared to the nine months ended September 30, ~~2016.~~2017.

Results in U.S. dollars were impacted by a ~~1.1%~~1.5% exchange rate increase in the average ~~exchange~~ rate between the U.S. dollar and the Canadian dollar for the nine months ended September 30, ~~2017~~2018 compared to the nine months ended September 30, ~~2016.~~2017.

Revenue Highlights


	In CAD		In U.S. dollars
	At CRA, net operating revenue ~~decreased~~increased by ~~(CAD 1.1)~~CAD 0.1 million, or ~~(5.0%)~~0.4%, due to ~~decreased~~increased gaming ~~and food and beverage~~ revenue.		At CRA, net operating revenue ~~decreased~~increased by ~~($0.6)~~$0.3 million, or ~~(3.8%)~~1.8%.
	At CSA, net operating revenue ~~was~~increased by CAD ~~8.4 million.~~0.1 million, or 1.3%, due to increased food and beverage revenue.		At CSA, net operating revenue ~~was $6.5 million.~~increased by $0.2 million, or 2.7%.
	At CAL, net operating revenue ~~decreased~~increased by ~~(CAD 0.3)~~CAD 0.5 million, or ~~(3.6%)~~6.7%, due to ~~decreased gaming and~~increased food and beverage revenue and ~~increased promotional allowances.~~revenue from the entertainment center.		At CAL, net operating revenue ~~decreased~~increased by ~~($0.1)~~$0.5 million, or ~~(2.2%)~~8.3%.
	At CDR, net operating revenue increased by CAD ~~0.5~~2.8 million, or ~~3.4%~~16.9%, due to increased ~~revenue in all categories, offset by decreased other revenue from lower stall rentals for horses.~~gaming, pari-mutuel and food and beverage revenue.		At CDR, net operating revenue increased by ~~$0.5~~$2.3 million, or ~~4.3%~~18.1%.

4546

Operating Expense Highlights


	In CAD		In U.S. dollars
	At CRA, operating expenses ~~decreased by (CAD 0.5) million, or (3.3%), due to decreased food and beverage related expenses and payroll costs.~~remained constant.		At CRA, operating expenses ~~decreased~~increased by ~~($0.2)~~$0.1 million, or ~~(2.2%)~~1.2%.
	At CSA, operating expenses ~~were~~increased by CAD ~~6.1 million.~~0.3 million, or 4.1%, primarily due to increased payroll costs and increased general and administrative expenses.		At CSA, operating expenses ~~were $4.7 million.~~increased by $0.3 million, or 5.7%.
	At CAL, operating expenses increased by CAD ~~0.4~~0.2 million, or ~~5.5%~~2.3%, primarily due to increased payroll, ~~costs~~marketing and ~~marketing~~general and administrative expenses.		At CAL, operating expenses increased by ~~$0.4~~$0.2 million, or ~~6.7%~~3.8%.
	At CDR, operating expenses increased by CAD ~~0.4~~1.4 million, or ~~4.0%~~12.5%, primarily due to increased ~~pari-mutuel related expenses, increased general~~payroll costs and ~~administrative expenses and increased marketing expense.~~racing-related operating expenses.		At CDR, operating expenses increased by ~~$0.4~~$1.2 million, or ~~5.2%~~13.7%.

Operating expenses related to the Century Mile project were ~~less than $0.1~~$1.1 million for the nine months ended September 30, 2018 related to the land that we are leasing from the Edmonton Airport.

Earnings from operations at CBS, which operates the Southern Alberta pari-mutuel off-track betting network, remained constant for the nine months ended September 30, 2018 compared to the nine months ended September 30, 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 (44.8%), for the nine months ended September 30, 2017 compared to the nine months ended September 30, 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 above.

4647


United States
	For the three months							For the nine months
	ended September 30,						%	ended September 30,						%
Amounts in thousands		2018		2017		Change	Change		2018		2017		Change	Change
Gaming	$	7,615	$	9,507	$	(1,892)	(19.9%)	$	21,056	$	26,294	$	(5,238)	(19.9%)
Hotel		446		421		25	5.9%		1,138		1,082		56	5.2%
Food and Beverage		1,194		1,139		55	4.8%		3,063		2,877		186	6.5%
Other		105		79		26	32.9%		285		252		33	13.1%
Total Operating Revenue		9,360		11,146		(1,786)	(16.0%)		25,542		30,505		(4,963)	(16.3%)
Less Promotional Allowances (1)		—		(2,107)		(2,107)	(100.0%)		—		(6,023)		(6,023)	(100.0%)
Net Operating Revenue		9,360		9,039		321	3.6%		25,542		24,482		1,060	4.3%
Gaming Expenses		(3,465)		(3,545)		(80)	(2.3%)		(9,746)		(10,026)		(280)	(2.8%)
Hotel Expenses		(144)		(120)		24	20.0%		(400)		(318)		82	25.8%
Food and Beverage Expenses		(1,087)		(793)		294	37.1%		(3,008)		(2,105)		903	42.9%
General and Administrative Expenses		(1,998)		(1,929)		69	3.6%		(5,912)		(5,649)		263	4.7%
Total Operating Costs and Expenses		(7,239)		(6,983)		256	3.7%		(20,697)		(19,922)		775	3.9%
Earnings from Operations		2,121		2,056		65	3.2%		4,845		4,560		285	6.3%
Net Earnings Attributable to Century Casinos, Inc. Shareholders		1,578		1,276		302	23.7%		3,602		2,827		775	27.4%
Adjusted EBITDA	$	2,666	$	2,653	$	13	0.5%	$	6,477	$	6,385	$	92	1.4%

United States

For the three months

For the nine months

ended September 30,

%

ended September 30,

%
Amounts in thousands

2017

2016

Change

Change

2017

2016

Change

Change
Gaming

$
9,507

$
8,691

$
816

9.4%

$
26,294

$
24,559

$
1,735

7.1%
Hotel

421

404

17

4.2%

1,082

1,047

35

3.3%
Food and Beverage

1,139

1,013

126

12.4%

2,877

2,590

287

11.1%
Other

79

105

(26)

(24.8%)

252

287

(35)

(12.2%)
Gross Revenue

11,146

10,213

933

9.1%

30,505

28,483

2,022

7.1%
Less Promotional Allowances

(2,107)

(2,025)

82

4.0%

(6,023)

(5,513)

510

9.3%
Net Operating Revenue

9,039

8,188

851

10.4%

24,482

22,970

1,512

6.6%
Gaming Expenses

(3,545)

(3,318)

227

6.8%

(10,026)

(9,576)

450

4.7%
Hotel Expenses

(120)

(94)

26

27.7%

(318)

(276)

42

15.2%
Food and Beverage Expenses

(793)

(663)

130

19.6%

(2,105)

(1,826)

279

15.3%
General and Administrative Expenses

(1,929)

(1,875)

54

2.9%

(5,649)

(5,579)

70

1.3%
Total Operating Costs and Expenses

(6,983)

(6,574)

409

6.2%

(19,922)

(19,132)

790

4.1%
Earnings from Operations

2,056

1,614

442

27.4%

4,560

3,838

722

18.8%
Net Earnings

1,276

1,000

276

27.6%

2,827

2,378

449

18.9%
Adjusted EBITDA

$
2,653

$
2,238

$
415

18.5%

$
6,385

$
5,716

$
669

11.7%

(1)

Three Months Ended September 30, ~~2017~~2018 and ~~2016~~2017

The following discussion highlights results for the three months ended September 30, ~~2017~~2018 compared to the three months ended September 30, ~~2016.~~2017.

Market Share Highlights

The Central City market increased by ~~3.0%~~12.2% and CTL’s share of the Central City market was ~~30.0%, an increase of 5.4%~~26.3% compared to 30.0% for the three months ended September 30, ~~2016.~~2017. We attribute the increase in the Central City market and the decrease in our market share to additional marketing promotions done by one of our competitors that recently renovated a casino in Central City.

The Cripple Creek market increased by ~~1.7%~~4.4% and CRC’s share of the Cripple Creek market was ~~10.6%, an increase of 9.8%~~11.1% compared to 10.6% for the three months ended September 30, ~~2016.~~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 $0.4 million, or 8.1%, due to increased gaming revenue and food and beverage revenue, offset by increased promotional allowances due to increased VIP play.~~remained constant.

At CRC, net operating revenue increased by ~~$0.5~~$0.3 million, or ~~13.7%~~8.6%, due to increased gaming revenue.

Operating Expense Highlights

At CTL, operating expenses increased by ~~$0.3~~$0.2 million, or ~~8.0%~~4.2%, due to increased ~~gaming-related expenses, food~~general and ~~beverage-related~~administrative expenses and payroll costs.

At CRC, operating expenses increased by $0.1 million, or ~~3.5%~~2.8%, due to increased gaming-related and marketing expenses.

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 above.

4748

Nine Months Ended September 30, ~~2017~~2018 and ~~2016~~2017

The following discussion highlights results for the nine months ended September 30, ~~2017~~2018 compared to the nine months ended September 30, ~~2016.~~2017.

Market Share Highlights

The Central City market increased by ~~2.9%~~10.5% and CTL’s share of the Central City market was ~~29.6%, an increase of 4.5%~~26.6% compared to 29.6% for the nine months ended September 30, ~~2016.~~2017. We attribute the increase in the Central City market and the decrease in our market share to additional marketing promotions done by one of our competitors that recently renovated a casino in Central City.

The Cripple Creek market increased by ~~2.6%~~2.8% and CRC’s share of the Cripple Creek market was ~~10.0%, an increase of 2.5%~~10.5% compared to 10.0% for the nine months ended September 30, ~~2016.~~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 ~~$0.9~~$0.2 million, or ~~6.3%~~1.6%, due to increased gaming ~~revenue~~ and food and beverage ~~revenue, offset by increased promotional allowances due to increased VIP play.~~revenue.

At CRC, net operating revenue increased by ~~$0.6~~$0.8 million, or ~~7.0%~~8.4%, due to increased gaming ~~revenue, primarily from slot machines.~~revenue.

Operating Expense Highlights

At CTL, operating expenses increased by ~~$0.7~~$0.6 million, or ~~6.2%~~4.9%, due to increased gaming-related ~~expenses, food and beverage-related~~ expenses and payroll costs.

At CRC, operating expenses increased by ~~$0.1~~$0.2 million, or ~~0.9%~~2.3%, due to increased gaming-related and marketing ~~expenses.~~expenses and 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 above.

4849


Poland
	For the three months							For the nine months
	ended September 30,						%	ended September 30,						%
Amounts in thousands		2018		2017		Change	Change		2018		2017		Change	Change
Gaming	$	16,569	$	15,659	$	910	5.8%	$	48,010	$	44,566	$	3,444	7.7%
Food and Beverage		205		172		33	19.2%		551		513		38	7.4%
Other		(27)		25		(52)	(208.0%)		134		126		8	6.3%
Total Operating Revenue		16,747		15,856		891	5.6%		48,695		45,205		3,490	7.7%
Less Promotional Allowances (1)		—		(306)		(306)	(100.0%)		—		(822)		(822)	(100.0%)
Net Operating Revenue		16,747		15,550		1,197	7.7%		48,695		44,383		4,312	9.7%
Gaming Expenses		(11,000)		(9,714)		1,286	13.2%		(31,455)		(27,795)		3,660	13.2%
Food and Beverage Expenses		(687)		(546)		141	25.8%		(1,964)		(1,496)		468	31.3%
General and Administrative Expenses		(4,327)		(3,840)		487	12.7%		(13,550)		(10,155)		3,395	33.4%
Total Operating Costs and Expenses		(16,731)		(14,757)		1,974	13.4%		(49,009)		(41,148)		7,861	19.1%
Earnings from Operations		16		793		(777)	(98.0%)		(314)		3,235		(3,549)	(109.7%)
Non-Controlling Interest		40		(229)		(269)	(117.5%)		164		(988)		(1,152)	(116.6%)
Net (Loss) Earnings Attributable to Century Casinos, Inc. Shareholders		(81)		464		(545)	(117.5%)		(329)		1,982		(2,311)	(116.6%)
Adjusted EBITDA	$	902	$	1,466	$	(564)	(38.5%)	$	3,158	$	5,420	$	(2,262)	(41.7%)

Poland

For the three months

For the nine months

ended September 30,

%

ended September 30,

%
Amounts in thousands

2017

2016

Change

Change

2017

2016

Change

Change
Gaming

$
15,659

$
13,324

$
2,335

17.5%

$
44,566

$
38,995

$
5,571

14.3%
Food and Beverage

172

139

33

23.7%

513

434

79

18.2%
Other

25

45

(20)

(44.4%)

126

259

(133)

(51.4%)
Gross Revenue

15,856

13,508

2,348

17.4%

45,205

39,688

5,517

13.9%
Less Promotional Allowances

(306)

(152)

154

101.3%

(822)

(498)

324

65.1%
Net Operating Revenue

15,550

13,356

2,194

16.4%

44,383

39,190

5,193

13.3%
Gaming Expenses

(9,714)

(8,139)

1,575

19.4%

(27,795)

(23,853)

3,942

16.5%
Food and Beverage Expenses

(546)

(444)

102

23.0%

(1,496)

(1,256)

240

19.1%
General and Administrative Expenses

(3,840)

(2,751)

1,089

39.6%

(10,155)

(8,390)

1,765

21.0%
Total Operating Costs and Expenses

(14,757)

(11,963)

2,794

23.4%

(41,148)

(35,362)

5,786

16.4%
Earnings from Operations

793

1,393

(600)

(43.1%)

3,235

3,828

(593)

(15.5%)
Non-Controlling Interest

(229)

(343)

(114)

(33.2%)

(988)

(1,015)

(27)

(2.7%)
Net Earnings

464

684

(220)

(32.2%)

1,982

2,029

(47)

(2.3%)
Adjusted EBITDA

$
1,466

$
2,022

$
(556)

(27.5%)

$
5,420

$
5,704

$
(284)

(5.0%)

(1)

In ~~June 2017, we opened~~Poland, casino gaming licenses are granted for a term of six years. These licenses are not renewable. Once a gaming license has expired, any gaming company can apply for a new license for that city. Delays by the ~~17,000 square foot casino at Hilton Warsaw Hotel~~Polish government in awarding licenses following their expiration resulted in several casinos closing throughout Poland, lost gaming tax revenue for the government and ~~Convention Centre in Warsaw, Poland with 70 slot machines, 24 table games~~additional costs and ~~a bar and lounge area. The Hilton Warsaw Hotel is utilizing~~expenses for the casino ~~license that was used at~~operators, including CPL. CPL’s results were significantly impacted by the ~~LIM Center casino, which had a 3,000 square foot casino~~additional costs and ~~was closed in May 2017. As a result of~~expenses associated with the temporary closure of ~~the LIM Center, we impaired PLN 0.5 million ($0.1 million)~~several of CPL’s casinos in ~~leasehold improvements that is included in general and administrative expenses in our condensed consolidated statement of earnings~~Poland for the three and nine months ended September 30, 2018 compared to the three and nine months ended September 30, 2017. The following is a summary of changes in and comparability of the casinos operated by CPL in 2017 and 2018.

The casino at the Marriott Hotel in Warsaw, Poland was operational for the full three and nine months ended September 30, 2018 and 2017.

The casino at the LIM Center in Warsaw, Poland closed in May 2017. The license was transferred to the Hilton Warsaw Hotel and Convention Centre in Warsaw, Poland, 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 and is currently determining the costs of terminating employees who will not relocate.

The casino at the Hotel Plock in Plock, Poland closed in February 2018. CPL was not awarded a new license for this city and is currently determining the costs of terminating employees who will not relocate.

The casino at the HP Park Plaza Hotel in Wroclaw, Poland closed in June 2017. CPL was awarded a new license for this city and the casino opened in April 2018.

The casino at the Altus Building in Katowice, Poland closed in July 2016. CPL was awarded a new license for this city and the casino opened in May 2018.

The casino at the Hotel President in Bielsko-Biala, Poland opened in January 2018.

~~In June 2017, the~~

CPL also was awarded a license for a third casino ~~license at our Wroclaw casino expired. We have won a casino license tender~~in Warsaw, Poland in July 2018 that it plans to open in the Polish city of Wroclaw and we have won casino licenses in the Polish cities of Katowice and Bielsko-Biala. The licenses have not yet been issued by the Polish Minister of Finance, and the license awards for Katowice and Bielsko-Biala have been appealed by our competitors. However, management believes we will receive the licenses and open the casinosMarriott Hotel in the first quarter of ~~2018. The Katowice~~2019. This casino will ~~include 62 slot machines and 14 live table games,~~be located on a floor directly above the ~~Bielsko-Biala~~ casino ~~will include 50 slot machines and 5 live table games and~~that CPL currently operates in the ~~Wroclaw casino will include 70 slot machines and 18 live table games.~~ Marriott Hotel.

Effective April 2017, the Polish gaming laws permit online gaming and slot arcades operated through a state run company. We doare unable to estimate when online gaming will begin operating. The first slot arcades opened in Poland in June 2018. We have not ~~anticipate that the changes in the gaming laws will have~~experienced a ~~significant~~negative impact onto our results of operations in 2017, though these changes could increase competition and adversely affect our results of operations in the future. In addition, there is currently discussion of changes to the Polish income tax laws by Parliament that may establish a tax on gaming winnings above a certain amount per casino visit. There has been no decision reached as of the date of filing;Poland from slot arcades; however, increased ~~taxation on winnings~~competition could occur and adversely affect our results of operations in the future.

In late 2017, the Polish Parliament enacted a new Polish income tax law requiring casino patron winnings over PLN 2,280 ($619 based on the exchange rate in effect on September 30, 2018) in a single casino visit to be subject to personal income tax on those winnings. This law was repealed effective July 19, 2018.

Three Months Ended September 30, ~~2017~~2018 and ~~2016~~2017

Results in U.S. dollars were impacted by a ~~6.9% increase~~2.1% decrease in the average exchange rate between the U.S. dollar and Polish zloty for the three months ended September 30, ~~2017~~2018 compared to the three months ended September 30, ~~2016.~~2017.

Revenue Highlights


	In PLN		In U.S. dollars
	Net operating revenue increased by PLN ~~4.4~~5.6 million, or ~~8.4%~~10.0%, due to ~~increased~~the additional gaming revenue ~~offset by increased promotional allowances.~~from the casinos that opened in 2018 as described above.		Net operating revenue increased by ~~$2.2~~$1.2 million, or ~~16.4%.~~

~~Operating Expense Highlights~~


	~~In PLN~~		~~In U.S. dollars~~
	~~Operating expenses increased by PLN 6.9 million, or 14.9%, primarily due to increased gaming-related expenses, marketing expenses, general and administrative expenses and payroll costs.~~		~~Operating expenses increased by $2.8 million, or 23.4%.~~

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

~~Nine Months Ended September 30, 2017 and 2016~~

Results in U.S. dollars were impacted by a 1.7% increase in the average exchange rate between the U.S. dollar and Polish zloty for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016.

~~Revenue Highlights~~


	~~In PLN~~		~~In U.S. dollars~~
	~~Net operating revenue increased by PLN 17.3 million, or 11.3%, due to increased gaming revenue, offset by increased promotional allowances.~~		~~Net operating revenue increased by $5.2 million, or 13.3%~~7.7%.

Operating Expense Highlights


	In PLN		In U.S. dollars
	Operating expenses increased by PLN ~~19.5~~8.4 million, or ~~14.1%~~15.8%, primarily due to increased ~~gaming-related expenses, marketing expenses,~~ general and administrative expenses ~~and~~from the casinos that began operating in 2018, increased payroll costs ~~as well as~~of PLN 1.7 million and increased ~~costs for~~gaming tax expense of PLN 3.5 million due to the ~~opening of the Hilton Warsaw Hotel casino.~~increase in gaming revenue.		Operating expenses increased by ~~$5.8~~$2.0 million, or ~~16.4%~~13.4%.

A reconciliation of net (loss) earnings attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

Nine Months Ended September 30, 2018 and 2017

Results in U.S. dollars were impacted by a 7.3% increase in the average exchange rate between the U.S. dollar and Polish zloty for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017.

Revenue Highlights


	In PLN		In U.S. dollars
	Net operating revenue increased by PLN 3.1 million, or 1.8%, due to additional gaming revenue from the casinos that opened in 2018 as described above.		Net operating revenue increased by $4.3 million, or 9.7%.

Operating Expense Highlights


	In PLN		In U.S. dollars
	Operating expenses increased by PLN 17.1 million, or 10.9%, primarily due to increased general and administrative expenses at the Hilton, Bielsko-Biala, Wroclaw and Katowice casinos, all of which were not operating for a full year in 2017. In addition, payroll costs increased by PLN 7.5 million and gaming tax expense increased by PLN 1.9 million due to increased gaming revenue.		Operating expenses increased by $7.9 million, or 19.1%.

A reconciliation of net (loss) earnings attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

5051


Corporate and Other
	For the three months							For the nine months							For the three months							For the nine months
	ended September 30,						%	ended September 30,						%	ended September 30,						%	ended September 30,						%
Amounts in thousands		2017		2016		Change	Change		2017		2016		Change	Change		2018		2017		Change	Change		2018		2017		Change	Change
Gaming	$	984	$	533	$	451	84.6%	$	2,419	$	1,255	$	1,164	92.7%	$	1,462	$	984	$	478	48.6%	$	3,339	$	2,419	$	920	38.0%
Food and Beverage																200		—		200	100.0%		303		—		303	100.0%
Other		199		444		(245)	(55.2%)		1,044		1,372		(328)	(23.9%)		112		199		(87)	(43.7%)		265		1,044		(779)	(74.6%)
Gross Revenue		1,183		977		206	21.1%		3,463		2,627		836	31.8%
Total Operating Revenue																1,774		1,183		591	50.0%		3,907		3,463		444	12.8%
Less Promotional Allowances		(9)		0		9	100.0%		(37)		0		37	100.0%		—		(9)		(9)	(100.0%)		—		(37)		(37)	(100.0%)
Net Operating Revenue		1,174		977		197	20.2%		3,426		2,627		799	30.4%		1,774		1,174		600	51.1%		3,907		3,426		481	14.0%
Gaming Expenses		(697)		(588)		109	18.5%		(1,895)		(1,140)		755	66.2%		(985)		(697)		288	41.3%		(2,461)		(1,895)		566	29.9%
Food and Beverage Expenses																(192)		—		192	100.0%		(387)		—		387	100.0%
General and Administrative Expenses		(2,358)		(2,055)		303	14.7%		(6,734)		(6,160)		574	9.3%		(2,822)		(2,358)		464	19.7%		(8,526)		(6,734)		1,792	26.6%
Total Operating Costs and Expenses		(3,151)		(2,748)		403	14.7%		(8,904)		(7,576)		1,328	17.5%		(4,298)		(3,151)		1,147	36.4%		(11,915)		(8,904)		3,011	33.8%
Losses from Equity Investment																2		—		2	100.0%		1		—		1	100.0%
Losses from Operations		(1,977)		(1,771)		(206)	(11.6%)		(5,478)		(4,949)		(529)	(10.7%)		(2,522)		(1,977)		(545)	(27.6%)		(8,007)		(5,478)		(2,529)	(46.2%)
Net Earnings (Loss)		3,279		(1,264)		4,543	359.4%		860		(3,453)		4,313	124.9%
Non-Controlling Interest																23		—		(23)	(100.0%)		54		—		(54)	(100.0%)
Net (Loss) Earnings Attributable to Century Casinos, Inc. Shareholders																(1,525)		3,279		(4,804)	(146.5%)		(6,027)		860		(6,887)	(800.8%)
Adjusted EBITDA	$	(1,432)	$	(1,368)	$	(64)	(4.7%)	$	(4,363)	$	(3,994)	$	(369)	(9.2%)	$	(2,048)	$	(1,432)	$	(616)	(43.0%)	$	(6,593)	$	(4,363)	$	(2,230)	(51.1%)

We began operating the ship-based casinos onboard the Mein Schiff ~~5 and~~6 in May 2017. The concession agreement to operate the ~~TUI Discovery in June 2016, the Glory Sea in July 2016 and~~ship-based casino onboard the Mein Schiff 61 ended in April 2018 when the vessel was transferred to another cruise line. The Mein Schiff 1 contributed a total of $0.2 million in revenue and less than $0.1 million in net losses attributable to Century Casinos, Inc. shareholders for the year ended December 31, 2017. The concession agreements to operate the ship-based casinos onboard the Wind Star and Marella Discovery will end in the fourth quarter of 2018. The Wind Star contributed less than $0.1 million in net operating revenue and less than ($0.1) million in net losses for the nine months ended September 30, 2018 and the Marella Discovery contributed $0.3 million in net operating revenue and less than ($0.1) million in net losses for the nine months ended September 30, 2018.

The casino at CCB opened in May ~~2017.~~2018.

In April 2018, CRM purchased a 51% ownership interest in GHL. GHL entered into agreements with MCL, the owner of a small hotel and international entertainment and gaming club in the Cao Bang province of Vietnam, under which GHL manages MCL and owns 6.36% of its outstanding shares. We ~~began construction on~~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 ~~SCCL project in October 2017.~~

Corporate Other operating segment.

Three Months Ended September 30, ~~2017~~2018 and ~~2016~~2017

The following discussion highlights results for the three months ended September 30, ~~2017~~2018 compared to the three months ended September 30, ~~2016.~~2017.

Revenue Highlights

Net operating revenue for Cruise Ships & Other ~~increased~~decreased by ~~$0.2~~($0.5) million, or ~~20.2%~~(39.2%), due to ~~the additional~~decreased gaming revenue from ~~the Mein Schiff 6~~our ship operations and ~~Glory Sea, offset by decreased revenue due to the completion~~termination of the ~~consulting~~management agreement ~~with Norwegian~~we had to direct the operation of the casino at the Hilton Aruba Caribbean Resort & Casino (the “Aruba Management Agreement”) in ~~May~~November 2017.

Net operating revenue for CCB for the three months ended September 30, 2018 was GBP 0.8 million. In U.S. dollars, net operating revenue was $1.1 million.

Operating Expense Highlights

Operating expenses for Cruise Ships & Other ~~increased~~decreased by ~~$0.1~~($0.3) million, or ~~13.2%~~(34.4%), due to ~~increased~~decreased concession fees paid to the cruise ~~ship-related~~lines as a result of decreased gaming revenue as well as decreased payroll costs.

Operating expenses ~~resulting from~~for CCB were GBP 1.3 million for the ~~additional~~three months ended September 30, 2018. In U.S. dollars, operating ~~and payroll costs associated with~~expenses were $1.7 million. Prior to the ~~Mein Schiff 6.~~opening of the casino, during the third quarter of 2017, CCB had operating expenses of GBP 0.1 million, which were $0.1 million in U.S. dollars.

~~Operating expenses related~~

Losses from operations attributable to ~~the SCCL project were $0.1~~our Corporate Other operating segment, which includes certain other corporate and management operations, decreased by ($0.1) million, or (3.9%), for the three months ended September 30, 2018 compared to the three months ended September 30, 2017 primarily due to additional expenses in 2017 related to the acquisition of CCB.

A reconciliation of net (loss) earnings attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

Nine Months Ended September 30, 2018 and 2017

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

Revenue Highlights

Net operating revenue for Cruise Ships & Other decreased by ($1.1) million, or (32.5%), due to the completion of the consulting agreement with Norwegian in May 2017, the termination of the Aruba Management Agreement in November 2017 and decreased gaming revenue from the cruise ships during 2018.

Net operating revenue for CCB was GBP 1.2 million for the nine months ended September 30, 2018. In U.S. dollars, net operating revenue was $1.6 million.

Operating Expense Highlights

Operating expenses for Cruise Ships & Other decreased by ($0.5) million, or (19.6%), due to decreased payroll costs and decreased concession fees paid to the cruise lines as a result of decreased gaming revenue.

Operating expenses for CCB were GBP 2.6 million for the nine months ended September 30, 2018. In U.S. dollars, operating expenses were $3.4 million. Prior to the opening of the casino, from January through mid-May 2018, CCB had operating expenses of GBP 0.5 million, which were $0.7 million in U.S. dollars. For the nine months ended September 30, 2017, CCB had operating expenses of GBP 0.1 million, which were $0.1 million in U.S. dollars.

Losses from operations attributable to our Corporate Other operating segment, which includes certain other corporate and management operations, increased by $0.2 million, or ~~10.2%~~3.4%, for the ~~three~~nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 ~~compared to the three months ended September 30, 2016~~ primarily due to ~~acquisition~~increased payroll costs, increased stock compensation expense and additional expenses of $0.1 million from GHL, offset by additional expenses in 2017 related to the ~~SCCL License Acquisition and increased payroll costs.~~CCB acquisition.

A reconciliation of net (loss) earnings attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

5153

~~Nine Months Ended September 30, 2017 and 2016~~

~~The following discussion highlights results for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016.~~

~~Revenue Highlights~~

Net operating revenue for Cruise Ships & Other increased by $0.8 million, or 30.4%, due to the additional revenue from the Mein Schiff 5, Mein Schiff 6, TUI Discovery and Glory Sea, offset by decreased revenue due to the completion of the consulting agreement with Norwegian in May 2017.

~~Operating Expense Highlights~~

Operating expenses for Cruise Ships & Other increased by $0.8 million, or 40.5%, due to increased cruise ship-related expenses resulting from the additional operating and payroll costs associated with the four new ship-based.

~~Operating expenses related to the SCCL project were $0.1 million for the nine months ended September 30, 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 8.1%, for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to increased payroll costs as well as acquisition costs related to the SCCL License Acquisition.

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

Non-Operating Income (Expense)

Non-operating income (expense) ~~for the three and nine months ended September 30, 2017 and 2016~~ was as follows:


	For the three months							For the nine months							For the three months							For the nine months
	ended September 30,						%	ended September 30,						%	ended September 30,						%	ended September 30,						%
Amounts in thousands	2017		2016		Change		Change	2017		2016		Change		Change	2018		2017		Change		Change	2018		2017		Change		Change
Interest Income	$	21	$	18	$	3	16.7%	$	69	$	49	$	20	40.8%	$	74	$	21	$	53	252.4%	$	107	$	69	$	38	55.1%
Interest Expense		(829)		(667)		162	24.3%		(2,667)		(2,247)		420	18.7%		(904)		(829)		75	9.0%		(3,023)		(2,667)		356	13.3%
Gain on Foreign Currency Transactions and Cost Recovery Income		70		20		50	250.0%		555		1,778		(1,223)	(68.8%)
Gain on Foreign Currency Transactions																182		70		112	160.0%		431		555		(124)	(22.3%)
Non-Operating (Expense) Income	$	(738)	$	(629)	$	(109)	(17.3%)	$	(2,043)	$	(420)	$	(1,623)	(386.4%)	$	(648)	$	(738)	$	(90)	(12.2%)	$	(2,485)	$	(2,043)	$	442	21.6%

Interest income

Interest income is directly related to interest earned on our cash reserves. During the third quarter of 2018, we also recorded interest income related to the payment from LOT Polish Airlines. See Note 7, “Commitments and Contingencies,” to our condensed consolidated financial statements included in Part I, Item 1 of this report.

Interest expense

Interest expense is directly related to interest owed on the BMO Credit Agreement, the fair value adjustments for our interest rate swap agreements, our CPL and ~~SCCL~~CCB borrowings, ~~and~~ interest expense related to ~~CDR’s~~the CDR land lease and our capital lease agreements.

~~Gain on foreign currency transactions and cost recovery transactions~~

~~Gain on foreign currency transactions and cost recovery transactions~~The increased interest expense for the nine months ended September 30, ~~2016 includes $1.6 million received by CDR~~2018 compared to the nine months ended September 30, 2017 is due primarily to increased interest expense related to ~~infrastructure built during~~ the ~~development of~~BMO Credit Agreement and the ~~Century Downs REC project. The distribution to CDR’s non-controlling shareholders through non-controlling interest is part of the credit agreement between CCE and CDR.~~CDR land lease.

Taxes

Income tax expense is recorded relative to the jurisdictions that recognize book earnings. During the nine months ended September 30, ~~2017,~~2018, we recognized an income tax expense of $1.8 million on pre-tax income of $5.0 million, representing an effective income tax rate of 35.7%, compared to an income tax benefit of $2.1 million on pre-tax income of $10.9 million, representing an effective income tax rate of (18.9%)~~, compared to an income tax expense of $2.6 million on pre-tax income of $12.0 million, representing an effective income tax rate of 21.3%~~ for the same period in ~~2016.~~

~~The difference between the~~2017. For an analysis of our effective income ~~taxes expected at~~tax rate compared to the U.S. federal statutory income tax rate, ~~of 34% and the reported income tax expense are impacted by a number of items. The decrease in the effective tax rate compared to the same period in 2016 is primarily the result of~~ the release of the U.S. valuation allowance in the third quarter of 2017, ~~discussed below. Our~~the change in the effective tax rate ~~is generally lower because there is a lower statutory tax rate~~period over period and the impact of the Tax Act, see Note 8, “Income Taxes,” to our condensed consolidated financial statements included in the countries where we pay taxes, such as Austria, Mauritius, Canada and Poland, when compared to the United States. There is also a lower effective tax rate for our Canadian and Polish operations due to exchange rate benefits. Part I, Item 1 of this report.

During the quarter ended September 30, 2017, we released our $5.1 million U.S. valuation allowance on our U.S. deferred tax assets, resulting in a tax benefit. We analyzed the likelihood of future realization of the U.S.’s deferred tax assets, including recent cumulative earnings by taxing jurisdiction, expectations of future taxable income or loss, the amount of net operating loss carryforwards not subject to limitations, the number of periods it will take to realize the net operating loss carryforwards and other relevant factors. Based on this analysis, we concluded that the operations in the U.S. had attained a sustained level of profitability sufficient to realize our deferred tax assets in the U.S., and thus to reduce its valuation allowance.

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 September 30, ~~2017,~~2018, our total debt under bank borrowings and other agreements net of $0.3 million related to deferred financing costs was ~~$58.3~~$53.3 million, of which ~~$52.7~~$33.2 million was long-term debt and ~~$5.6~~$20.1 million was the current portion of long-term debt. The current portion relates to payments due within one year under our BMO Credit Agreement, ~~CPL’s~~the CPL credit facilities, the CCB loan agreement and ~~other~~ capital lease agreements. ~~We intend to repay the current portion~~A principal amount of ~~our debt obligations with available cash. In September 2017, we borrowed GBP 2.0~~approximately CAD 16.1 million ($~~2.7~~12.4 million based on the exchange rate in effect on September 30, ~~2017) from UniCredit~~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 ~~finance~~seek to refinance this portion of our BMO Credit Agreement and anticipate that the ~~construction and fitting out~~refinancing will be completed in the third quarter of 2019. We intend to repay the ~~SCCL project. Repayment~~remaining current portion of ~~the SCCL loan is scheduled to begin in December 2018.~~our debt obligations with available cash. For a description of our debt agreements, see Note 7,6, “Long-Term Debt,” to our condensed consolidated financial statements included in Part I, Item 1 of this report. Net Debt was $6.7 million as of September 30, 2018 compared to $14.3 million as of September 30, 2017, ~~compared~~due to ~~$25.8~~the increase in cash to $46.8 million ~~as of~~at September 30, ~~2016.~~2018 from $44.3 million at September 30, 2017 and principal repayments. For the definition and reconciliation of Net Debt to the most directly comparable US GAAP measure, see “Non-GAAP Measures – Net Debt” above.

The following table lists the amount of ~~2017~~2018 maturities of our debt:


Amounts in thousands	Amounts in thousands									Amounts in thousands
		Saw Close Casino Ltd. Credit		Century Downs							Casinos Poland Credit		Century Casino Bath Credit		Century Downs
Bank of Montreal	Bank of Montreal	Agreement		Land Lease		Capital Leases		Total		Bank of Montreal	Facility		Agreement		Land Lease		Capital Leases		Total
$	1,433	$	0	$	0	$	120	$	1,553	1,382	$	2,291	$	130	$	—	$	56	$	3,859

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. The UniCredit Agreement is not included in the table above because no amounts were borrowed as of September 30, 2018.

Cash Flows

At September 30, ~~2017,~~2018, cash, ~~and~~ cash equivalents and restricted cash totaled ~~$44.3~~$47.5 million, and we had working capital (current assets minus current liabilities) of ~~$22.5~~less than ($0.1) million compared to cash, ~~and~~ cash equivalents and restricted cash of ~~$38.8~~$76.4 million and working capital of ~~$17.3~~$49.9 million at December 31, ~~2016.~~2017. The ~~increase~~decrease in cash, ~~and~~ cash equivalents and restricted cash from December 31, ~~2016~~2017 is due to ~~$14.5~~$24.5 million for construction costs related to the Century Mile project, $15.5 million used to purchase property and equipment, $0.6 million used for a distribution to non-controlling interest, $0.3 million for CRM’s purchase of its ownership interest in GHL, net of cash acquired, $0.4 million for GHL’s purchase of its ownership interest in MCL, $1.6 million in principal payments net of borrowings, $0.1 million in payments of deferred financing costs and $0.7 million in exchange rate changes, offset by $14.6 million of net cash provided by operating activities and ~~$1.4~~$0.3 million in exchange rate changes, offset by a $1.5 million payment related to a working capital adjustment for the Apex Acquisition, $0.1 million payment for the SCCL License Acquisition, $5.2 million used to purchase property and equipment, $1.6 million in principal repayments net of borrowingsproceeds from the ~~SCCL loan agreement and $2.0 million used for a distribution to non-controlling interest.~~exercise of stock options.

Net cash provided by operating activities was ~~$14.5~~$14.6 million for the nine months ended September 30, ~~2017~~2018 and ~~$15.6~~$16.0 million for the nine months ended September 30, ~~2016.~~2017. The decrease in cash provided by operating activities was primarily due to increased taxes payable due to the impact of the Tax Act (see Note 8). Our cash flows from operations have historically been positive and sufficient to fund ordinary operations. Trends in our operating cash flows tend to follow trends in earnings from operations, excluding non-cash charges. Please refer to the condensed consolidated statements of cash flows in Part I, Item 1 of this Form 10-Q and to management’s discussion of the results of operations above in this Item 2 for a discussion of earnings from operations.

Net cash used in investing activities of $40.8 million for the nine months ended September 30, 2018 consisted of $24.5 million for construction costs related to the Century Mile project; $8.4 million for the Century Casino Bath project; $5.3 million in leasehold improvements at the new casinos in Poland and additional assets for the casinos in Poland; $0.4 million in slot machines for CTL and CRC; $0.8 million in racetrack improvements and a barn at CDR; $0.7 million in other fixed asset additions at our properties; $0.3 million for CRM’s purchase of its ownership interest in GHL, net of cash acquired; and $0.4 million for GHL’s purchase of its ownership interest in MCL, offset by less than $0.1 million in proceeds from the disposition of assets.

Net cash used in investing activities of $6.8 million for the nine months ended September 30, 2017 consisted of $0.1 million for the Palace Hotel renovation project at CRC, which was placed on hold during the first quarter of 2017; $0.2 million to purchase slot machines for CTL and CRC; $0.1 million for the CRA casino renovation; $0.3 million for bowling lane renovations and a miniature golf course at CAL; $0.6 million for a parking lot and thoroughbred infrastructure at CDR; $0.5 million in leasehold improvements at the Hilton Hotel Warsaw and new CPL locations in Katowice and Wroclaw; $0.5 million in gaming equipment upgrades at various CPL casinos; $0.1 million for the ~~SCCL~~CCB leasehold renovations; $0.8 million for the Century Mile project; $0.1 million for equipment for the Mein Schiff 6; $1.9 million in other fixed asset additions at our ~~properties, the~~properties; a $1.5 million payment related to a working capital adjustment for the ~~Apex Acquisition~~acquisition of CSA and a $0.1 million payment related to the ~~SCCL License Acquisition,~~acquisition of CCB, offset by less than $0.1 million in proceeds from the disposition of fixed assets.

Net cash used in ~~investing~~financing activities of ~~$28.2~~$2.0 million for the nine months ended September 30, ~~2016~~2018 consisted of ~~$1.4~~$1.6 million of principal repayments net of proceeds from borrowings on our long-term debt, $0.6 million in ~~various projects for CDR including construction of a second barn, parking lots~~distributions to non-controlling interest and ~~landscaping, $1.4 million for the CRA casino renovation; $0.5~~$0.1 million in gaming equipment and furniture for three new cruise ships, $0.1 million to purchase new slot machines for CRC; $0.1 million to purchase new slot machines for CTL; $0.1 million for hotel upgrades at CTL; $0.5 million to purchase new slot machines and table games for CPL, $0.9 million in other fixed asset additions at our properties and $23.2 million held in restricted cash for the Apex Acquisition that closed on October 1, 2016,deferred financing cost payments, offset by ~~less than $0.1~~$0.3 million in proceeds from the ~~disposition~~exercise of ~~fixed assets.~~stock options.

Net cash used in financing activities of $3.6 million for the nine months ended September 30, 2017 consisted of $1.6 million of principal repayments on our long-term debt net of borrowings from the SCCL loan agreement and $2.0 million in distributions to non-controlling interest, offset by less than $0.1 million in cash from the exercise of stock options.

~~Net cash provided by financing activities of $17.1 million~~Tax Act

The Tax Act, which was enacted on December 22, 2017, made significant changes to the Internal Revenue Code effective for 2018, although certain provisions affected our 2017 financial results. The changes impacting our 2018 results include, but are not limited to, the reduction in the U.S. federal corporate income tax rate from 35% to 21% and the tax on Global Intangible Low-Taxed Income (“GILTI”). We have not completed our accounting for the ~~nine months ended September 30, 2016 consisted~~income tax effects of ~~$19.1 million cash received under various loan agreements net~~the Tax Act and the provisional amounts will be refined as needed during the measurement period allowed by SAB 118 and ASU 2018-05. While we believe that we have made reasonable estimates of ~~principal repayments~~the impact of the U.S. corporate income tax rate reduction and ~~$0.1 million received from~~GILTI, these estimates could change as we continue to analyze IRS guidance related to the ~~exercise~~Tax Act as it is released. In addition to the Tax Act changes impacting our 2018 results, further changes could result as we refine our calculations surrounding the changes that impacted our 2017 results including the remeasurement of ~~stock options, offset by $1.9 million distribution~~our deferred tax balances, as well as our calculations of earnings and profits as used in the computation of the transition tax. For further discussion of the Tax Act, see Note 8, “Income Taxes,” to ~~non-controlling interest and $0.2 million~~our condensed consolidated financial statements included in ~~deferred financing payments.~~ Part I, Item 1 of this report.

Common Stock Repurchase Program

Since 2000, we have had a discretionary program to repurchase our outstanding common stock. In November 2009, we increased the amount available to be repurchased to $15.0 million. We did not repurchase any common stock during the nine months ended September 30, ~~2017.~~2018. The total amount remaining under the repurchase program was $14.7 million as of September 30, ~~2017.~~2018. The repurchase program has no set expiration or termination date.

Potential Sources of Liquidity, Short-Term Liquidity

Historically, our primary sources of liquidity and capital resources have been cash flow from operations, bank borrowings, sales of existing casino operations and proceeds from the issuance of equity ~~securities.~~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 September 30, ~~2017,~~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 the CAD 16.1 million ($12.4 million based on the exchange rate in effect on September 30, 2018) 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 source of cash will be from our gaming operations and additional borrowings under the BMO Credit Agreement and other credit arrangements. In addition to the payment of operating costs, expected uses of cash within one year include capital expenditures for our existing properties, interest and principal payments on outstanding debt, the construction of Century Mile, ~~the construction of the SCCL project, a potential renovation~~an expansion at CRC to provide additional hotel rooms for our existing casino and ~~expansion project at the Palace Hotel in Cripple Creek,~~hotel, and other potential new projects. We will continue to evaluate our planned capital expenditures at each of our existing locations in light of the operating performance of the facilities at such locations.

We estimate that the Century Mile project will cost approximately CAD 60.0 million ($~~48.1~~46.4 million based on the exchange rate in effect on September 30, ~~2017)~~2018). ~~Cash needs~~We have used $24.2 million of the net proceeds from the common stock offering for construction of the ~~development~~Century Mile project. The balance of the Century Mile project ~~exceeds our current~~will be financed with the BMO Credit Agreement, which was amended in August 2018 to add an additional borrowing ~~capacity. Therefore, we are seeking additional financing to fund these projects. The financing for the Century Mile project may be in the form~~capacity of a construction or term loan or line of credit with a commercial bank, other debt or equity financings, or a combination of these financings. We estimate that the SCCL project will cost approximately GBP 5.0CAD 33.0 million ($~~6.7~~25.5 million based on the exchange rate in effect on September 30, 2017), in addition to GBP 0.5 million ($0.7 million based on the exchange rate in effect on September 30, 2017) of additional payments due to the seller of SCCL on the satisfaction of certain conditions. We have obtained a loan for the SCCL project of GBP 2.0 million ($2.7 million based on the exchange rate in effect as of September 30, 2017)2018) and ~~expect to fund the balance of the SCCL project costs~~ 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.~~securities and under which we undertook the common stock offering in November 2017. If necessary, we may seek to obtain further term loans, mortgages or lines of credit with commercial banks or other debt or equity financings to supplement our working capital and investing requirements. A financing transaction may not be available on terms acceptable to us, or at all, and a financing transaction may be dilutive to our current stockholders.

In addition, we expect our U.S. domestic cash resources will be sufficient to fund our U.S. operating activities and cash commitments for investing and financing activities. While we currently do not have an intent nor foresee a need to repatriate funds, we could require more capital in the U.S. than is generated by our U.S. operations for operations, capital expenditures or significant discretionary activities such as acquisitions of businesses and share repurchases. If so, we could elect to repatriate earnings from foreign jurisdictions orin the form of a cash dividend, which would generally be exempt from taxation with the exception of the adverse impact of withholding taxes. We also could elect to raise capital in the U.S. through debt or equity ~~issuances, which could have adverse tax consequences, as we have not accrued taxes for un-repatriated earnings of our foreign subsidiaries.~~issuances. We estimate that approximately ~~$37.3~~$27.8 million of our total ~~$44.3~~$46.8 million in cash and cash equivalents at September 30, ~~2017~~2018 is held by our foreign subsidiaries and is not available to fund U.S. 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.~~

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We had no material changes in our exposure to market risks from that previously reported in Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures – Our management, with the participation of our principal executive officers and principal financial/accounting officer, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, for the period covered by this report. Based on such evaluation, our principal executive officers and principal financial/accounting officer have concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting –There were no changes in our internal control over financial reporting that occurred during the three months ended September 30, ~~2017~~2018 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ~~We are evaluating our internal control procedures as they relate to revenue recognition.~~

PART II - OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In March 2000, our board of directors approved a discretionary program to repurchase up to $5.0 million of our outstanding common stock. In November 2009, our board of directors approved an increase of the amount available to be repurchased under the program to $15.0 million. The repurchase program has no set expiration or termination date and had approximately $14.7 million remaining as of September 30, ~~2017.~~2018. There were no repurchases of common stock during the nine months ended September 30, ~~2017.~~2018.

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Item 6. E xhibits



Exhibit No.	Document
3.1P	Certificate of Incorporation of Century Casinos, Inc. is hereby incorporated by reference to the Company’s Proxy Statement for the 1994 Annual Meeting of Stockholders.
3.2	Amended and Restated Bylaws of Century Casinos, Inc. is hereby incorporated by reference ~~from~~to Exhibit 11.14 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002.
10.1	~~Form of~~Loan Agreement, dated August 13, 2018, by and among Century Resorts Management GmbH, Century Casinos, Inc. ~~Performance Stock Unit Award Agreement~~and UniCredit Bank Austria AG is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on ~~March 8, 2017.~~August 16, 2018.
10.2	~~Share Purchase~~Third Amended and Restated Credit Agreement, ~~relating to Saw Close~~dated June 30, 2018, by and among Century Resorts Alberta Inc., Century Casino ~~Limited~~St. Albert Inc., Century Mile Inc. and Bank of Montreal is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on ~~June 22, 2017.~~August 28, 2018.
31.1*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Co-Chief Executive Officer.
31.2*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Co-Chief Executive Officer and President.
31.3*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Principal Financial Officer.
32.1**	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Co-Chief Executive Officer.
32.2**	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Co-Chief Executive Officer and President.
32.3**	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Principal Financial Officer.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

** Furnished herewith.

P Filed on Paper

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CENTURY CASINOS, INC.

/s/ Margaret Stapleton

Margaret Stapleton

Principal Financial/Accounting Officer

Date: November 6~~, 2017~~7, 2018

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