UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2022~~March 31, 2023

¨ 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)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Per Share Par Value	CNTY	Nasdaq Capital Market, Inc.

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 þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes þ 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 þ
	Non-accelerated Filer ¨		Smaller Reporting Company þ
			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 þ

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

~~29,864,047~~30,334,931 shares of common stock, $0.01 par value per share, were outstanding as of ~~November~~May 1, ~~2022.~~2023.

INDEX


Part I	FINANCIAL INFORMATION	Page
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022	3
	Condensed Consolidated Statements of (Loss) Earnings for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~	4
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~	5
	Condensed Consolidated Statements of Equity for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~	6
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3028
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5144
Item 4.	Controls and Procedures	5144
Part II	OTHER INFORMATION
Item 2.1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5144
Item 6.	Exhibits	5245
Signatures		5346

‎

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,	March 31,			December 31,
Amounts in thousands, except for share and per share information	2022			2021	2023			2022
ASSETS
Current Assets:
Cash and cash equivalents	$	99,257	$	107,821	$	102,707	$	101,785
Receivables, net		9,071		9,414		6,272		9,085
Prepaid expenses		8,979		12,417		13,092		13,780
Inventories		1,529		1,443		1,627		1,530
Restricted cash		100,100		—		100,200		100,151
Other current assets		826		1,163		507		1,688
Assets held for sale		—		8,422
Total Current Assets		219,762		140,680		224,405		228,019

Property and equipment, net		457,859		472,302		471,416		464,650
Leased right-of-use assets, net		27,470		28,383		24,532		27,190
Goodwill		8,907		10,347		9,740		9,583
Intangible assets, net		45,297		48,930		43,947		44,771
Deferred income taxes		13,321		555		17,501		15,579
Equity investment		94,018		—		92,095		93,260
Note receivable, net of current portion and unamortized discount		358		358		336		336
Deposits and other		1,542		1,803		1,510		1,579
Total Assets	$	868,534	$	703,358	$	885,482	$	884,967

LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt	$	5,349	$	3,958	$	5,222	$	5,322
Current portion of operating lease liabilities		3,610		3,915		3,768		3,947
Current portion of finance lease liabilities		149		38		150		150
Accounts payable		8,226		12,651		12,571		15,341
Accrued liabilities		16,439		13,592		19,597		19,012
Accrued payroll		10,857		11,190		11,443		11,840
Taxes payable		9,851		15,089		10,417		9,801
Total Current Liabilities		54,481		60,433		63,168		65,413

Long-term debt, net of current portion and deferred financing costs (Note 5)		344,417		177,526		343,783		344,258
Long-term financing obligation to VICI Properties, Inc. subsidiaries (Note 6)		284,085		281,901		285,158		284,904
Operating lease liabilities, net of current portion		26,539		27,229		23,642		26,016
Finance lease liabilities, net of current portion		430		43		363		399
Taxes payable and other		2,406		2,954		12,719		6,965
Deferred income taxes		2,869		2,915		2,868		2,813
Total Liabilities		715,227		553,001		731,701		730,768
Commitments and Contingencies (Note 7)

Equity:
Preferred stock; $0.01 par value; 20,000,000 shares authorized; no shares issued or outstanding		—		—		—		—
Common stock; $0.01 par value; 50,000,000 shares authorized; 29,864,047 and 29,624,814 shares issued and outstanding		299		296
Common stock; $0.01 par value; 50,000,000 shares authorized; 30,334,931 and 29,870,547 shares issued and outstanding						303		299
Additional paid-in capital		120,923		118,469		121,095		121,653
Retained earnings		41,307		29,289		36,022		37,265
Accumulated other comprehensive loss		(17,668)		(6,430)		(14,723)		(15,189)
Total Century Casinos, Inc. Shareholders' Equity		144,861		141,624		142,697		144,028
Non-controlling interests		8,446		8,733		11,084		10,171
Total Equity		153,307		150,357		153,781		154,199
Total Liabilities and Equity	$	868,534	$	703,358	$	885,482	$	884,967

See notes to unaudited condensed consolidated financial statements.

‎

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS (Unaudited)



	For the three months				For the nine months				For the three months
	ended September 30,				ended September 30,				ended March 31,
Amounts in thousands, except for per share information	2022		2021		2022		2021		2023		2022
Operating revenue:
Gaming	$	93,505	$	98,366	$	277,853	$	240,694	$	94,297	$	89,876
Pari-mutuel, sports betting and iGaming		6,067		6,200		14,755		13,342		3,385		3,430
Hotel		2,619		2,243		7,234		6,214		2,522		2,074
Food and beverage		7,031		6,078		18,095		12,401		5,767		5,038
Other		3,330		3,723		8,839		8,556		2,537		2,685
Net operating revenue		112,552		116,610		326,776		281,207		108,508		103,103
Operating costs and expenses:
Gaming		46,729		46,388		137,755		115,557		48,062		44,749
Pari-mutuel, sports betting and iGaming		6,922		6,741		16,724		14,031		3,712		3,768
Hotel		754		640		2,088		1,718		797		642
Food and beverage		6,257		5,412		16,983		11,415		5,645		4,979
General and administrative		26,179		24,918		79,002		66,337		26,702		26,971
Depreciation and amortization		6,776		6,784		20,350		20,060		6,855		6,795
(Gain) on sale of casino operations (Note 1)										(574)		—
Loss on sale of assets (Note 1)		—		—		2,154		—		—		2,154
Total operating costs and expenses		93,617		90,883		275,056		229,118		91,199		90,058
Earnings from equity investment		1,071		—		2,134		—		1,091		—
Earnings from operations		20,006		25,727		53,854		52,089		18,400		13,045
Non-operating (expense) income:
Interest income		574		164		699		164		145		17
Interest expense		(15,924)		(10,784)		(48,638)		(31,994)		(17,649)		(10,811)
Gain (loss) on foreign currency transactions, cost recovery income and other		409		(135)		2,725		302
Gain on foreign currency transactions, cost recovery income and other										3,758		1,893
Non-operating (expense) income, net		(14,941)		(10,755)		(45,214)		(31,528)		(13,746)		(8,901)
Earnings before income taxes		5,065		14,972		8,640		20,561		4,654		4,144
Income tax (expense) benefit		(855)		(2,593)		8,130		(3,813)
Income tax expense										(1,623)		(1,435)
Net earnings		4,210		12,379		16,770		16,748		3,031		2,709
Net earnings attributable to non-controlling interests		(1,266)		(1,153)		(4,752)		(86)		(4,274)		(2,491)
Net earnings attributable to Century Casinos, Inc. shareholders	$	2,944	$	11,226	$	12,018	$	16,662
Net (loss) earnings attributable to Century Casinos, Inc. shareholders									$	(1,243)	$	218

Earnings per share attributable to Century Casinos, Inc. shareholders:
(Loss) earnings per share attributable to Century Casinos, Inc. shareholders:
Basic	$	0.10	$	0.38	$	0.40	$	0.56	$	(0.04)	$	0.01
Diluted	$	0.09	$	0.36	$	0.38	$	0.54	$	(0.04)	$	0.01
Weighted average shares outstanding - basic		29,864		29,598		29,790		29,584		30,056		29,661
Weighted average shares outstanding - diluted		31,404		31,242		31,523		31,059		30,056		31,335

See notes to unaudited condensed consolidated financial statements.

‎

CENTURY CASINOS, INC. AND SUBSIDIARIES

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



	For the three months				For the nine months				For the three months
	ended September 30,				ended September 30,				ended March 31,
Amounts in thousands	2022		2021		2022		2021		2023		2022
Net earnings	$	4,210	$	12,379	$	16,770	$	16,748	$	3,031	$	2,709

Other comprehensive (loss) income
Other comprehensive income
Foreign currency translation adjustments		(9,272)		(4,207)		(13,002)		(905)		641		1,443
Other comprehensive loss		(9,272)		(4,207)		(13,002)		(905)
Comprehensive (loss) income	$	(5,062)	$	8,172	$	3,768	$	15,843
Other comprehensive income										641		1,443
Comprehensive income									$	3,672	$	4,152

Comprehensive (loss) income attributable to non-controlling interests
Net earnings attributable to non-controlling interests		(1,266)		(1,153)		(4,752)		(86)		(4,274)		(2,491)
Foreign currency translation adjustments		1,035		292		1,764		292		(175)		38
Comprehensive (loss) income attributable to Century Casinos, Inc. shareholders	$	(5,293)	$	7,311	$	780	$	16,049	$	(777)	$	1,699

See notes to unaudited condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)


	For the three months				For the nine months				For the three months
	ended September 30,				ended September 30,				ended March 31,
Amounts in thousands, except for share information	2022		2021		2022		2021		2023		2022
Common Stock
Balance, beginning of period	$	299	$	296	$	296	$	296	$	299	$	296
Performance stock unit issuance		—		—		3		—		4		2
Balance, end of period		299		296		299		296		303		298

Additional Paid-in Capital
Balance, beginning of period	$	119,970	$	116,192	$	118,469	$	115,570	$	121,653	$	118,469
Amortization of stock-based compensation		953		986		2,638		1,568		736		673
Exercise of options		—		126		252		166
Performance stock unit issuance		—		—		(436)		—		(1,294)		(436)
Balance, end of period		120,923		117,304		120,923		117,304		121,095		118,706

Accumulated Other Comprehensive Loss
Balance, beginning of period	$	(9,431)	$	(3,077)	$	(6,430)	$	(6,379)	$	(15,189)	$	(6,430)
Foreign currency translation adjustment		(8,237)		(3,915)		(11,238)		(613)		466		1,481
Balance, end of period		(17,668)		(6,992)		(17,668)		(6,992)		(14,723)		(4,949)

Retained Earnings
Balance, beginning of period	$	38,363	$	14,103	$	29,289	$	8,667	$	37,265	$	29,289
Net earnings		2,944		11,226		12,018		16,662
Net (loss) earnings										(1,243)		218
Balance, end of period		41,307		25,329		41,307		25,329		36,022		29,507

Total Century Casinos, Inc. Shareholders' Equity	$	144,861	$	135,937	$	144,861	$	135,937	$	142,697	$	143,562

Noncontrolling Interests
Balance, beginning of period	$	9,530	$	7,107	$	8,733	$	8,829	$	10,171	$	8,733
Net earnings		1,266		1,153		4,752		86		4,274		2,491
Foreign currency translation adjustment		(1,035)		(292)		(1,764)		(292)		175		(38)
Distribution to non-controlling interest		(1,315)		(153)		(3,275)		(808)		(3,536)		(1,960)
Balance, end of period		8,446		7,815		8,446		7,815		11,084		9,226

Total Equity	$	153,307	$	143,752	$	153,307	$	143,752	$	153,781	$	152,788

Common shares issued		—		25,000		239,233		32,852		464,384		189,233

See notes to unaudited condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	For the nine months					For the three months
	ended September 30,					ended March 31,
Amounts in thousands		2022		2021			2023		2022

Cash Flows provided by Operating Activities:
Net earnings		$	16,770	$	16,748		$	3,031	$	2,709
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			20,350		20,060			6,855		6,795
Lease amortization			2,763		3,349			965		1,043
(Gain) loss on disposition of fixed assets			(37)		278
Adjustment of contingent liability (Note 7)			—		20
Loss on disposition of fixed assets								480		36
Income from equity investment								(1,091)		—
Amortization of stock-based compensation expense			2,638		1,568			736		673
Amortization and write-off of deferred financing costs and discount on note receivable			9,042		1,174
Amortization of deferred financing costs and discount on note receivable								674		391
Loss on sale of assets (Note 1)			2,154		—			—		2,154
Gain on sale of operations (Note 1)								(574)		—
Deferred taxes			(13,616)		(468)			(1,866)		(24)
Changes in Operating Assets and Liabilities:
Receivables, net			(20)		(1,792)			2,821		1,982
Prepaid expenses and other assets			3,557		3,256			1,010		(148)
Accounts payable			(6,516)		(9,468)			(2,127)		(3,608)
Other current and long-term liabilities			3,190		6,662			325		5,183
Inventories			(169)		184			(90)		(11)
Accrued payroll			306		2,186			(467)		(1,768)
Taxes payable			(3,724)		4,924			1,598		(3,862)
Net cash provided by operating activities			36,688		48,681			12,280		11,545

Cash Flows used in Investing Activities:
Cash Flows (used in) provided by Investing Activities:
Purchases of property and equipment			(12,938)		(7,389)			(13,619)		(5,248)
Smooth Bourbon dividends (Note 3)			982		—			2,256		—
Smooth Bourbon acquisition (Note 3)			(95,000)		—
Purchase of intangible assets - casino license			(390)		—
Proceeds from disposition of assets			124		44
Century Casino Calgary sale working capital adjustment, net of earn out (Note 1)			—		(28)
Century Casino Calgary sale earn out								572		—
Calgary asset sale (Note 1)			6,330		—			—		6,330
Net cash used in investing activities			(100,892)		(7,373)
Net cash (used in) provided by investing activities								(10,791)		1,082

Cash Flows provided by (used in) Financing Activities:
Cash Flows used in Financing Activities:
Proceeds from borrowings			350,000		—			5,900		—
Principal payments			(170,141)		(2,838)			(1,411)		(1,018)
Payment of deferred financing costs			(18,857)		—
Distribution to non-controlling interest			(2,378)		(655)			(3,536)		(1,960)
Repurchase of shares to satisfy tax withholding			(434)		—			(1,290)		(434)
Proceeds from exercise of stock options			253		166
Net cash provided by (used in) financing activities			158,443		(3,327)
Net cash used in financing activities								(337)		(3,412)

Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash		$	(2,781)	$	(476)		$	(179)	$	177

Increase in Cash, Cash Equivalents and Restricted Cash		$	91,458	$	37,505		$	973	$	9,392

Cash, Cash Equivalents and Restricted Cash at Beginning of Period		$	108,041	$	63,677		$	202,131	$	108,041
Cash, Cash Equivalents and Restricted Cash at End of Period		$	199,499	$	101,182		$	203,104	$	117,433

Supplemental Disclosure of Cash Flow Information:
Interest paid		$	37,439	$	26,118		$	16,703	$	7,452
Income taxes paid		$	6,489	$	4,200		$	776	$	3,725
Income tax refunds		$	890	$	1,049

Non-Cash Investing Activities:
Purchase of property and equipment on account		$	2,304	$	1,766		$	5,957	$	3,223

Non-Cash Financing Activities:
Distributions payable to non-controlling shareholders		$	1,003	$	153

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. (the “Company”) is a casino entertainment company with operations primarily in North America. The Company’s operations as of ~~September 30, 2022~~March 31, 2023 are detailed below.

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

The Century Casino & Hotel in Central City, Colorado (“CTL”)

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

Mountaineer Casino, Racetrack & Resort in New Cumberland, West Virginia (“Mountaineer” or “MTR”) ⁽¹⁾

The Century Casino Cape Girardeau, Missouri (“Cape Girardeau” or “CCG”) ⁽¹⁾

The Century Casino Caruthersville, Missouri (“Caruthersville” or “CCV”) ⁽¹⁾

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

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

Century Mile Racetrack and Casino in Edmonton, Alberta, Canada (“CMR” or “Century Mile”) ⁽²⁾

(1)Subsidiaries of VICI Properties Inc. (“VICI”) own the real estate assets underlying these properties.

(2)CMR leases the land on which CMR’s racing and entertainment centre (“REC”) and racetrack are located.

OnIn February ~~10,~~ 2022, the Company sold the land and building in Calgary, transferred the lease agreement for the casino premises to the buyer, and ceased operating Century Sports, a sports bar, bowling and entertainment facility located on the property. See below in this Note 1 for additional information about the Calgary property.

Through August 2021, the Company operated the pari-mutuel off-track betting network in southern Alberta, Canada through Century Bets! Inc. (“CBS” or “Century Bets”). In September 2021, the Company transferred these contracts to Century Mile.

The Company’s Colorado and West Virginia subsidiaries have partnered with sports betting and iGaming operators to offer sports wagering and online betting through mobile apps.

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

The Company owns 66.6% of Casinos Poland Ltd (“CPL” or “Casinos Poland”). As of ~~September 30, 2022,~~March 31, 2023, CPL owned and operated eight casinos throughout Poland. 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.

Through its wholly owned subsidiary Century Nevada Acquisition, Inc., the Company has a 50% equity interest in Smooth Bourbon, LLC (“~~PropCo” or “Smooth~~Smooth Bourbon”). The Company reports this interest as an equity investment. See Note 3.

As of ~~September 30, 2022,~~March 31, 2023, the Company had a concession agreement with TUI Cruises for one ship-based ~~casino that ends in the second quarter of~~casino. The agreement ended April 16, 2023. The table below illustrates the ships operating during the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.


Ship	Operated From	Operated To
Mein Schiff Herz	April 5, 2022	~~Currently operating~~April 16, 2023
Mein Schiff 6	June 11, 2021	April 18, 2022

‎

Recent Developments Related to COVID-19

~~The~~Since the inception of the COVID-19 pandemic ~~impacted~~in March 2020, the Company’s results of operations in the first half of 2021 because of closures at the Company’s Canada and Poland properties during this period. The table below provides a summary of the time periods in which the Company’s casinos ~~hotels and other facilities were closed in December 2020 and during 2021 to comply with quarantines issued by governments to contain the spread of COVID-19. The Company’s casinos have~~ varied their operations based on the governmental health and safety requirements in the jurisdictions in which they are located. The COVID-19 pandemic impacted the Company’s results of operations in 2020 and the first half of 2021, and into the first quarter of 2022 for its Canada properties. Currently, the Company’s operations ~~are open and~~ have no health and safety requirements for entry and few other COVID-19 related restrictions.


~~Operating Segment~~	~~Closure Date~~	~~Reopen Date~~
~~Edmonton~~	~~December 13, 2020~~	~~June 10, 2021~~
~~Calgary~~	~~December 13, 2020~~	~~June 10, 2021~~
~~Poland~~	~~December 29, 2020~~	~~February 12, 2021~~
	~~March 20, 2021~~	~~May 28, 2021~~

The duration and impact of the COVID-19 pandemic remains uncertain. The Company cannot predict the negative impacts that COVID-19 will have on its consumer demand, workforce, suppliers, contractors and other partners and whether future closures will be required. Such closures have had a material impact on the Company’s financial ~~results. The~~results and the effects of COVID-19, ongoing governmental health and safety requirements and any future closures could have a material impact on the Company. The Company will continue to monitor its liquidity and make reductions to marketing and operating expenditures, where possible, if future government mandates or closures are required that would have an adverse impact on the Company.

Other Projects and Developments

Nugget Casino Resort in Sparks, Nevada

In February 2022, the Company entered into a definitive agreement with Marnell Gaming, LLC (“Marnell”), pursuant to which a newly formed subsidiary of the Company agreed to purchase from Marnell (i) 50% of the membership interests in Smooth Bourbon, and (ii) 100% of the membership interests in Nugget Sparks, LLC (“Nugget”). Nugget owns and operates the Nugget Casino Resort in Sparks, Nevada, and Smooth Bourbon owns the real property on which the casino is located.

The Company purchased 50% of the membership interests in Smooth Bourbon for approximately $95.0 million (the “Smooth Bourbon Acquisition”) at the first closing, which occurred on April 1, 2022 (the “First Closing”). The Company used approximately $29.3 million of cash on hand and borrowings under the Goldman Credit Agreement (see Note 5) in connection with the First Closing. On April 3, 2023 (the “Second Closing”), the Company purchased 100% of the membership interests in Nugget for approximately $100.0 million (subject to certain adjustments) (the “OpCo Acquisition” and, together with the Smooth Bourbon Acquisition, the “Nugget Acquisition”). The purchase price for the OpCo Acquisition was paid from proceeds of the term loan under the Goldman Credit Agreement deposited in escrow (“Acquisition Escrow”) on the First Closing date. Following the Second Closing, the Company owns the operating assets of Nugget Casino Resort and 50% of the membership interests in Smooth Bourbon. The Company also has a five year option through April 1, 2027 to acquire the remaining 50% of the membership interests in Smooth Bourbon for $105.0 million plus 2% per annum. At the First Closing, Smooth Bourbon entered into a lease with Nugget for an annual rent of $15.0 million.

Rocky Gap Casino Resort in Flintstone, Maryland

On August 24, 2022, the Company entered into a definitive agreement with Lakes Maryland Development, LLC (“Lakes Maryland”), Golden Entertainment, Inc (“Golden”), and VICI Properties, L.P. (“VICI PropCo”), an affiliate of VICI, pursuant to which the Company agreed to acquire the operations of Rocky Gap Casino Resort (“Rocky Gap”) for approximately $56.1 million subject to the conditions and terms set forth therein (the “Rocky Gap Acquisition”). Pursuant to a real estate purchase agreement, dated August 24, 2022, by and between Evitts Resort, LLC (“Evitts”) and an affiliate of VICI PropCo (“VICI PropCo Buyer”), VICI PropCo Buyer agreed to acquire the real estate assets relating to Rocky Gap for approximately $203.9 million, subject to the conditions and terms set forth therein. In connection with the closing of this transaction, subsidiaries of the Company and VICI PropCo will enter into an amendment to their triple net lease agreement (the “Master Lease”) to (i) add Rocky Gap to the Master Lease, (ii) provide for an initial annual rent for Rocky Gap of approximately $15.5 million and (iii) extend the initial Master Lease term for 15 years from the date of the amendment (subject to the existing four five year renewal options).

~~Nugget Casino Resort in Sparks, Nevada~~

On ~~February 22, 2022,~~April 27, 2023, the Company ~~entered into~~was approved for a ~~definitive agreement with Marnell~~gaming license by the Maryland State Lottery & Gaming ~~LLC (“Marnell”), pursuant~~Control Agency. Additional regulatory approvals are required prior to ~~which a newly formed subsidiary of~~ the Company (i) purchased from Marnell 50% of the membership interests in PropCo, and (ii) will purchase 100% of the membership interests in Nugget Sparks, LLC (“OpCo”). OpCo owns and operates the Nugget Casino Resort in Sparks, Nevada, and PropCo owns the real property on which the casino is located.

~~The Company purchased 50% of the membership interests in PropCo for approximately $95.0 million (the “PropCo Acquisition”) at the first~~Rocky Gap Acquisition closing, which occurred on April 1, 2022 (the “First Closing”). The Company used approximately $29.3 million of cash on hand and borrowings under the Goldman Credit Agreement (see Note 5) in connection with the First Closing. Subject to approval from the Nevada Gaming Commission, the Company’s purchase of 100% of the membership interests in OpCo for approximately $100.0 million (subject to certain adjustments) (the “OpCo Acquisition” and, together with the PropCo Acquisition, the “Nugget Acquisition”) is expected to close within one year after the First Closing (the “Second Closing”). The purchase price for the OpCo Acquisition will be paid from proceeds of the Term Loan (as defined below) deposited in escrow (“Acquisition Escrow”) on the First Closing date. Following the Second Closing, the Company will own the operating assets of Nugget Casino Resort and 50% of the membership interests in PropCo. The Company also has a five year option to acquire the remaining 50% of the membership interests in PropCo for $105.0 million plus 2% per annum. At the First Closing, PropCo entered into a lease with OpCo for an annual rent of $15.0 million.

‎

~~Caruthersville Land-Based Casino and Hotel~~

In July 2021, the Missouri law requiring each casino to be a floating facility was amended to allow casino facilities to be built as a standard building with a container with at least 2,000 gallons of water beneath the facility. Subsequently, a lawsuit was filed by the City of St. Louis that seeks to block the implementation of the omnibus bill that included the amendment to the definition of a floating facility. In June 2022, the Missouri governor signed a standalone bill to amend the definition of a floating facility. This change provides an opportunity for Century Casino Caruthersville, the last remaining riverboat casino on open water in Missouri, to move to a non-floating facility. The Company plans to move the casino from the riverboat to a new land-based casino with a small hotel adjacent to and connected with the existing building. Construction on the project began in October 2022, and it is expected to be completedoccur in the ~~second half~~summer of 2024 with an estimated project cost of $51.9 million. The Company plans to finance the cost of this project with a combination of financing and cash on hand. As of September 30, 2022, the Company has spent $2.1 million on this project.2023.

Recent Developments Related to Century Casino Caruthersville

On October 26, 2022, the Missouri Gaming Commission (“MGC”) approved the relocation of the casino at Century Casino Caruthersville from the riverboat and the barge to a land-based pavilion until the new land-based casino and hotel are completed. On October 13, 2022, the riverboat, which had operated since 1994, had to be closed as it was no longer accessible from the barge because of the record low water levels in the Mississippi River. ~~Since then, Caruthersville has operated~~The riverboat had 519 slot machines and seven table games. From October 2022 to December 2022, the casino operated from the barge with 299 slot machines and four table games. The move to the pavilion, which has 424 slot machines and six table games, was completed in late December 2022. The pavilion building will not be affected by water levels, ~~and~~ is protected by a flood ~~wall. The pavilion will provide~~wall and provides for easier access to the casino for customers than the riverboat. The riverboat and barge were removed on February 25, 2023.

‎

Caruthersville Land-Based Casino and Hotel

The Company is building a new land-based casino with a 38 room hotel adjacent to and connected with the existing casino pavilion building. Construction on the project began in December 2022 and is expected to be completed in the second half of 2024 with an estimated project cost of $51.9 million. The Company is financing this project through financing provided by VICI PropCo. As of March 31, 2023, the Company ~~anticipates it will bring operating efficiencies~~has received $10.9 million in financing from VICI PropCo and ~~cost savings. The casino will be smaller with approximately 400 slot machines and seven table games, compared to 519 slot machines and seven table games~~has spent $5.4 million of those funds on the riverboat and barge. Caruthersville will continue to operate from the barge until the move to the pavilion is complete. The Company anticipates the move to the pavilion will be completed by the end of 2022 and that there will be no negative impact on results of operations thereafter.this project.

Caruthersville Hotel

In July 2021, the Company announced that it had purchased land and a small two-story hotel near Century Casino Caruthersville with plans to refurbish the existing hotel’s 36 rooms. The Company opened the hotel, the Farmstead, on October 30, ~~2022. As~~2022 with a total project cost of ~~September 30, 2022, the Company has spent $2.7 million on this project and estimates an additional $1.0 million will be spent in the fourth quarter of 2022.~~$3.6 million.

Cape Girardeau Hotel

The Company is building a 69 room hotel at its Cape Girardeau location. The hotel is planned as a six story building with 68,000 square feet that will be adjacent to and connected with the existing casino building. The hotel project has been approved by the City of Cape Girardeau. Additional state and local approvals from other agencies will also be required. Planning, design and preparations for the project are substantially complete. Construction on the project began in September 2022 and it is expected to be completed in the first half of 2024. The Company estimates a project cost of approximately $30.5 million. The Company is financing the project with cash on hand. As of ~~September 30, 2022,~~March 31, 2023, the Company has spent ~~$1.4~~$7.1 million on this project.

Terminated Projects

Century Sports

In August 2020, the Company announced that it had entered into an agreement to sell the casino operations of Century Casino Calgary for CAD 10.0 million ($7.5 million based on the exchange rate on August 5, 2020) plus a three year ~~quarterly~~ earn out as specified in the agreement. The transaction closed on December 1, 2020. ~~During the first quarter~~The Company received an earn out payment of ~~2021, the Company paid~~ CAD ~~0.1~~0.8 million ($~~0.1~~0.6 million based on the exchange rate on ~~February 12, 2021)~~March 31, 2023) that it recorded to gain on sale of casino operations in ~~working capital adjustments under~~its condensed consolidated statement of (loss) earnings for the ~~purchase agreement.~~three months ended March 31, 2023. Upon closing of the transaction, the Company entered into a three year lease agreement with the purchaser of the casino operations for annual net rent for the land and building of CAD 0.5 million ($0.4 million based on the exchange rate on ~~September 30, 2022)~~March 31, 2023).

After the sale, the Company continued to operate Century Sports, and to own the underlying real estate. On February 10, 2022, the Company sold the land and building in Calgary for CAD 8.0 million ($6.3 million based on the exchange rate on February 10, 2022) at which time the Company transferred the lease agreement for the casino premises to the buyer and ceased operating Century Sports. ~~As of December 31, 2021, the assets held for sale included $4.8 million in land and $3.6 million in buildings and improvements, net of accumulated depreciation.~~ Century Sports was included in the Canada reportable segment.

~~Mendoza Central Entretenimientos S.A.~~

The Company, through its subsidiary CRM, had a 7.5% ownership interest in Mendoza Central Entretenimientos S.A, an Argentina company (“MCE”), which leases slot machines and provides related services to Casino de Mendoza, a casino located in Mendoza, Argentina that is owned by the Province of Mendoza. In November 2021, CRM sold its ownership interest in MCE for nominal consideration. In addition, a consulting services agreement between CRM and MCE was terminated.

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, ~~2021.~~2022. The results of operations for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 are not necessarily indicative of the operating results for the full year.

Cash, Cash Equivalents and Restricted Cash – A reconciliation of cash, cash equivalents and restricted cash as stated in the Company’s condensed consolidated statements of cash flows is presented in the following table:


	September 30,		September 30,		March 31,		March 31,
Amounts in thousands	2022		2021		2023		2022
Cash and cash equivalents	$	99,257	$	100,759	$	102,707	$	117,217
Restricted cash		100,100		196		100,200		20
Restricted cash included in deposits and other		142		227		197		196
Total cash, cash equivalents, and restricted cash shown in the consolidated statement of cash flows	$	199,499	$	101,182	$	203,104	$	117,433

‎

As of ~~September 30, 2022,~~March 31, 2023, the Company had ~~$100.1~~$100.2 million related to the Acquisition Escrow in restricted cash and ~~$0.1~~$0.2 million related to payment of prizes and giveaways for Casinos Poland and less than $0.1 million related to an insurance policy in restricted cash included in deposits and other on its condensed consolidated balance sheet. As of ~~September 30, 2021, the Company had $0.2 million in~~March 31, 2022, restricted cash ~~related to~~included cash held in escrow ~~for a cancelled sale agreement for~~related to the Calgary ~~and~~asset sale. As of March 31, 2022, the Company had $0.2 million related to payments of prizes and giveaways for Casinos Poland, and less than $0.1 million related to an insurance policy in restricted cash included in deposits and other on its condensed consolidated balance sheet.

Use of Estimates – The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. Management’s use of estimates includes estimates for property and equipment, goodwill, intangible assets and income tax.

Presentation of Foreign Currency Amounts – The Company’s functional currency is the US dollar (“USD” or “$”). Foreign subsidiaries with a functional currency other than the US 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”) and Polish zloty (“PLN”). 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 US dollar used to translate balances at the end of the reported periods are as follows:


	As of September 30,	As of December 31,	As of March 31,	As of December 31,
Ending Rates	2022	2021	2023	2022
Canadian dollar (CAD)	1.3702	1.2678	1.3530	1.3550
Euros (EUR)	1.0179	0.8810	0.9178	0.9393
Polish zloty (PLN)	4.9399	4.0492	4.2886	4.4004

‎

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



	For the three months			For the nine months				For the three months
	ended September 30,			ended September 30,				ended March 31,
Average Rates	2022	2021	% Change	2022	2021	% Change		2023	2022	% Change
Canadian dollar (CAD)	1.3045	1.2593	(3.6%)	1.2823	1.2515	(2.5%)		1.3523	1.2669	(6.7%)
Euros (EUR)	0.9920	0.8482	(17.0%)	0.9403	0.8360	(12.5%)		0.9324	0.8909	(4.7%)
Polish zloty (PLN)	4.7025	3.8721	(21.4%)	4.3935	3.8013	(15.6%)		4.3913	4.1182	(6.6%)
Source: 2022 Xe Currency Converter, 2021 Pacific Exchange Rate Service
Source: Xe Currency Converter							Source: Xe Currency Converter

Equity Investment – On April 1, 2022, the Company purchased 50% of the membership interests in Smooth Bourbon. Smooth Bourbon owns the real property on which the Nugget Casino is located. The additional 50% of the membership interest in Smooth Bourbon is held by Marnell. At Smooth Bourbon, decision making is controlled by Marnell, the managing member. The Company completed an assessment of whether Smooth Bourbon is a variable interest entity in which it has a financial interest. Based on this assessment, the Company concluded that Smooth Bourbon is not subject to consolidation under the guidance for variable interest entities. The Company will evaluate its investment in Smooth Bourbon for impairment on an annual basis or whenever events or circumstances indicate the carrying amount may not be recoverable. See Note 3 for additional information about Smooth Bourbon.

2.SIGNIFICANT ACCOUNTING POLICIES

Accounting Pronouncements ~~Not Yet Adopted~~Pending Adoption – The Company has ~~not yet adopted the following accounting pronouncements:~~

~~In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04,~~ ~~Reference Rate Reform (Topic 848)~~ (“ASU 2020-04”). The objective of ASU 2020-04 is to provide optional expedients and exceptions for applying US GAAP to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU 2021-01, ~~Reference Rate Reform (Topic 848): Scope~~ (“ASU 2021-01”), which provides clarification that certain optional expedients and exceptions in ASU 2020-04 for contract modification and hedge accounting apply to derivatives that are affected by discounting transition.The guidance is effective from March 12, 2020 through December 31, 2022. The Company has evaluated its debt agreements under ASU 2020-04 and has determined that it will not need to modify any of the agreements as a result of the discontinuation of LIBOR. The Company does not expect the adoption of the standard to have a material impact on the Company’s financial statements.

~~The Company has~~ considered all ~~other~~ recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements or notes thereto.

‎

3. EQUITY INVESTMENT

Following is summarized financial information regarding Smooth Bourbon as of ~~September 30, 2022:~~March 31, 2023:


	For the three months ended		For the nine months ended		For the three months ended
Amounts in thousands	September 30, 2022		September 30, 2022		March 31, 2023
Operating Results
Net operating revenue	$	3,959	$	7,729	$	3,852
Earnings from continuing operations	$	3,725	$	7,475	$	3,729
Net earnings	$	2,142	$	4,268	$	2,181
Net earnings attributable to Century Casinos, Inc.	$	1,071	$	2,134	$	1,091

The Company’s maximum exposure to losses at ~~September 30, 2022~~March 31, 2023 was ~~$94.0~~$92.1 million, the value of its equity investment in Smooth Bourbon.

‎

Changes in the carrying amount of the investment in Smooth Bourbon for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 are presented in the table below.

Amounts in thousands

Balance at
‎January 1, 2022

Acquisition

Equity Earnings

Dividend

Balance at

September 30, 2022

Balance at
‎January 1, 2023

Equity Earnings

Dividend

Balance at
‎March 31, 2023

Smooth Bourbon

—

95,000

2,134

(3,116)

94,018

93,260

1,091

(2,256)

92,095

4.GOODWILL AND INTANGIBLE ASSETS

Goodwill represents the future economic benefits of a business combination to the extent that the purchase price exceeds the fair value of the net identified tangible and intangible assets acquired and liabilities assumed. The Company determines the estimated fair value of the net identified tangible and intangible assets acquired and liabilities assumed after review and consideration of relevant information including discounted cash flows, quoted market prices, and estimates made by management.

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 reportable segments with goodwill balances as of ~~September 30, 2022 included~~March 31, 2023 were Canada and Poland. For the quantitative goodwill impairment test, the current fair value of each reporting unit with goodwill balances is estimated using a combination of (i) the income approach using the discounted cash flow method for projected revenue, EBITDA and working capital, (ii) the market approach observing the price at which comparable companies or shares of comparable companies are bought or sold, and (iii) fair value measurements using either quoted market price or an estimate of fair value using a present value technique. The cost approach, estimating the cost of reproduction or replacement of an asset, was considered but not used because it does not adequately capture an operating company’s intangible value. If the carrying value of a reporting unit exceeds its estimated fair value, the Company will recognize an impairment for the amount by which the carrying value exceeds the reporting unit’s fair value. The impairment analysis requires management to make estimates about future operating results, valuation multiples and discount rates and assumptions based on historical data and consideration of future market conditions. Changes in the assumptions can materially affect these estimates. Given the uncertainty inherent in any projection, heightened by the possibility of additional effects of COVID-19, actual results may differ from the estimates and assumptions used, or conditions may change, which could result in additional impairment charges in the future. Such impairments could be material.

The Company tests its indefinite-lived intangible assets as of October 1 each year, or more frequently as circumstances indicate it is necessary. The fair value is determined primarily using the multi-period excess earnings methodology and the relief from royalty method under the income approach.

‎

Goodwill

Changes in the carrying amount of goodwill related to the Canada and Poland segments are as follows:

Amounts in thousands
Canada
Poland
Total
Gross carrying value January 1, 2022
$
7,402
$
6,320
$
13,722
Currency translation
(301)
(1,139)
(1,440)
Gross carrying value September 30, 2022
7,101
5,181
12,282
Accumulated impairment losses January 1, 2022
(3,375)
—
(3,375)
Accumulated impairment losses September 30, 2022
(3,375)
—
(3,375)
Net carrying value at January 1, 2022
$
4,027
$
6,320
$
10,347
Net carrying value at September 30, 2022
$
3,726
$
5,181
$
8,907


Amounts in thousands	Canada		Poland		Total
Gross carrying value January 1, 2023	$	7,142	$	5,816	$	12,958
Currency translation		5		152		157
Gross carrying value March 31, 2023		7,147		5,968		13,115

Accumulated impairment losses January 1, 2023		(3,375)		—		(3,375)
Accumulated impairment losses March 31, 2023		(3,375)		—		(3,375)

Net carrying value at January 1, 2023	$	3,767	$	5,816	$	9,583
Net carrying value at March 31, 2023	$	3,772	$	5,968	$	9,740

‎

Intangible Assets

Intangible assets at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 consisted of the following:


		September 30,		December 31,		March 31,		December 31,
Amounts in thousands	2022		2021		2023		2022
Finite-lived
Casino licenses	$	2,380	$	2,768	$	2,741	$	2,672
Less: accumulated amortization		(1,455)		(1,749)		(1,923)		(1,763)
		925		1,019		818		909
Trademarks		2,368		2,368		2,368		2,368
Less: accumulated amortization		(671)		(494)		(789)		(730)
		1,697		1,874		1,579		1,638
Players club lists		20,373		20,373		20,373		20,373
Less: accumulated amortization		(8,246)		(6,063)		(9,701)		(8,974)
		12,127		14,310		10,672		11,399
Total finite-lived intangible assets, net		14,749		17,203		13,069		13,946
Indefinite-lived
Casino licenses		29,205		30,112		29,348		29,331
Trademarks		1,343		1,615		1,530		1,494
Total indefinite-lived intangible assets		30,548		31,727		30,878		30,825
Total intangible assets, net	$	45,297	$	48,930	$	43,947	$	44,771

Trademarks

The Company currently owns three trademarks, the Century Casinos trademark, the Mountaineer trademark and the Casinos Poland trademark, which are reported as intangible assets on the Company’s condensed consolidated balance sheets.

Trademarks: Finite-Lived

The Company has determined that the Mountaineer trademark, reported in the United States segment, has a useful life of ten years after considering, among other things, the expected use of the asset, the expected useful life of other related assets or asset groups, any legal, regulatory, or contractual provisions that may limit the useful life, the effects of obsolescence, demand and other economic factors, and the maintenance expenditures required to promote and support the trade name. As such, the trademark will be amortized over its useful life. Costs incurred to renew trademarks that are finite-lived are expensed over the renewal period to general and administrative expenses on the Company’s condensed consolidated statements of earnings. Changes in the carrying amount of the Mountaineer trademark are as follows:

Amounts in thousands

Balance at

January 1, 2022

Amortization

Balance at

September 30, 2022

Balance at

January 1, 2023

Amortization

Balance at

March 31, 2023

United States

1,874

(177)

1,697

1,638

(59)

1,579

‎

As of ~~September 30, 2022,~~March 31, 2023, estimated amortization expense of the Mountaineer trademark over the next five years was as follows:


Amounts in thousands
2022	$	60
2023		237	$	178
2024		237		237
2025		237		237
2026		237		237
2027				237
Thereafter		689		453
	$	1,697	$	1,579

The weighted-average amortization period of the Mountaineer trademark is ~~7.2~~6.7 years.

‎

Trademarks: Indefinite-Lived

The Company has determined that the Casinos Poland trademark, reported in the Poland segment, and the Century Casinos trademark, reported in the Corporate and Other segment, have indefinite useful lives and therefore the Company does not amortize these trademarks. Costs incurred to renew trademarks that are indefinite-lived are expensed over the renewal period as general and administrative expenses on the Company’s condensed consolidated statements of earnings. Changes in the carrying amount of the indefinite-lived trademarks are as follows:


Amounts in thousands		Balance at January 1, 2022		Currency translation		Balance at September 30, 2022		Balance at January 1, 2023		Currency translation		Balance at March 31, 2023
Poland	$	1,507	$	(272)	$	1,235	$	1,386	$	36	$	1,422
Corporate and Other		108		—		108		108		—		108
	$	1,615	$	(272)	$	1,343	$	1,494	$	36	$	1,530

Casino Licenses: Finite-Lived

As of ~~September 30, 2022,~~March 31, 2023, Casinos Poland had eight casino licenses, each with an original term of six years, which are reported as 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		Balance at January 1, 2022		New Casino License		Amortization		Currency translation		Balance at ‎September 30, 2022		Balance at January 1, 2023		Amortization		Currency translation		Balance at ‎March 31, 2023
Poland	$	1,019	$	390	$	(321)	$	(163)	$	925	$	909	$	(112)	$	21	$	818

As of ~~September 30, 2022,~~March 31, 2023, estimated amortization expense for the CPL casino licenses over the next five years was as follows:


Amounts in thousands
2022	$	100
2023		378	$	320
2024		192		221
2025		84		97
2026		62		72
2027				72
Thereafter		109		36
	$	925	$	818

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 next license expiration is ~~2.1~~1.6 years. In Poland, gaming licenses are not renewable. Once a gaming license has expired, any gaming company can apply for the license.

‎

Casino Licenses: Indefinite-Lived

The Company has determined that the casino licenses held in the United States segment from the Missouri Gaming Commission and the West Virginia Lottery Commission and those held in the Canada segment from the Alberta Gaming, Liquor and Cannabis Commission and Horse Racing Alberta are indefinite-lived. Costs incurred to renew licenses that are indefinite-lived are expensed over the renewal period to general and administrative expenses on the Company’s condensed consolidated statements of earnings. Changes in the carrying amount of the licenses are as follows:


Amounts in thousands		Balance at ‎January 1, 2022		Currency translation		Balance at September 30, 2022		Balance at January 1, 2023		Currency translation		Balance at March 31, 2023
United States	$	17,962	$	—	$	17,962	$	17,962	$	—	$	17,962
Canada		12,150		(907)		11,243		11,369		17		11,386
	$	30,112	$	(907)	$	29,205	$	29,331	$	17	$	29,348

‎

Player’s Club Lists

The Company has determined that the player’s club lists, reported in the United States segment, have a useful life of seven years based on estimated revenue attrition among the player’s club members over each property’s historical operations as estimated by management. As such, the player’s club lists will be amortized over their useful lives. Changes in the carrying amount of the player’s club lists are as follows:

Amounts in thousands

Balance at

January 1, 2022

Amortization

Balance at

September 30, 2022

Balance at

January 1, 2023

Amortization

Balance at

March 31, 2023

United States

14,310

(2,183)

12,127

11,399

(727)

10,672

As of ~~September 30, 2022,~~March 31, 2023, estimated amortization expense for the player’s club lists over the next ~~five~~four years was as follows:


Amounts in thousands
2022	$	727
2023		2,910	$	2,183
2024		2,910		2,910
2025		2,910		2,910
2026		2,670		2,669
	$	12,127	$	10,672

The weighted-average amortization period for the player’s club lists is ~~4.2~~3.7 years.

5. LONG-TERM DEBT

Long-term debt and the weighted average interest rates as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 consisted of the following:



Amounts in thousands	September 30, 2022			December 31, 2021			March 31, 2023			December 31, 2022
Credit agreement - Goldman	$	348,250	7.71%	$	—	—	$	346,500	10.62%	$	347,375	8.45%
Credit agreement - Macquarie		—	—		166,600	6.70%
Credit agreement - CPL		—	—		207	2.12%
UniCredit term loans		4,797	3.12%		6,994	2.55%		4,265	3.24%		4,661	3.17%
Financing obligation - CDR land lease		14,229	15.09%		15,378	11.44%		14,410	14.25%		14,388	15.05%
Total principal	$	367,276	8.12%	$	189,179	6.89%	$	365,175	10.67%	$	366,424	8.72%
Deferred financing costs		(17,510)			(7,695)			(16,170)			(16,844)
Total long-term debt	$	349,766		$	181,484		$	349,005		$	349,580
Less current portion		(5,349)			(3,958)			(5,222)			(5,322)
Long-term portion	$	344,417		$	177,526		$	343,783		$	344,258

Goldman Credit Agreement

On April 1, 2022, the Company entered into a Credit Agreement (the “Goldman Credit Agreement”) by and among the Company, as borrower, the subsidiary guarantors party thereto, Goldman Sachs Bank USA, as administrative agent and collateral agent, Goldman Sachs Bank USA and BOFA Securities, Inc., as joint lead arrangers and joint bookrunners, and the Lenders and L/C Lenders party thereto. The Goldman Credit Agreement ~~replaces~~replaced the Macquarie Credit Agreement discussed below. The Goldman Credit Agreement provides for a $350.0 million term loan (the “Term Loan”) and a $30.0 million revolving credit facility (the “Revolving Facility”). As of ~~September 30, 2022,~~March 31, 2023, the outstanding balance of the Term Loan was ~~$348.3~~$346.5 million and the Company had $30.0 million available to borrow on the Revolving Facility. The Company used the Goldman Credit Agreement to fund the ~~PropCo~~Smooth Bourbon Acquisition, for the repayment of approximately $166.2 million outstanding under the Macquarie Credit Agreement, to fund the Acquisition Escrow and for related fees and expenses.

The Term Loan matures on April 1, 2029, and the Revolving Facility matures on April 1, 2027. The Revolving Facility includes up to $10.0 million available for the issuance of letters of credit. The Term Loan requires scheduled quarterly payments of $875,000 equal to 0.25% of the original aggregate principal amount of the Term Loan, with the balance due at maturity.

Borrowings under the Goldman Credit Agreement bear interest at a rate equal to, at the Company’s option, either (a) the Adjusted Term SOFR (as defined in the Goldman Credit Agreement), plus an applicable margin (each loan, being a “SOFR Loan”) or (b) the ABR (as defined in the Goldman Credit Agreement), plus an applicable margin (each loan, being a “ABR Loan”). The applicable margin for the Term Loan is 6.00% per annum with respect to SOFR Loans and 5.00% per annum with respect to ABR Loans. The applicable margin for loans under the Revolving Facility (“Revolving Loans”) is (1) so long as the Consolidated First Lien Net Leverage Ratio (as defined in the Goldman Credit Agreement) of the Company is greater than 2.75 to 1.00, the applicable margin for Revolving Loans that are SOFR Loans will be 5.25% per annum, and for Revolving Loans that are ABR Loans will be 4.25% per annum; (2) so long as the Consolidated First Lien Net Leverage Ratio of the Company is less than or equal to 2.75 to 1.00 but greater than 2.25 to 1.00, the applicable margin for Revolving Loans that are SOFR Loans will be 5.00% per annum, and for Revolving Loans that are ABR Loans will be 4.00% per annum; and (3) so long as the Consolidated First Lien Net Leverage Ratio of the Company is less than or equal to 2.25 to 1.00, the applicable margin for Revolving Loans that are SOFR Loans will be 4.75% per annum, and for Revolving Loans that are ABR Loans will be 3.75% per annum.

In addition, on a quarterly basis, the Company is required to pay each lender under the Revolving Facility a commitment fee in respect of any unused commitments under the Revolving Facility at a per annum rate of 0.50% of the principal amount of unused commitments of such lender, subject to a stepdown to 0.375% based upon the Company’s Consolidated First Lien Net Leverage Ratio. The Company is also required to pay letter of credit fees equal to the applicable margin then in effect for SOFR Loans that are Revolving Loans multiplied by the average daily maximum aggregate amount available to be drawn under all letters of credit, plus such letter of credit issuer’s customary documentary and processing fees and charges and a fronting fee in an amount equal to 0.125% of the face amount of such letter of credit. The Company is also required to pay customary agency fees. Fees related to the Goldman Credit Agreement of less than $0.1 million ~~and $0.1 million~~ were recorded as interest expense in the consolidated statements of (loss) earnings for the three ~~and nine~~ months ended ~~September 30, 2022, respectively.~~March 31, 2023.

The Goldman Credit Agreement requires the Company to prepay the Term Loan, subject to certain exceptions, with:

• 100% of the net cash proceeds of certain non-ordinary course asset sales or certain casualty events, subject to certain exceptions; and

• 50% of the Company’s annual Excess Cash Flow (as defined in the Goldman Credit Agreement) (which percentage will be reduced to 25% if the Consolidated First Lien Net Leverage Ratio is greater than 2.25 to 1.00 but less than or equal to 2.75 to 1.00, and to 0% if the Consolidated First Lien Net Leverage Ratio is less than or equal to 2.25 to 1.00)~~; and~~

~~• 100% of the funds in the Acquisition Escrow if the OpCo Acquisition does not occur.~~.

The Goldman Credit Agreement provides that the Term Loan may be prepaid ~~subject to~~without a ~~prepayment~~ premium ~~in an amount equal to 1.00% of the principal amount of the Term Loan if such event occurs on~~ or ~~before April 1, 2023. This premium does not apply if there is a mandatory prepayment with respect to the Acquisition Escrow.~~penalties.

The borrowings under the Goldman Credit Agreement are guaranteed by the material subsidiaries of the Company, subject to certain exceptions (including the exclusion of the Company’s non-domestic subsidiaries), and are secured by a pledge (and, with respect to real property, mortgage) of substantially all of the existing and future property and assets of the Company and the guarantors, subject to certain exceptions.

The Goldman Credit Agreement contains customary representations and warranties, affirmative, negative and financial covenants, and events of default. All future borrowings under the Goldman Credit Agreement are subject to the satisfaction of customary conditions, including the absence of a default and the accuracy of representations and warranties. The Company was in compliance with all applicable financial covenants under the Goldman Credit Agreement as of ~~September 30, 2022.~~March 31, 2023.

Deferred financing costs consist of the Company’s costs related to financings. ~~The Company recognized $18.9 million in deferred financing costs related to the Goldman Credit Agreement for the nine months ended September 30, 2022.~~ Amortization expenses relating to the Goldman Credit Agreement were $0.7 million ~~and $1.3 million~~ for the three ~~and nine~~ months ended ~~September 30, 2022, respectively.~~March 31, 2023. These costs are included in interest expense in the condensed consolidated statement of (loss) earnings for the three ~~and nine~~ months ended ~~September 30, 2022.~~March 31, 2023.

‎

1716

Credit Agreement – Macquarie Capital

In December 2019, the Company entered into a $180.0 million credit agreement with Macquarie Capital Funding LLC, as swingline lender, administrative agent and collateral agent, Macquarie Capital (USA) Inc., as sole lead arranger and sole bookrunner, and the Lenders and L/C Lenders party thereto (the “Macquarie Credit Agreement”). The Macquarie Credit Agreement replaced the Company’s credit agreement with the Bank of Montreal (the “BMO Credit Agreement”). The Macquarie Credit Agreement provided for a $170.0 million term loan (the “Macquarie Term Loan”) and a $10.0 million Revolving Facility (the “Macquarie Revolving Facility”). The Macquarie Revolving Facility included up to $5.0 million available for the issuance of letters of credit. The Company used proceeds from the Macquarie Term Loan to fund the acquisition of ~~MTR, CCG~~Mountaineer, Cape Girardeau and ~~CCV~~Caruthersville (the “Acquired Casinos”), for the repayment of approximately $52.0 million outstanding under the BMO Credit Agreement and for general working capital and corporate purposes. In connection with the Goldman Credit Agreement, the Macquarie Term Loan was repaid on April 1, 2022 and the Macquarie Credit Agreement was terminated.

Commitment fees related to the Macquarie Revolving Facility of less than $0.1 million were recorded as interest expense in the condensed consolidated statements of (loss) earnings for the ~~nine~~three months ended ~~September 30, 2022 and for each of the three and nine months ended September 30, 2021.~~

March 31, 2022. The Company amortized $0.4 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 ~~and $0.4 million and $1.2 million for each of the three and nine months ended September 30, 2021, respectively,~~ relating to Macquarie Credit Agreement deferred financing costs. These costs are included in interest expense in the condensed consolidated statements of (loss) earnings for the three ~~and nine~~ months ended ~~September 30, 2022 and 2021.~~ ~~The Company wrote off approximately $7.3 million of deferred financing costs to interest expense in the second quarter of 2022 in connection with the prepayment of the Macquarie Term Loan.~~March 31, 2022.

Casinos Poland

CPL’s PLN 3.0 million term loan and PLN 4.0 million term loan with mBank were paid in full in November 2021. The term loans bore an interest rate of 1-month Warsaw Interbank Offered Rate (“WIBOR”) plus 1.70%. CPL’s PLN 2.5 million term loan with mBank was paid in full in September 2022. The term loan bore an interest rate of 1-month WIBOR plus 1.90%. CPL’s PLN 10.0 million short-term line of credit was amended onin April ~~22,~~ 2022, and the PLN 2.5 million that was available for cash borrowing was removed from the line of credit. The short term line of credit was terminated in October 2022.

As of ~~September 30, 2022,~~March 31, 2023, CPL had a short-term line of credit with mBank used to finance current operations. The line of credit has a borrowing capacity of PLN 5.0 million bearing an interest rate of overnight WIBOR plus 2.00%. As of ~~September 30, 2022,~~March 31, 2023, the credit facility had no outstanding balance and PLN 5.0 million ($~~1.0~~1.2 million based on the exchange rate in effect on ~~September 30, 2022)~~March 31, 2023) was available for additional borrowing. The credit agreement is secured by a building owned by CPL in Warsaw. 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. The line of credit was amended in April ~~2022 extending~~2023 to extend the line of credit through ~~April 27, 2023.~~May 30, 2023 while negotiations for an additional one year extension are completed.

Under Polish gaming law, CPL is required to maintain PLN 3.6 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 million ($~~0.7~~0.8 million based on the exchange rate in effect on ~~September 30, 2022)~~March 31, 2023). The mBank guarantees are secured by land owned by CPL in Kolbaskowo, Poland as well as a deposit of PLN 1.2 million ($~~0.2~~0.3 million based on the exchange rate in effect on ~~September 30, 2022)~~March 31, 2023) with mBank and will terminate in June 2024 and January 2026, respectively. CPL also 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 ~~0.6~~0.7 million ($~~0.1~~0.2 million based on the exchange rate in effect on ~~September 30, 2022)~~March 31, 2023) in deposits for this purpose as of ~~September 30, 2022.~~March 31, 2023. These deposits are included in deposits and other on the Company’s condensed consolidated balance sheets.

Century Resorts Management

As of ~~September 30, 2022,~~March 31, 2023, CRM had two credit agreements with UniCredit (the “UniCredit Term Loans”).

The first credit agreement (“UniCredit Term Loan 1”) is a GBP 2.0 million term loan used for construction and fitting out of Century Casino Bath, a casino in Bath, England that the Company closed in March 2020. In November 2021, the Company amended the UniCredit Term Loan 1 to convert it into a USD term loan beginning December 31, 2021. The term loan matures September 30, 2023 and bears interest at LIBOR plus 1.625%. If LIBOR is not available, the interest rate will be determined based on a quoted rate from leading banks in the London interbank market. As of ~~September 30, 2022,~~March 31, 2023, the amount outstanding on UniCredit Term Loan 1 was ~~$0.5~~$0.3 million. CRM has no further borrowing availability under the loan agreement. The loan is unsecured and has no financial covenants.

‎

1817

The second credit agreement (“UniCredit Term Loan 2”) is a EUR 6.0 million term loan converted from a $7.4 million line of credit onin June ~~23,~~ 2021. In August 2018, CRM entered into a loan agreement with UniCredit for a revolving line of credit to be used for acquisitions and capital expenditures at the Company’s existing operations or new operations. In March 2020, CRM borrowed $7.4 million with a 12 month term under the UniCredit Agreement. In March 2021, the term of the line of credit was extended to June 2021, when it was converted into UniCredit Term Loan 2. The term loan matures on December 31, 2025 and bears interest at a rate of 2.875%. As of ~~September 30, 2022,~~March 31, 2023, the amount outstanding was EUR ~~4.3~~3.7 million ($~~4.3~~4.0 million based on the exchange rate in effect on ~~September 30, 2022)~~March 31, 2023) and the Company had no further borrowings available. UniCredit Term Loan 2 is secured by a EUR 6.0 million guarantee by the Company and has no financial covenants.

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~~In March 2023, the Company amended the land lease to extend the first option date isfrom July 1, 2023 to September 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, 2022,~~March 31, 2023, the outstanding balance on the financing obligation was CAD 19.5 million ($~~14.2~~14.4 million based on the exchange rate in effect on ~~September 30, 2022)~~March 31, 2023).

As of ~~September 30, 2022,~~March 31, 2023, scheduled maturities related to long-term debt were as follows:


Amounts in thousands	Goldman Credit Agreement		UniCredit Term Loans		Century Downs ‎Land Lease		Total		Goldman Credit Agreement		UniCredit Term Loans		Century Downs ‎Land Lease		Total
2022	$	875	$	464	$	—	$	1,339
2023		3,500		1,713		—		5,213	$	2,625	$	1,359	$	—	$	3,984
2024		3,500		1,310		—		4,810		3,500		1,453		—		4,953
2025		3,500		1,310		—		4,810		3,500		1,453		—		4,953
2026		3,500		—		—		3,500		3,500		—		—		3,500
2027										3,500		—		—		3,500
Thereafter		333,375		—		14,229		347,604		329,875		—		14,410		344,285
Total	$	348,250	$	4,797	$	14,229	$	367,276	$	346,500	$	4,265	$	14,410	$	365,175

6.LONG-TERM FINANCING OBLIGATION

OnIn December 6, 2019, certain subsidiaries of the Company (collectively, the “Tenant”) and certain subsidiaries of VICI PropCo (collectively, the “Landlord”) entered into the sale and leaseback transaction for the Acquired Casino properties. The Tenant entered into the Master Lease with the Landlord to lease the real estate assets of the Acquired Casinos. The Master Lease does not transfer control of the Acquired Casino properties to VICI PropCo subsidiaries.

~~Pursuant to a real estate purchase agreement, dated August 24,~~ On December 1, 2022, between Evitts and VICI PropCo Buyer, VICI PropCo Buyer agreed to acquire the real estate assets relating to Rocky Gap for approximately $203.9 million. In connection with the Rocky Gap Acquisition, the Tenant and Landlord will enter into an amendment to the Master Lease was amended (the “Master Lease Amendment”) to provide for (i) ~~add Rocky Gap~~modifications with respect to certain project work to be done by the Company related to Century Casino Caruthersville, (ii) modifications to rent under the Master Lease ~~(ii) provide for an initial annual rent for Rocky Gap of approximately $15.5 million~~ and (iii) ~~extend the initial Master Lease term for 15 years from the date of the amendment (subject to the existing four five year renewal options).~~other related modifications.

The Company accounts for the transaction as a failed sale-leaseback financing obligation. When cash proceeds are exchanged, a failed sale-leaseback financing obligation is equal to the proceeds received for the assets that are sold and then leased back. The value of the failed sale-leaseback financing obligations recognized in this transaction was determined to be the fair value of the leased real estate assets. In subsequent periods, a portion of the periodic payment under the Master Lease will be recognized as interest expense with the remainder of the payment reducing the failed sale-leaseback financing obligation using the effective interest method. The failed sale-leaseback obligations will not be reduced to less than the net book value of the leased real estate assets as of the end of the lease term, which is estimated to be $28.5 million.

The fair values of the real estate assets and the related failed sale-leaseback financing obligation were estimated based on the present value of the estimated future payments over the term plus renewal options of 35 years, using an imputed discount rate of approximately ~~10.6%~~10.1%. The value of the failed sale-leaseback financing obligation is dependent upon assumptions regarding the amount of the payments and the estimated discount rate of the payments required by a market participant.

1918

The Master Lease provides for the lease of land, buildings, structures and other improvements on the land (including barges and riverboats), easements and similar appurtenances to the land and improvements relating to the operations of the leased properties. The Master Lease has an initial term of 15 years with no purchase option (which term will be extended for 15 years from the date of the Master Lease amendment). At the Company’s option, the Master Lease may be extended for up to four five year renewal terms beyond the initial 15 year term. The Company exercised one five year renewal option when the Master Lease was amended on December 1, 2022. The renewal terms are effective as to all, but not less than all, of the property then subject to the Master Lease. The Company does not have the ability to terminate its obligations under the Master Lease prior to its expiration without the Landlord’s consent.

The Master Lease has a triple-net structure, which requires the Tenant to pay substantially all costs associated with the Company’s Missouri and West Virginia properties, including real estate taxes, insurance, utilities, maintenance and operating costs. The Master Lease contains certain covenants, including minimum capital improvement expenditures. The Company has provided a guarantee of the Tenant’s obligations under the Master Lease.

The rent payable under the Master Lease, ~~is comprised of “Base Rent” and “Variable Rent”. Base rent~~as amended by the Master Lease Amendment on December 1, 2022, is:

An initial annual rent (the “Rent”) of approximately $25.0 million.

The Rent will escalate at a rate of 1.01% for the 2^nd and 3^rd years and the greater of either 1.0125% (the “Base Rent Escalator”) or the increase in the Consumer Price Index (“CPI”) for each year starting in the 4^th ~~year and ending~~year. In addition, Rent will increase by approximately $4.2 million on the 7^th ~~year.~~“CapEx Project Incremental Rent Increase Date” (as defined in the Master Lease Amendment).

The Base Rent Escalator is subject to adjustment from and after the 6^th year if the Minimum Rent Coverage Ratio (as defined in the Master Lease) is not satisfied.

~~Beginning in the 8~~^th ~~year of the lease term, Rent will be calculated as (i) 80% of the Rent for the 7~~^th lease year (“Base Rent”), subject to an annual Base Rent Escalator of the greater of 1.0125% or CPI subject to adjustment if the Minimum Rent Coverage Ratio is not satisfied, plus (ii) variable rent (“Variable Rent”) equal to 20% of the Rent for the 7^th ~~lease year, plus or minus 4.0% of the change in average net revenue of the Acquired Casinos calculated as set forth in the Master Lease.~~

~~For the 11~~^th ~~year and thereafter of the initial lease term, the Base Rent will escalate annually as set forth above and the Variable Rent will be recalculated as set forth in the Master Lease.~~

The estimated future payments include the payments and adjustments to reflect estimated payments as described in the Master Lease, including an annual escalator of up to 1.0125% ~~and estimates~~. The estimated future payments are not adjusted for increases based on ~~contingent rental payments.~~the CPI. Rent adjusted for CPI for the year ended December 31, 2023 is estimated to be $27.5 million, excluding the increased rent due to the Rocky Gap Acquisition discussed below.

Total payments and interest expense related to the Master Lease for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows:


	For the three months ended				For the nine months ended				For the three months ended
	September 30,				September 30,				March 31,
Amounts in thousands	2022		2021		2022		2021		2023		2022
Payments made	$	8,501	$	6,313	$	19,127	$	16,833	$	6,866	$	4,250
Interest expense on financing obligation	$	7,201	$	7,125	$	21,311	$	21,087	$	7,120	$	7,008

The estimated future payments related to the Master Lease financing obligation with the Landlord at ~~September 30, 2022~~March 31, 2023 were as follows:


Amounts in thousands
2022	$	4,250
2023		25,821	$	17,214
2024		26,144		26,144
2025		26,340		26,471
2026		26,538		26,802
2027				27,137
Thereafter		1,008,183		875,958
Total payments		1,117,276		999,726
Less imputed interest		(861,683)		(743,060)
Residual value		28,492		28,492
Total	$	284,085	$	285,158

As discussed in Note 1, pursuant to a real estate purchase agreement, dated August 24, 2022, VICI PropCo Buyer agreed to acquire the real estate assets relating to Rocky Gap for approximately $203.9 million. In connection with the Rocky Gap Acquisition, the Tenant and Landlord will enter into an amendment to the Master Lease to (i) add Rocky Gap to the Master Lease, (ii) provide for an initial annual rent for Rocky Gap of approximately $15.5 million and (iii) extend the initial Master Lease term for 15 years from the date of the amendment (subject to the existing four five year renewal options).

‎

2019

7.COMMITMENTS AND CONTINGENCIES

Litigation – From time to time, the Company is subject to various legal proceedings arising from normal business operations. The Company does not expect the outcome of such proceedings, either individually or in the aggregate, to have a material effect on its financial position, cash flows or results of operations.

8.INCOME TAXES

Income tax expense or benefits are recorded relative to the jurisdictions that recognize book earnings. For the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, the Company recognized an income tax ~~benefit~~expense of ~~($8.1)~~$1.6 million on pre-tax earnings of ~~$8.6~~$4.7 million, representing an effective income tax rate of ~~(94.1%)~~34.9% compared to income tax expense of ~~$3.8~~$1.4 million on pre-tax earnings of ~~$20.6~~$4.1 million, representing an effective income tax rate of ~~18.5%~~34.6% for the same period in 2021. The comparison of pre-tax earnings of $8.6 million for the nine months ended September 30, 2022 to the pre-tax earnings of $20.6 million for the nine months ended September 30, 2021 should be considered when comparing effective tax rates for the respective periods.2022.

For the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, the Company computed an annual effective tax rate using forecasted information. Based on current forecasts, the Company’s effective tax rate is expected to be highly sensitive to changes in earnings. The Company concluded that computing its effective tax rate using forecasted information would be appropriate in estimating tax expense for the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023.

A number of items caused the effective income tax rate for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 to differ from the US federal statutory income tax rate of 21%, including taxation of global intangible low-tax income (GILTI) in the United States, a 23% statutory tax rate in Canada, certain nondeductible business expenses in Poland, and various exchange rate benefits. Furthermore, management has determined that there is significant positive evidence to conclude that it is more likely than not that the deferred tax assets in the United States will be realized. As a result, the valuation allowance against these deferred tax assets has been released, resulting in a $10.2 million income tax benefit recognized during 2022. As of ~~September 30, 2022,~~March 31, 2023, the Company continues to maintain a full valuation allowance on deferred tax assets for CMR, CRM and Century Resorts International Ltd.

Additionally, the Company has unrecognized tax benefits of ~~$0.8~~$0.5 million ~~of which $0.7 million is~~ due to the Company’s ability to utilize pre-acquisition net operating losses. ~~Due to the lapse~~The Company received notification of ~~statute of limitations related to the pre-acquisition net operating losses, the Company recognized a tax benefit of $0.2 million during 2022~~an examination by Canada Revenue Agency, and ~~anticipates~~ it will assess the ability to recognize ~~a tax benefit of~~the $0.5 million ~~during 2023.~~in tax benefits upon completion of the examination. The Company believes that the examination will not conclude until 2024.

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,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows:



	For the three months				For the nine months				For the three months
	ended September 30,				ended September 30,				ended March 31,
Amounts in thousands	2022		2021		2022		2021		2023		2022
Weighted average common shares, basic		29,864		29,598		29,790		29,584		30,056		29,661
Dilutive effect of stock options		1,540		1,644		1,733		1,475		—		1,674
Weighted average common shares, diluted		31,404		31,242		31,523		31,059		30,056		31,335

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
	ended September 30,				ended September 30,				ended March 31,
Amounts in thousands	2022		2021		2022		2021		2023		2022
Stock options		2,730		757		2,746		867		2,545		2,445

‎

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. There were no transfers between the three levels for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

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, 2022~~March 31, 2023 and ~~2021.~~

2022.

Long-Term Debt – The carrying value of the Goldman Credit Agreement, the UniCredit Term Loans and CPL’s short-term line of credit approximate fair value based on the variable interest paid on the obligations. The carrying value of the UniCredit Term Loan 2 approximates fair value due to the short-term nature of the agreement. The estimated fair values of the outstanding balances under the Goldman Credit Agreement and UniCredit Term Loan 1 are designated as Level 2 measurements in the fair value hierarchy based on quoted prices in active markets for similar liabilities. The carrying values of the Company’s finance lease obligations approximate fair value based on the similar terms and conditions currently available to the Company in the marketplace for similar financings.

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 and accounts payable, have been determined to approximate carrying value based on the short-term nature of those financial instruments. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company had no cash equivalents.

11.REVENUE RECOGNITION

The Company derives revenue and other income from contracts with customers and financial instruments. A breakout of the Company’s derived revenue and other income is presented in the table below.


	For the three months				For the nine months				For the three months
	ended September 30,				ended September 30,				ended March 31,
Amounts in thousands	2022		2021		2022		2021		2023		2022
Revenue from contracts with customers	$	112,552	$	116,610	$	326,776	$	281,207	$	108,508	$	103,103
Cost recovery income		—		—		1,938		655		3,501		1,938
Century Casino Calgary sale earn out revenue		—		47		—		47		574		—
Total revenue	$	112,552	$	116,657	$	328,714	$	281,909	$	112,583	$	105,041

‎

2221

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


	For the three months ended September 30, 2022										For the three months ended March 31, 2023
Amounts in thousands		United States		Canada		Poland		Corporate and Other		Total		United States		Canada		Poland		Corporate and Other		Total
Gaming	$	60,150	$	11,841	$	21,478	$	36	$	93,505	$	58,393	$	10,598	$	25,249	$	57	$	94,297
Pari-mutuel, sports betting and iGaming		2,965		3,102		—		—		6,067		1,282		2,103		—		—		3,385
Hotel		2,485		134		—		—		2,619		2,403		119		—		—		2,522
Food and beverage		3,319		3,509		203		—		7,031		3,110		2,426		231		—		5,767
Other		1,799		1,479		52		—		3,330		1,181		1,257		99		—		2,537
Net operating revenue	$	70,718	$	20,065	$	21,733	$	36	$	112,552	$	66,369	$	16,503	$	25,579	$	57	$	108,508

For the three months ended September 30, 2021
Amounts in thousands
United States
Canada
Poland
Corporate and Other
Total
Gaming
$
64,569
$
12,917
$
20,811
$
69
$
98,366
Pari-mutuel, sports betting and iGaming
2,617
3,583
—
—
6,200
Hotel
2,243
—
—
—
2,243
Food and beverage
2,950
2,962
166
—
6,078
Other
1,518
1,906
174
125
3,723
Net operating revenue
$
73,897
$
21,368
$
21,151
$
194
$
116,610

For the nine months ended September 30, 2022
Amounts in thousands
United States
Canada
Poland
Corporate and Other
Total
Gaming
$
179,524
$
33,728
$
64,481
$
120
$
277,853
Pari-mutuel, sports betting and iGaming
6,300
8,455
—
—
14,755
Hotel
6,895
339
—
—
7,234
Food and beverage
9,314
8,171
610
—
18,095
Other
4,242
4,412
174
11
8,839
Net operating revenue
$
206,275
$
55,105
$
65,265
$
131
$
326,776


	For the nine months ended September 30, 2021										For the three months ended March 31, 2022
Amounts in thousands		United States		Canada		Poland		Corporate and Other		Total		United States		Canada		Poland		Corporate and Other		Total
Gaming	$	190,159	$	15,937	$	34,514	$	84	$	240,694	$	58,245	$	9,976	$	21,625	$	30	$	89,876
Pari-mutuel, sports betting and iGaming		5,825		7,517		—		—		13,342		963		2,467		—		—		3,430
Hotel		6,214		—		—		—		6,214		1,990		84		—		—		2,074
Food and beverage		8,676		3,504		221		—		12,401		2,934		1,914		190		—		5,038
Other		4,095		3,073		1,016		372		8,556		1,116		1,558		9		2		2,685
Net operating revenue	$	214,969	$	30,031	$	35,751	$	456	$	281,207	$	65,248	$	15,999	$	21,824	$	32	$	103,103

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 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 $1.1 million ~~and $1.3 million~~ for each of the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~respectively, and $1.0 million and $0.5 million for the three and nine months ended September 30, 2021,~~ respectively. 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 receivables and contract liabilities is presented in the tables below.


	For the three months				For the three months				For the three months				For the three months
	ended September 30, 2022				ended September 30, 2021				ended March 31, 2023				ended March 31, 2022
Amounts in thousands	Receivables		Contract Liabilities		Receivables		Contract Liabilities		Receivables		Contract Liabilities		Receivables		Contract Liabilities
Opening	$	749		2,842		739		2,769	$	1,351	$	2,417	$	1,269	$	2,986
Closing		1,299		2,607		899		3,038		638		2,185		586		2,937
Increase/(Decrease)	$	550	$	(235)	$	160	$	269

	For the nine months				For the nine months
	ended September 30, 2022				ended September 30, 2021
Amounts in thousands	Receivables		Contract Liabilities		Receivables		Contract Liabilities
Opening	$	1,269		2,986		1,103		2,200
Closing		1,299		2,607		899		3,038
(Decrease)/Increase	$	30	$	(379)	$	(204)	$	838
Decrease									$	(713)	$	(232)	$	(683)	$	(49)

Receivables are included in accounts receivable and contract liabilities are included in accrued liabilities on the Company’s condensed consolidated balance sheets.

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.

‎

12.LEASES

The Company determines if an arrangement is a lease at inception. The right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate in each of the jurisdictions in which its subsidiaries operate to calculate the present value of lease payments. Lease terms may include options to extend or terminate the lease. These options are included in the lease term when it is reasonably certain that the Company will exercise those options. Operating lease expense is recorded on a straight-line basis over the lease term.

The Company accounts for lease agreements with lease and non-lease components as a single lease component for all asset classes. The Company does not establish ROU assets or lease liabilities for operating leases with terms of 12 months or less.

The Company’s operating and finance leases include land, casino space, corporate offices, and gaming and other equipment. The leases have remaining lease terms of one month to 1514 years.

The components of lease expense were as follows:


	For the three months ended				For the nine months ended				For the three months ended
	September 30,				September 30,				March 31,
Amounts in thousands	2022		2021		2022		2021		2023		2022
Operating lease expense	$	1,305	$	1,463	$	3,988	$	4,445	$	1,334	$	1,386

Finance lease expense:
Amortization of right-of-use assets	$	26	$	31	$	110	$	97	$	24	$	42
Interest on lease liabilities		10		1		19		5		9		5
Total finance lease expense	$	36	$	32	$	129	$	102	$	33	$	47

Variable lease expense	$	415	$	554	$	1,139	$	942	$	293	$	454

Variable lease expense relates primarily to rates based on changes in indexes that are excluded from the lease liability and fluctuations in foreign currency related to leases in Poland.

Supplemental cash flow information related to leases was as follows:


	For the nine months ended				For the three months ended
	September 30,				March 31,
Amounts in thousands	2022		2021		2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	15	$	5	$	9	$	4
Operating cash flows from operating leases		3,579		3,960		1,249		1,344
Financing cash flows from finance leases		115		93		38		41

Right-of-use assets obtained in exchange for operating lease liabilities	$	1,050	$	334	$	48	$	—

‎

Supplemental balance sheet information related to leases was as follows:


	As of		As of		As of		As of
Amounts in thousands	September 30, 2022		December 31, 2021		March 31, 2023		December 31, 2022
Operating leases
Leased right-of-use assets, net	$	27,470	$	28,383	$	24,532	$	27,190

Current portion of operating lease liabilities		3,610		3,915		3,768		3,947
Operating lease liabilities, net of current portion		26,539		27,229		23,642		26,016
Total operating lease liabilities		30,149		31,144		27,410		29,963

Finance leases
Finance lease right-of-use assets, gross		747		424		768		764
Accumulated depreciation		(142)		(342)		(202)		(175)
Property and equipment, net		605		82		566		589

Current portion of finance lease liabilities		149		38		150		150
Finance lease liabilities, net of current portion		430		43		363		399
Total finance lease liabilities		579		81		513		549

Weighted-average remaining lease term
Operating leases		10.8 years		11.2 years		10.0 years		10.5 years
Finance leases		3.8 years		2.2 years		3.3 years		3.6 years

Weighted-average discount rate
Operating leases		4.9%		4.7%		6.4%		4.9%
Finance leases		7.0%		4.0%		7.0%		7.0%

Maturities of lease liabilities as of ~~September 30, 2022~~March 31, 2023 were as follows:


Amounts in thousands		Operating Leases	Finance Leases			Operating Leases	Finance Leases
2022	$	1,215	$	49
2023		4,845		180	$	3,948	$	137
2024		4,179		174		4,572		178
2025		3,228		159		3,497		161
2026		2,995		84		3,213		85
2027						3,201		15
Thereafter		23,837		15		20,913		—
Total lease payments		40,299		661		39,344		576
Less imputed interest		(10,150)		(82)		(11,934)		(63)
Total	$	30,149	$	579	$	27,410	$	513

‎

13.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. The Company views each market in which it operates as a separate operating segment and each casino or other operation within those markets as a reporting unit. Operating segments are aggregated within reportable segments based on their similar economic 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’s operations related to its concession, management and consulting 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. All intercompany transactions are eliminated in consolidation.

‎

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


Reportable Segment	Operating Segment	Reporting Unit
United States	Colorado	Century Casino & Hotel - Central City
		Century Casino & Hotel - Cripple Creek
	West Virginia	Mountaineer Casino, Racetrack & Resort
	Missouri	Century Casino Cape Girardeau
		Century Casino Caruthersville⁽¹⁾
Canada	Edmonton	Century Casino & Hotel - Edmonton
		Century Casino St. Albert
		Century Mile Racetrack and Casino
	Calgary⁽²⁾	Century Downs Racetrack and Casino
		~~Century Sports~~ ⁽¹⁾
		~~Century Bets! Inc.~~ ⁽¹⁾
Poland	Poland	Casinos Poland
Corporate and Other	Corporate and Other	Cruise Ships & Other
		Corporate Other ⁽²⁾⁽³⁾

(1)Includes The Farmstead.

(2)The Company operated Century Sports through February 10, 2022. ~~The Company operated Century Bets! Inc. through August 2021, when operations were transferred to Century Mile. For more information about Century Sports and Century Bets! Inc., see~~See Note 1.

~~(2)~~(3)The Company’s equity investment in Smooth Bourbon is included in the Corporate Other reporting unit.

The Company’s chief operating decision maker is a management function comprised of two individuals. These two individuals are the Company’s Co-Chief Executive Officers. The Company’s chief operating decision makers and management utilize Adjusted EBITDA as the primary profit measure for its reportable segments. Adjusted EBITDA is a non-US GAAP measure defined as net earnings (loss) attributable to Century Casinos, Inc. shareholders before interest expense (income), net, income taxes (benefit), depreciation, amortization, non-controlling interest earnings (loss) and transactions, pre-opening expenses, acquisition costs, non-cash stock-based compensation charges, asset impairment costs, loss (gain) on disposition of fixed assets, discontinued operations, (gain) loss on foreign currency transactions, cost recovery income and other, gain on business combination and certain other one-time transactions. Expense related to the Master Lease is included in the interest expense (income), net line item. 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) attributable to Century Casinos, Inc. shareholders 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. 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.

‎

2625

The following tables provide information regarding the Company’s reportable segments:


	For the three months ended September 30, 2022											For the three months ended March 31, 2023
Amounts in thousands			United States		Canada		Poland		Corporate and Other		Total			United States		Canada		Poland		Corporate and Other		Total
Net operating revenue ⁽¹⁾		$	70,718	$	20,065	$	21,733	$	36	$	112,552		$	66,369	$	16,503	$	25,579	$	57	$	108,508

Earnings (loss) before income taxes		$	9,139	$	3,395	$	3,513	$	(10,982)	$	5,065		$	7,151	$	6,989	$	2,992	$	(12,478)	$	4,654

Net earnings (loss) attributable to Century Casinos, Inc. shareholders		$	2,372	$	2,623	$	2,032	$	(4,083)	$	2,944		$	5,375	$	1,867	$	1,574	$	(10,059)	$	(1,243)
Interest expense (income), net ⁽²⁾			7,201		581		(519)		8,087		15,350			7,119		523		(95)		9,957		17,504
Income taxes (benefit)			6,767		522		465		(6,899)		855			1,776		1,634		632		(2,419)		1,623
Depreciation and amortization			4,892		1,180		623		81		6,776			5,032		1,127		635		61		6,855
Net earnings attributable to non-controlling interests			—		250		1,016		—		1,266			—		3,488		786		—		4,274
Non-cash stock-based compensation			—		—		—		953		953			—		—		—		736		736
Gain on foreign currency transactions, cost recovery income and other			—		(71)		(333)		(5)		(409)
(Gain) loss on foreign currency transactions, cost recovery income and other⁽³⁾														—		(4,085)		(254)		7		(4,332)
Loss on disposition of fixed assets			11		—		27		—		38			470		3		1		5		479
Acquisition costs			—		—		—		295		295			—		—		—		158		158
Adjusted EBITDA		$	21,243	$	5,085	$	3,311	$	(1,571)	$	28,068		$	19,772	$	4,557	$	3,279	$	(1,554)	$	26,054

(1)Net operating revenue for Corporate and Other primarily related to the Company’s cruise ship operations.

(2)Expense of ~~$7.2~~$7.1 million related to the Master Lease is included in interest expense (income), net in the United States segment. Expense of $0.5 million related to the CDR land lease is included in interest expense (income), net in the Canada segment. Cash payments related to the Master Lease and CDR land lease were $6.9 million and $0.5 million, respectively, for the period presented.

(3)Includes $0.6 million related to the earn out from the sale of casino operations in Calgary in 2020 and cost recovery income for CDR.


	For the three months ended March 31, 2022
Amounts in thousands			United States		Canada		Poland		Corporate and Other		Total
Net operating revenue ⁽¹⁾		$	65,248	$	15,999	$	21,824	$	32	$	103,103

Earnings (loss) before income taxes		$	8,521	$	1,944	$	1,955	$	(8,276)	$	4,144

Net earnings (loss) attributable to Century Casinos, Inc. shareholders		$	8,521	$	(703)	$	931	$	(8,531)	$	218
Interest expense (income), net⁽²⁾			7,007		567		(13)		3,233		10,794
Income taxes			—		622		558		255		1,435
Depreciation and amortization			4,768		1,225		681		121		6,795
Net earnings attributable to non-controlling interests			—		2,025		466		—		2,491
Non-cash stock-based compensation			—		—		—		673		673
Loss (gain) on foreign currency transactions and cost recovery income ⁽³⁾			—		243		18		(12)		249
Loss on disposition of fixed assets			19		15		3		—		37
Acquisition costs			—		—		—		1,132		1,132
Adjusted EBITDA		$	20,315	$	3,994	$	2,644	$	(3,129)	$	23,824

(1)Net operating revenue for Corporate and Other primarily related to the Company’s cruise ship operations and consulting agreements.

(2)Expense of $7.0 million related to the Master Lease is included in interest expense (income), net in the United States segment. Expense of $0.6 million related to the CDR land lease is included in interest expense (income), net in the Canada segment. Cash payments related to the Master Lease and CDR land lease were ~~$8.5 million and $0.5 million, respectively, for the period presented.~~

For the three months ended September 30, 2021
Amounts in thousands
United States
Canada
Poland
Corporate and Other
Total
Net operating revenue ⁽¹⁾
$
73,897
$
21,368
$
21,151
$
194
$
116,610
Earnings (loss) before income taxes
$
12,389
$
6,242
$
2,829
$
(6,488)
$
14,972
Net earnings (loss) attributable to Century Casinos, Inc. shareholders
$
12,389
$
5,308
$
1,437
$
(7,908)
$
11,226
Interest expense (income), net⁽²⁾
7,121
560
(355)
3,294
10,620
Income taxes
—
499
674
1,420
2,593
Depreciation and amortization
4,699
1,217
760
108
6,784
Net earnings attributable to non-controlling interests
—
435
718
—
1,153
Non-cash stock-based compensation
—
—
—
986
986
Gain on foreign currency transactions and cost recovery income
—
(57)
(232)
(24)
(313)
Loss on disposition of fixed assets
—
4
3
—
7
Adjusted EBITDA
$
24,209
$
7,966
$
3,005
$
(2,124)
$
33,056

~~(1)Net operating revenue for Corporate and Other primarily related to the Company’s cruise ship operations and consulting agreements.~~

~~(2)~~Expense of $7.1 million related to the Master Lease is included in interest expense, net in the United States segment. Expense of $0.5 million related to the CDR land lease is included in interest expense, net in the Canada segment. Cash payments related to the Master Lease and CDR land lease were $6.3$4.3 million and $0.4 million, respectively, for the period presented.

‎

For the nine months ended September 30, 2022
Amounts in thousands
United States
Canada
Poland
Corporate and Other
Total
Net operating revenue ⁽¹⁾
$
206,275
$
55,105
$
65,265
$
131
$
326,776
Earnings (loss) before income taxes
$
28,176
$
9,123
$
7,967
$
(36,626)
$
8,640
Net earnings (loss) attributable to Century Casinos, Inc. shareholders
$
21,409
$
4,797
$
4,285
$
(18,473)
$
12,018
Interest expense (income), net ⁽²⁾
21,310
1,733
(586)
25,482
47,939
Income taxes (benefit)
6,767
1,718
1,538
(18,153)
(8,130)
Depreciation and amortization
14,418
3,632
1,979
321
20,350
Net earnings attributable to non-controlling interests
—
2,608
2,144
—
4,752
Non-cash stock-based compensation
—
—
—
2,638
2,638
(Gain) loss on foreign currency transactions, cost recovery income and other ⁽³⁾
(1)
138
(712)
(8)
(583)
Loss (gain) on disposition of fixed assets
33
23
31
(124)
(37)
Acquisition costs
—
—
—
2,724
2,724
Adjusted EBITDA
$
63,936
$
14,649
$
8,679
$
(5,593)
$
81,671

~~(1)Net operating revenue for Corporate and Other primarily related to the Company’s cruise ship operations.~~

~~(2)~~Expense of $21.3 million related to the Master Lease is included in interest expense (income), net in the United States segment. Expense of $1.7 million related to the CDR land lease is included in interest expense (income), net in the Canada segment. Cash payments related to the Master Lease and CDR land lease were $19.1 million and $1.6 million respectively, for the period presented. Expense of $7.3 million related to the write-off of deferred financing costs in connection with the prepayment of the Macquarie Term Loan is included in interest expense (income), net in the Corporate and Other segment.

(3)Loss of $2.2 million related to the sale of the land and building in Calgary is included in the Canada segment.

For the nine months ended September 30, 2021
Amounts in thousands
United States
Canada
Poland
Corporate and Other
Total
Net operating revenue ⁽¹⁾
$
214,969
$
30,031
$
35,751
$
456
$
281,207
Earnings (loss) before income taxes
$
39,486
$
1,728
$
(2,364)
$
(18,289)
$
20,561
Net earnings (loss) attributable to Century Casinos, Inc. shareholders
$
39,486
$
265
$
(1,432)
$
(21,657)
$
16,662
Interest expense (income), net ⁽²⁾
21,083
1,263
(341)
9,825
31,830
Income taxes (benefit)
—
661
(216)
3,368
3,813
Depreciation and amortization
13,734
3,689
2,320
317
20,060
Net earnings (loss) attributable to non-controlling interests
—
802
(716)
—
86
Non-cash stock-based compensation
—
—
—
1,568
1,568
Gain on foreign currency transactions, cost recovery income and other
—
(604)
(221)
(436)
(1,261)
Loss (gain) on disposition of fixed assets
282
36
3
(39)
282
Adjusted EBITDA
$
74,585
$
6,112
$
(603)
$
(7,054)
$
73,040

~~(1)Net operating revenue for Corporate and Other primarily related to the Company’s cruise ship operations and consulting agreements.~~

~~(2)~~Expense of $21.1 million related to the Master Lease is included in interest expense, net in the United States segment. Expense of $1.2 million related to the CDR land lease is included in interest expense, net in the Canada segment. Cash payments related to the Master Lease and CDR land lease were $16.8 million and $1.3 million, respectively, for the period presented.

2826

14.TRANSACTIONS WITH RELATED PARTIES

The Company has entered into an agreement for general contracting services with Marnell, with which the Company owns 50% of Smooth Bourbon. The Company has prepaid less than $0.1 million to Marnell related to design work for a future capital improvement project at the Nugget. This amount is reported in prepaid expenses on the Company’s condensed consolidated balance sheet for the three months ended March 31, 2023. The Company also has a liability of $0.4 million related to construction performed by Marnell in accrued liabilities on its condensed consolidated balance sheets for the three months ended March 31, 2022 and the year ended December 31, 2022.

The Company has also entered into certain consulting agreements with Marnell for services after the acquisition of Nugget is completed. No services were performed under the agreements during the three months ended March 31, 2023 or 2022, respectively.

~~14.~~15.SUBSEQUENT EVENTS

The Company evaluated subsequent events and accounting and disclosure requirements related to material subsequent events in its condensed consolidated financial statements and related notes.

On April 3, 2023, the Company completed its previously announced acquisition of 100% of the membership interests in Nugget for an aggregate purchase price of approximately $100.0 million (subject to adjustment based on Nugget’s working capital and cash at closing). The OpCo Acquisition was financed with funds from the Acquisition Escrow previously borrowed under the Goldman Credit Agreement.

Nugget did not contribute any net operating revenue or net (loss) earnings attributable to Century Casinos, Inc. shareholders for the three months ended March 31, 2023. The Company ~~did~~is currently completing the fair value assessment of the acquired operations and, as such, the fair value of assets and liabilities of Nugget that will be recognized has not ~~identify any material subsequent events impacting its financial statements in this report.~~been disclosed.

The Company has incurred acquisition costs related to the OpCo Acquisition of approximately less than $0.1 million and $1.1 million for the three months ended March 31, 2023 and 2022, respectively. The costs include legal and accounting fees and have been recorded as general and administrative expenses on the Company’s condensed consolidated statement of (loss) earnings.

The Company is currently completing the fair value assessment of the acquired operations and, as such, adjustments to Nuggets operating results based on the fair value of assets and liabilities of Nugget as if the OpCo Acquisition had occurred at the beginning of the earliest comparable period presented have not been disclosed.

‎

2927

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, ~~2021.~~2022. 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, and the term “PLN” refers to Polish zloty. 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), sports betting, iGaming, bowling and entertainment facilities that are in most instances a part of the casinos.

We view each market in which we operate as a separate operating segment and each casino or other operation within those markets as a reporting unit. We aggregate all operating segments into three reportable segments based on the geographical locations in which our casinos operate: United States, Canada and Poland. We have additional business activities including concession agreements, management agreements, consulting agreements and certain other corporate and management operations that we report as Corporate and Other.

‎

3028

The table below provides information about the aggregation of our operating segments and reporting units into reportable segments. The reporting units, except for Century Downs Racetrack and Casino and Casinos Poland, are owned, operated and managed through wholly-owned subsidiaries. Our ownership and operation of Century Downs Racetrack and Casino and Casinos Poland are discussed below. The real estate assets at our West Virginia and Missouri operating segments are owned by VICI PropCo and leased to us under the Master Lease. The land on which the REC and racetracks at Century Downs and Century Mile are located is leased.


Reportable Segment	Operating Segment	Reporting Unit
United States	Colorado	Century Casino & Hotel - Central City
		Century Casino & Hotel - Cripple Creek
	West Virginia	Mountaineer Casino, Racetrack & Resort
	Missouri	Century Casino Cape Girardeau
		Century Casino Caruthersville⁽¹⁾
Canada	Edmonton	Century Casino & Hotel - Edmonton
		Century Casino St. Albert
		Century Mile Racetrack and Casino
	Calgary⁽²⁾	Century Downs Racetrack and Casino
		~~Century Sports~~ ⁽¹⁾
		~~Century Bets! Inc.~~ ⁽¹⁾
Poland	Poland	Casinos Poland
Corporate and Other	Corporate and Other	Cruise Ships & Other
		Corporate Other ⁽²⁾⁽³⁾

(1)Includes The Farmstead.

(2)We operated Century Sports through February 10, 2022. ~~We operated Century Bets! Inc. through August 2021, when operations were transferred to Century Mile. For more information about Century Sports and Century Bets! Inc., see~~See Note 1, “Description of Business and Basis of Presentation,” to our condensed consolidated financial statements in Part I, Item 1 of this report.

~~(2)~~(3)Our equity investment in Smooth Bourbon is included in the Corporate Other reporting unit.

In September 2021, we transferred operation of the southern Alberta pari-mutuel network from Century Bets! to CMR. CMR now operates both the northern and southern Alberta pari-mutuel off-track betting networks. Prior to September 2021, Century Bets! was included in the Calgary operating segment.

On February ~~10,~~ 2022, we sold the land and building we owned in Calgary, transferred the lease agreement for the casino premises to the buyer and ceased operating Century Sports, a sports bar, bowling and entertainment facility located on the property. Prior to the sale, Century Sports was included in the Calgary operating segment.

We have controlling financial interests through our subsidiary CRM in the following reporting units:

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. As of ~~September 30, 2022,~~March 31, 2023, CPL owned and operated eight casinos throughout Poland. The following table summarizes information about CPL’s casinos as of ~~September 30, 2022.~~March 31, 2023.


City	Location	License Expiration	Number of Slots	Number of Tables	Location	License Expiration	Number of Slots	Number of Tables
Warsaw	Marriott Hotel	September 2028	70	37	Marriott Hotel	September 2028	70	37
Warsaw	Hilton Hotel	July 2024	69	24	Hilton Hotel	July 2024	70	26
Warsaw	LIM Center	June 2025	65	4	LIM Center	June 2025	65	4
Bielsko-Biala	Hotel President	October 2023	51	5	Hotel President	October 2023	49	5
Katowice	Park Inn by Radisson	October 2023	70	14	Park Inn by Radisson	October 2023	70	14
Wroclaw	Double Tree Hilton Hotel	November 2023	70	18	Double Tree Hilton Hotel	November 2023	70	20
Krakow	Dwor Kosciuszko Hotel	May 2024	70	5	Dwor Kosciuszko Hotel	May 2024	70	5
Lodz	Manufaktura Entertainment Complex	June 2024	70	10	Manufaktura Entertainment Complex	June 2024	69	10

In September 2022, CPL transferred the casino license for the Warsaw Marriott Hotel expiring in July 2024 to the Warsaw Hilton Hotel, and CPL was granted a new license for the Warsaw Marriott Hotel expiring in September 2028.

Casino licenses are granted for six years. When a casino license expires, the Polish Minister of Finance notifies the public of its availability, and interested parties can submit an application for the casino license. Following approval of a casino license by the Minister of Finance, there is a period in which applicants can appeal the decision.

‎

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

Through our wholly owned subsidiary Century Nevada Acquisition, Inc., we have a 50% equity interest in ~~PropCo.~~Smooth Bourbon. We report this interest as an equity investment. See Note 3, “Equity Investment,” to our condensed consolidated financial statements in Part I, Item 1 of this report.

WeAs of March 31, 2023, we also ~~have~~had a concession agreement for one ship-based ~~casino and had ownership in and a consulting~~casino. The agreement ~~with MCE, which are detailed further under~~ended on April 16, 2023. See “Corporate and Other” below.

Recent Developments Related to COVID-19

~~The~~Since the inception of the COVID-19 pandemic ~~negatively impacted~~in March 2020, our ~~results of operations in the first half of 2021 because of closures of our Canada and Poland properties during this period. Our~~ casinos varied their operations based on the governmental health and safety requirements in the jurisdictions in which they are located. The COVID-19 pandemic impacted our results of operations in 2020 and the first half of 2021, and into the first quarter of 2022 for our Canada properties. Currently, our operations have no health and safety requirements for entry and few other COVID-19 related restrictions.

We estimate that net operating revenue for the nine months ended September 30, 2021 was adversely impacted by approximately $35.9 million, and that Adjusted EBITDA for the nine months ended September 30, 2021 was adversely impacted by approximately $13.1 million due to the closures. See “Discussion of Results” below for a discussion of the impact of the closures in the Canada and Poland reportable segments.

The duration and impact of the COVID-19 pandemic ~~otherwise~~ remains uncertain. We cannot predict the negative impacts that COVID-19 will have on our consumer demand, workforce, suppliers, contractors and other partners and whether future closures will be required. Such closures have had a material impact on us. The effects of COVID-19, ongoing governmental health and safety requirements and any future closures could have a material impact on us. We will continue to monitor our liquidity and make reductions to marketing and operating expenditures, where possible, if future government mandates or closures are required that would have an adverse impact on us.

Other Projects and Developments

Nugget Casino Resort in Sparks, Nevada

In February 2022, we entered into a definitive agreement with Marnell, pursuant to which we, through a newly formed subsidiary, agreed to purchase from Marnell (i) 50% of the membership interests in Smooth Bourbon, and (ii) 100% of the membership interests in Nugget. Nugget owns and operates the Nugget Casino Resort in Sparks, Nevada, and Smooth Bourbon owns the real property on which the casino is located.

We purchased 50% of the membership interests in Smooth Bourbon for approximately $95.0 million at the First Closing on April 1, 2022. We used approximately $29.3 million of cash on hand and borrowings under the Goldman Credit Agreement in connection with the First Closing. We purchased 100% of the membership interests in Nugget for approximately $100.0 million (subject to certain adjustments) at the Second Closing on April 3, 2023. Following the Second Closing, we own the operating assets of Nugget Casino Resort and 50% of the membership interests in Smooth Bourbon. We also have a five-year option through April 1, 2027 to acquire the remaining 50% of the membership interests in Smooth Bourbon for $105.0 million plus 2% per annum. At the First Closing, Smooth Bourbon entered into a lease with Nugget for an annual rent of $15.0 million.

Rocky Gap Casino Resort in Flintstone, Maryland

On August 24, 2022, we entered into a definitive agreement with Lakes Maryland, Golden, and VICI PropCo, pursuant to which we agreed to acquire the operations of Rocky Gap for approximately $56.1 million subject to the conditions and terms set forth therein. Pursuant to a real estate purchase agreement, dated August 24, 2022, by and between Evitts and VICI PropCo Buyer, VICI PropCo Buyer agreed to acquire the real estate assets relating to Rocky Gap for approximately $203.9 million, subject to the conditions and terms set forth therein. In connection with the closing of this transaction, one of our subsidiaries and a subsidiary of VICI PropCo will enter into an amendment to the Master Lease to (i) add Rocky Gap to the Master Lease, (ii) provide for an initial annual rent for Rocky Gap of approximately $15.5 million, and (iii) extend the initial Master Lease term for 15 years from the date of the amendment (subject to the existing four five-year renewal options).

~~Nugget Casino Resort in Sparks, Nevada~~

On ~~February 22, 2022,~~April 27, 2023, we ~~entered into~~were approved for a ~~definitive agreement with Marnell, pursuant~~gaming license by the Maryland State Lottery & Gaming Control Agency. Additional regulatory approvals are required prior to ~~which we, through a newly formed subsidiary, (i) purchased from Marnell 50% of~~ the ~~membership interests in PropCo, and (ii) will purchase 100% of the membership interests in OpCo. OpCo owns and operates the Nugget Casino Resort in Sparks, Nevada, and PropCo owns the real property on~~Rocky Gap Acquisition closing, which ~~the casino is located.~~

We purchased 50% of the membership interests in PropCo for approximately $95.0 million at the first closing on April 1, 2022. We used approximately $29.3 million of cash on hand in connection with the First Closing. Subject to approval from the Nevada Gaming Commission, our purchase of 100% of the membership interests in OpCo for approximately $100.0 million (subject to certain adjustments) is expected to ~~close within one year after~~occur in the ~~First Closing. Following the Second Closing, we will own the operating assets~~summer of Nugget Casino Resort and 50% of the membership interests in PropCo. We also have a five-year option to acquire the remaining 50% of the membership interests in PropCo for $105.0 million plus 2% per annum. At the First Closing, PropCo entered into a lease with OpCo for an annual rent of $15.0 million.2023.

‎

3230

~~Caruthersville Land-Based Casino~~

In July 2021, the Missouri law requiring each casino to be a floating facility was amended to allow casino facilities to be built as a standard building with a container with at least 2,000 gallons of water beneath the facility. A lawsuit was filed by the City of St. Louis to block the implementation of the omnibus bill that included the amendment to the definition of a floating facility. In June 2022, the Missouri governor signed a standalone bill to amend the definition of a floating facility. This legislation provides an opportunity for Century Casino Caruthersville, the last remaining riverboat casino on open water in Missouri, to move to a non-floating facility. We plan to move the casino from the riverboat to a new land-based casino with a small hotel. We estimate the project will cost $51.9 million. Construction started in October 2022 with completion expected in the second half of 2024. We plan to finance the cost of this project with a combination of financing and cash on hand. As of September 30, 2022, we have spent $2.1 million on this project.

Recent Developments Related to Century Casino Caruthersville

On October 26, 2022, the MGC approved the relocation of the casino at Century Casino Caruthersville from the riverboat and the barge to a land-based pavilion until the new land-based casino and hotel discussed below are completed. On October 13, 2022, the riverboat, which had operated since 1994, had to be closed as it was no longer accessible from the barge because of ~~the~~ record low water levels in the Mississippi River. ~~Since then,~~Prior to its closure, the riverboat casino had 519 slot machines and seven table games. From October 2022 to December 2022, Caruthersville ~~has~~ operated the casino from the barge with 299 slot machines and four table games. The move to the pavilion, which has 424 slot machines and six table games, was completed in late December 2022. The pavilion building will not be affected by water levels and is protected by a flood wall. The pavilion ~~will provide~~provides for easier access to the casino for customers, and we anticipate it will bring operating efficiencies and cost savings. ~~The casino will be smaller with approximately 400 slot machines and seven table games, compared to 519 slot machines and seven table games~~We have not experienced a negative impact on ~~the riverboat and barge. Caruthersville will continue to operate from the barge until~~results following the move to the pavilion ~~is complete.~~ and have had a positive reaction from customers. The riverboat and barge were removed on February 25, 2023.

Caruthersville Land-Based Casino

We ~~anticipate~~are building a new land-based casino with a small hotel. We estimate the ~~move~~project will cost $51.9 million. Construction started in December 2022 with completion expected in the second half of 2024. We plan to finance the cost of this project with financing provided by VICI PropCo. To finance the Caruthersville project, we entered into an amendment to the ~~pavilion~~Master Lease with VICI PropCo. Following completion, VICI PropCo will ~~be completed by~~own the ~~end~~real estate improvements associated with the Caruthersville project. As of ~~2022~~March 31, 2023, we have received $10.9 million from VICI PropCo and ~~that there will be no negative impact~~have spent $5.4 million of those funds on ~~results of operations thereafter.~~this project.

Caruthersville Hotel

In July 2021, we announced that we had purchased land and a small two-story hotel near Century Casino Caruthersville with plans to refurbish the existing hotel’s 36 rooms. The completely renovated hotel called The Farmstead opened on October 30, 2022 with a grand opening held in December 2022. AsThe total cost of ~~September 30, 2022, we have spent $2.7 million on this~~the project ~~and estimate an additional $1.0 million will be spent in the fourth quarter of 2022.~~was $3.6 million.

Cape Girardeau Hotel

We ~~plan to build~~are building a hotel at our Cape Girardeau location. The hotel is planned as a six-story building with 68,000 square feet that will be adjacent to and connected with the existing casino building. The hotel project has been approved by the City of Cape Girardeau. Additional state and local approvals from other agencies will also be required. Planning, design and preparations for the project are substantially complete. Construction on this project began in September 2022 and is expected to be completed in the first half of 2024. We estimate the project will cost $30.5 million, and we plan to finance this cost with cash on hand. As of ~~September 30, 2022,~~March 31, 2023, we have spent ~~$1.4~~$7.1 million on this project.

Additional Gaming Projects

We currently are exploring additional potential gaming projects and acquisition opportunities. Along with the capital needs of potential projects, there are various other risks which, if they materialize, could affect our ability to complete a proposed project or acquisition or could eliminate its feasibility altogether.

Presentation of Foreign Currency Amounts

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



	For the three months			For the nine months				For the three months
	ended September 30,			ended September 30,				ended March 31,
Average Rates	2022	2021	% Change	2022	2021	% Change		2023	2022	% Change
Canadian dollar (CAD)	1.3045	1.2593	(3.6%)	1.2823	1.2515	(2.5%)		1.3523	1.2669	(6.7%)
Euros (EUR)	0.9920	0.8482	(17.0%)	0.9403	0.8360	(12.5%)		0.9324	0.8909	(4.7%)
Polish zloty (PLN)	4.7025	3.8721	(21.4%)	4.3935	3.8013	(15.6%)		4.3913	4.1182	(6.6%)
Source: 2022 Xe Currency Converter, 2021 Pacific Exchange Rate Service
Source: Xe Currency Converter							Source: Xe Currency Converter

‎

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

‎

DISCUSSION OF RESULTS

Century Casinos, Inc. and Subsidiaries


	For the three months							For the nine months								For the three months
	ended September 30,						%	ended September 30,						%		ended March 31,						%
Amounts in thousands		2022		2021		Change	Change		2022		2021		Change	Change			2023		2022		Change	Change
Gaming Revenue	$	93,505	$	98,366	$	(4,861)	(4.9%)	$	277,853	$	240,694	$	37,159	15.4%		$	94,297	$	89,876	$	4,421	4.9%
Pari-mutuel, Sports Betting and iGaming Revenue		6,067		6,200		(133)	(2.1%)		14,755		13,342		1,413	10.6%			3,385		3,430		(45)	(1.3%)
Hotel Revenue		2,619		2,243		376	16.8%		7,234		6,214		1,020	16.4%			2,522		2,074		448	21.6%
Food and Beverage Revenue		7,031		6,078		953	15.7%		18,095		12,401		5,694	45.9%			5,767		5,038		729	14.5%
Other Revenue		3,330		3,723		(393)	(10.6%)		8,839		8,556		283	3.3%			2,537		2,685		(148)	(5.5%)
Net Operating Revenue		112,552		116,610		(4,058)	(3.5%)		326,776		281,207		45,569	16.2%			108,508		103,103		5,405	5.2%
Gaming Expenses		(46,729)		(46,388)		341	0.7%		(137,755)		(115,557)		22,198	19.2%			(48,062)		(44,749)		3,313	7.4%
Pari-mutuel, Sports Betting and iGaming Expenses		(6,922)		(6,741)		181	2.7%		(16,724)		(14,031)		2,693	19.2%			(3,712)		(3,768)		(56)	(1.5%)
Hotel Expenses		(754)		(640)		114	17.8%		(2,088)		(1,718)		370	21.5%			(797)		(642)		155	24.1%
Food and Beverage Expenses		(6,257)		(5,412)		845	15.6%		(16,983)		(11,415)		5,568	48.8%			(5,645)		(4,979)		666	13.4%
General and Administrative Expenses		(26,179)		(24,918)		1,261	5.1%		(79,002)		(66,337)		12,665	19.1%			(26,702)		(26,971)		(269)	(1.0%)
Depreciation and Amortization		(6,776)		(6,784)		(8)	(0.1%)		(20,350)		(20,060)		290	1.4%			(6,855)		(6,795)		60	0.9%
Gain on Sale of Casino Operations																	574		—		574	100.0%
Loss on Sale of Assets		—		—		—	—		(2,154)		—		2,154	100.0%			—		(2,154)		(2,154)	(100.0%)
Total Operating Costs and Expenses		(93,617)		(90,883)		2,734	3.0%		(275,056)		(229,118)		45,938	20.0%			(91,199)		(90,058)		1,141	1.3%
Earnings from Equity Investment		1,071		—		1,071	100.0%		2,134		—		2,134	100.0%			1,091		—		1,091	100.0%
Earnings from Operations		20,006		25,727		(5,721)	(22.2%)		53,854		52,089		1,765	3.4%			18,400		13,045		5,355	41.1%

Income Tax (Expense) Benefit		(855)		(2,593)		(1,738)	(67.0%)		8,130		(3,813)		(11,943)	(313.2%)
Income Tax Expense																	(1,623)		(1,435)		188	13.1%
Non-Controlling Interest		(1,266)		(1,153)		113	9.8%		(4,752)		(86)		4,666	5425.6%			(4,274)		(2,491)		1,783	71.6%
Net Earnings Attributable to Century Casinos, Inc. Shareholders		2,944		11,226		(8,282)	(73.8%)		12,018		16,662		(4,644)	(27.9%)
Net (Loss) Earnings Attributable to Century Casinos, Inc. Shareholders																	(1,243)		218		(1,461)	(670.2%)
Adjusted EBITDA ⁽¹⁾	$	28,068	$	33,056	$	(4,988)	(15.1%)	$	81,671	$	73,040	$	8,631	11.8%		$	26,054	$	23,824	$	2,230	9.4%

Earnings Per Share Attributable to Century Casinos, Inc. Shareholders
Basic Earnings Per Share	$	0.10	$	0.38	$	(0.28)	(73.7%)	$	0.40	$	0.56	$	(0.16)	(28.6%)
Diluted Earnings Per Share	$	0.09	$	0.36	$	(0.27)	(75.0%)	$	0.38	$	0.54	$	(0.16)	(29.6%)
(Loss) Earnings Per Share Attributable to Century Casinos, Inc. Shareholders															(Loss) Earnings Per Share Attributable to Century Casinos, Inc. Shareholders
Basic																$	(0.04)	$	0.01	$	(0.05)	(500.0%)
Diluted																$	(0.04)	$	0.01	$	(0.05)	(500.0%)

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

Items impacting comparability of the results include the following:

~~COVID-19~~ – Closures of our Canada and Poland properties due to COVID-19 had a negative impact on our results for the nine months ended September 30, 2021. See “Executive Overview-Recent Developments Related to COVID-19” above for details regarding the closures.

Calgary – In February 2022, we sold the land and building that we owned in Calgary for CAD 8.0 million ($6.3 million based on the exchange rate on February 10, 2022). We recorded a loss on the sale of the land and building of CAD 2.7 million ($2.2 million based on the average exchange rate for the month ended February 28, 2022). In March 2023, we received an earn out payment of CAD 0.8 million ($0.6 million based on the exchange rate on March 31, 2023) related to our 2020 sale of the Calgary casino operations.

~~Deferred Financing~~COVID-19 (Canada) – We ~~wrote-off approximately $7.3 million~~Through early February 2022 we required customers to provide proof of ~~deferred financing costs~~vaccination, a negative rapid test result or an original medical exemption letter for entry to ~~interest expense in the second quarter of 2022 in connection~~comply with ~~the prepayment of the Macquarie Term Loan.~~a government mandate. In accordance with a government mandate, all customers and employees were required to wear masks while indoors through early March 2022.

Inflation – We have seen operating expenses, such as utilities, maintenance costs and food and beverage costs, increase at our properties but the increases have not been material to date. We are starting to see an impact on customer visits at some of our properties in the third and fourth quarter believed to be from economic and inflationary factors, but the decreases have not been material to date.

Staffing – We have experienced difficulties attracting and retaining staff at some locations in the US and Canada. As a result, we have had to adjust hours of some food and beverage outlets, the number of table games open and the number of rooms available at some of our hotels. We have been able to make adjustments during non-peak times and have not seen a material impact to our operating results.

~~Valuation Allowance –~~ We released a $10.2 million US valuation allowance, resulting in an income tax benefit of $8.1 million for the nine months ended September 30, 2022. We recorded income tax expense of $6.8 million in the United States reportable segment for the three months ended September 30, 2022. The income tax expense reflects the full nine months ended September 30, 2022.

Pari-Mutuel

Pari-mutuel revenue includes live racing, export, advanced deposit wagering and off-track betting. Pari-mutuel expense ~~relate~~relates to the revenue above and the operation of our racetracks.

‎

Results of Operations

Net operating revenue ~~decreased~~increased by ~~($4.1)~~$5.4 million, or ~~(3.5%), and increased by $45.6 million, or 16.2%~~5.2%, for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 compared to the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2022. Following is a breakout of net operating revenue by segment for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 compared to the three ~~and nine~~ months ended ~~September 30, 2021:~~March 31, 2022:

United States ~~decreased~~increased by ~~($3.2)~~$1.1 million, or ~~(4.3%), and by ($8.7) million, or (4.0%)~~1.7%.

Canada ~~decreased~~increased by ~~($1.3)~~$0.5 million, or ~~(6.1%), and increased by $25.1 million, or 83.5%~~3.2%.

Poland increased by ~~$0.6~~$3.8 million, or ~~2.8%, and by $29.5 million, or 82.6%~~17.2%.

Corporate and Other ~~decreased by ($0.2) million, or (81.4%), and by ($0.3) million, or (71.3%).~~remained constant.

Operating costs and expenses increased by ~~$2.7~~$1.1 million, or ~~3.0%, and by $45.9 million, or 20.0%~~1.3%, for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 compared to the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2022. Following is a breakout of operating costs and expenses by segment for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 compared to the three ~~and nine~~ months ended ~~September 30, 2021:~~March 31, 2022:

United States ~~remained constant and~~ increased by $2.4 million, or ~~1.5%~~4.8%.

Canada ~~increased~~decreased by ~~$1.6~~($2.9) million, or ~~10.9%, and by $18.6 million, or 67.2%~~(18.8%).

Poland increased by ~~$0.6~~$3.1 million, or ~~3.0%, and by $20.3 million, or 53.1%~~15.5%.

Corporate and Other ~~increased~~decreased by ~~$0.6~~($1.4) million, or ~~17.4%, and by $4.6 million, or 53.0%~~(27.8%).

Earnings from operations ~~decreased~~increased by ~~($5.7)~~$5.4 million, or ~~(22.2%), and increased by $1.8 million, or 3.4%~~41.1%, for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 compared to the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2022. Following is a breakout of earnings from operations by segment for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 compared to the three ~~and nine~~ months ended ~~September 30, 2021:~~March 31, 2022:

United States decreased by ($~~3.2)~~1.3) million, or ~~(16.2%), and by ($11.1) million, or (18.3%~~(8.1%).

Canada ~~decreased~~increased by ~~($2.9)~~$3.4 million, or ~~(42.5%), and increased by $6.5 million, or 275.5%~~566.8%.

Poland ~~remained constant and~~ increased by ~~$9.2~~$0.7 million, or ~~364.0%~~34.8%.

Corporate and Other increased by ~~$0.3~~$2.5 million, or ~~9.9%, and decreased by ($2.8) million, or (34.1%)~~50.1%.

Net earnings attributable to Century Casinos, Inc. shareholders decreased by ($~~8.3)~~1.5) million, or ~~(73.8%), and by ($4.6) million, or (27.9%~~(670.2%), for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 compared to the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2022. Items deducted from or added to earnings from operations to arrive at net earnings attributable to Century Casinos, Inc. shareholders include interest income, interest expense, gains (losses) on foreign currency transactions and other, income tax expense (benefit) and non-controlling interest. ~~Items that impacted net~~Net earnings attributable to Century Casinos, Inc. shareholders decreased for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 compared to the three months ended March 31, 2022 ~~included~~primarily because interest expense increased by $6.8 million as a ~~write-off~~result of ~~$7.3~~an additional $176.9 million in ~~deferred financing costs to interest expense related~~principal debt as of March 31, 2023 under the Goldman Credit Agreement compared to the ~~prepayment~~principal debt as of March 31, 2022 under the Macquarie Credit ~~Agreement and~~Agreement. This included approximately $2.6 million of additional interest expense from interest on the ~~release~~$100.0 million in escrow to fund the OpCo Acquisition without the benefit of ~~a $10.2 million US valuation allowance, resulting in an~~net income ~~tax benefit.~~from the Nugget Casino.

‎For a discussion of the factors that impacted each reportable segment, please see “Reportable Segments” below.

Non-US GAAP Measures – Adjusted EBITDA

We define Adjusted EBITDA as net earnings (loss) attributable to Century Casinos, Inc. shareholders 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, loss (gain) on disposition of fixed assets, discontinued operations, (gain) loss on foreign currency transactions, cost recovery income and other, gain on business combination and certain other one-time transactions. Expense related to the Master Lease is included in the interest expense (income), net line item. 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) attributable to Century Casinos, Inc. shareholders 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 our chief operating decision makers. 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 generally accepted accounting principles (“US GAAP”). Adjusted EBITDA is not considered a measure of performance recognized under US GAAP.

Management believes that Adjusted EBITDA is a valuable measure of the relative performance of the Company and its properties. The gaming industry commonly uses Adjusted EBITDA as a method of arriving at the economic value of a casino operation. Management uses Adjusted EBITDA to evaluate and forecast the operating performance of the Company and its properties as well as to compare results of current periods to prior periods. Management believes that presenting Adjusted EBITDA to investors provides them with information used by management for financial and operational decision-making in order to understand the Company’s operating performance and evaluate the methodology used by management to evaluate and measure such performance. Management believes that using Adjusted EBITDA is a useful way to compare the relative operating performance of separate reportable 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, 2022
Amounts in thousands
United States
Canada
Poland
Corporate and Other
Total
Net earnings (loss) attributable to Century Casinos, Inc. shareholders
$
2,372
$
2,623
$
2,032
$
(4,083)
$
2,944
Interest expense (income), net ⁽¹⁾
7,201
581
(519)
8,087
15,350
Income taxes (benefit)
6,767
522
465
(6,899)
855
Depreciation and amortization
4,892
1,180
623
81
6,776
Net earnings attributable to non-controlling interests
—
250
1,016
—
1,266
Non-cash stock-based compensation
—
—
—
953
953
Gain on foreign currency transactions, cost recovery income and other
—
(71)
(333)
(5)
(409)
Loss on disposition of fixed assets
11
—
27
—
38
Acquisition costs
—
—
—
295
295
Adjusted EBITDA
$
21,243
$
5,085
$
3,311
$
(1,571)
$
28,068

~~(1)~~Expense of $7.2 million related to the Master Lease is included in interest expense (income), net in the United States segment. Expense of $0.6 million related to the CDR land lease is included in interest expense (income), net in the Canada segment. Cash payments related to the Master Lease and CDR land lease were $8.5 million and $0.5 million, respectively, for the period presented.

‎


	For the three months ended September 30, 2021											For the three months ended March 31, 2023
Amounts in thousands			United States		Canada		Poland		Corporate and Other		Total			United States		Canada		Poland		Corporate and Other		Total
Net earnings (loss) attributable to Century Casinos, Inc. shareholders		$	12,389	$	5,308	$	1,437	$	(7,908)	$	11,226		$	5,375	$	1,867	$	1,574	$	(10,059)	$	(1,243)
Interest expense (income), net ⁽¹⁾			7,121		560		(355)		3,294		10,620			7,119		523		(95)		9,957		17,504
Income taxes			—		499		674		1,420		2,593
Income taxes (benefit)														1,776		1,634		632		(2,419)		1,623
Depreciation and amortization			4,699		1,217		760		108		6,784			5,032		1,127		635		61		6,855
Net earnings attributable to non-controlling interests			—		435		718		—		1,153			—		3,488		786		—		4,274
Non-cash stock-based compensation			—		—		—		986		986			—		—		—		736		736
Gain on foreign currency transactions and cost recovery income			—		(57)		(232)		(24)		(313)
(Gain) loss on foreign currency transactions, cost recovery income and other ⁽²⁾														—		(4,085)		(254)		7		(4,332)
Loss on disposition of fixed assets			—		4		3		—		7			470		3		1		5		479
Acquisition costs														—		—		—		158		158
Adjusted EBITDA		$	24,209	$	7,966	$	3,005	$	(2,124)	$	33,056		$	19,772	$	4,557	$	3,279	$	(1,554)	$	26,054

(1)Expense of $7.1 million related to the Master Lease is included in interest expense (income), net in the United States segment. Expense of $0.5 million related to the CDR land lease is included in interest expense (income), net in the Canada segment. Cash payments related to the Master Lease and CDR land lease were ~~$6.3~~$6.9 million and ~~$0.4~~$0.5 million, respectively, for the period presented.

(2)Includes $0.6 million related to the earn out payment from the sale of casino operations in Calgary in 2020 and cost recovery income for CDR.

‎


	For the nine months ended September 30, 2022											For the three months ended March 31, 2022
Amounts in thousands			United States		Canada		Poland		Corporate and Other		Total			United States		Canada		Poland		Corporate and Other		Total
Net earnings (loss) attributable to Century Casinos, Inc. shareholders		$	21,409	$	4,797	$	4,285	$	(18,473)	$	12,018		$	8,521	$	(703)	$	931	$	(8,531)	$	218
Interest expense (income), net ⁽¹⁾			21,310		1,733		(586)		25,482		47,939			7,007		567		(13)		3,233		10,794
Income taxes (benefit)			6,767		1,718		1,538		(18,153)		(8,130)
Income taxes														—		622		558		255		1,435
Depreciation and amortization			14,418		3,632		1,979		321		20,350			4,768		1,225		681		121		6,795
Net earnings attributable to non-controlling interests			—		2,608		2,144		—		4,752			—		2,025		466		—		2,491
Non-cash stock-based compensation			—		—		—		2,638		2,638			—		—		—		673		673
(Gain) loss on foreign currency transactions, cost recovery income and other ⁽²⁾			(1)		138		(712)		(8)		(583)
Loss (gain) on disposition of fixed assets			33		23		31		(124)		(37)
Loss (gain) on foreign currency transactions and cost recovery income⁽²⁾														—		243		18		(12)		249
Loss on disposition of fixed assets														19		15		3		—		37
Acquisition costs			—		—		—		2,724		2,724			—		—		—		1,132		1,132
Adjusted EBITDA		$	63,936	$	14,649	$	8,679	$	(5,593)	$	81,671		$	20,315	$	3,994	$	2,644	$	(3,129)	$	23,824

(1)Expense of ~~$21.3~~$7.0 million related to the Master Lease is included in interest expense (income), net in the United States segment. Expense of ~~$1.7~~$0.6 million related to the CDR land lease is included in interest expense (income), net in the Canada segment. Cash payments related to the Master Lease and CDR land lease were ~~$19.1~~$4.3 million and ~~$1.6~~$0.4 million, respectively, for the period presented. Expense of $7.3 million related to the write-off of deferred financing costs in connection with the prepayment of the Macquarie Term Loan is included in interest expense (income), net in the Corporate and Other segment.

(2)Loss of $2.2 million related to the sale of the land and building in Calgary in February 2022 is included in the Canada segment.

‎

For the nine months ended September 30, 2021
Amounts in thousands
United States
Canada
Poland
Corporate and Other
Total
Net earnings (loss) attributable to Century Casinos, Inc. shareholders
$
39,486
$
265
$
(1,432)
$
(21,657)
$
16,662
Interest expense (income), net⁽¹⁾
21,083
1,263
(341)
9,825
31,830
Income taxes (benefit)
—
661
(216)
3,368
3,813
Depreciation and amortization
13,734
3,689
2,320
317
20,060
Net earnings (loss) attributable to non-controlling interests
—
802
(716)
—
86
Non-cash stock-based compensation
—
—
—
1,568
1,568
Gain on foreign currency transactions, cost recovery income and other
—
(604)
(221)
(436)
(1,261)
Loss (gain) on disposition of fixed assets
282
36
3
(39)
282
Adjusted EBITDA
$
74,585
$
6,112
$
(603)
$
(7,054)
$
73,040

~~(1)~~Expense of $21.1 million related to the Master Lease is included in interest expense (income), net in the United States segment. Expense of $1.2 million related to the CDR land lease is included in interest expense (income), net in the Canada segment. Cash payments related to the Master Lease and CDR land lease were $16.8 million and $1.3 million, respectively, for the period presented.

Non-US 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, 2022		September 30, 2021		March 31, 2023		March 31, 2022
Total long-term debt, including current portion	$	349,766	$	182,445	$	349,005	$	180,995
Deferred financing costs		17,510		8,086		16,170		7,304
Total principal	$	367,276	$	190,531	$	365,175	$	188,299
Less: Cash and cash equivalents	$	99,257	$	100,759	$	102,707	$	117,217
Net Debt	$	268,019	$	89,772	$	262,468	$	71,082

‎

3835

Reportable Segments

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


United States
	For the three months							For the nine months							For the three months
	ended September 30,						%	ended September 30,						%	ended March 31,						%
Amounts in thousands		2022		2021		Change	Change		2022		2021		Change	Change		2023		2022		Change	Change
Gaming Revenue	$	60,150	$	64,569	$	(4,419)	(6.8%)	$	179,524	$	190,159	$	(10,635)	(5.6%)	$	58,393	$	58,245	$	148	0.3%
Pari-mutuel, Sports Betting and iGaming Revenue		2,965		2,617		348	13.3%		6,300		5,825		475	8.2%		1,282		963		319	33.1%
Hotel Revenue		2,485		2,243		242	10.8%		6,895		6,214		681	11.0%		2,403		1,990		413	20.8%
Food and Beverage Revenue		3,319		2,950		369	12.5%		9,314		8,676		638	7.4%		3,110		2,934		176	6.0%
Other Revenue		1,799		1,518		281	18.5%		4,242		4,095		147	3.6%		1,181		1,116		65	5.8%
Net Operating Revenue		70,718		73,897		(3,179)	(4.3%)		206,275		214,969		(8,694)	(4.0%)		66,369		65,248		1,121	1.7%
Gaming Expenses		(30,351)		(31,729)		(1,378)	(4.3%)		(89,781)		(90,610)		(829)	(0.9%)		(29,662)		(29,055)		607	2.1%
Pari-mutuel, Sports Betting and iGaming Expenses		(2,257)		(2,180)		77	3.5%		(4,554)		(4,642)		(88)	(1.9%)		(631)		(467)		164	35.1%
Hotel Expenses		(680)		(632)		48	7.6%		(1,902)		(1,707)		195	11.4%		(733)		(596)		137	23.0%
Food and Beverage Expenses		(2,775)		(2,511)		264	10.5%		(7,910)		(7,307)		603	8.3%		(2,542)		(2,486)		56	2.3%
General and Administrative Expenses		(13,423)		(12,636)		787	6.2%		(38,225)		(36,400)		1,825	5.0%		(13,499)		(12,348)		1,151	9.3%
Depreciation and Amortization		(4,892)		(4,699)		193	4.1%		(14,418)		(13,734)		684	5.0%		(5,032)		(4,768)		264	5.5%
Total Operating Costs and Expenses		(54,378)		(54,387)		(9)	—		(156,790)		(154,400)		2,390	1.5%		(52,099)		(49,720)		2,379	4.8%
Earnings from Operations		16,340		19,510		(3,170)	(16.2%)		49,485		60,569		(11,084)	(18.3%)		14,270		15,528		(1,258)	(8.1%)

Income Tax Expense		(6,767)		—		6,767	100.0%		(6,767)		—		6,767	100.0%		(1,776)		—		1,776	100.0%
Net Earnings Attributable to Century Casinos, Inc. Shareholders		2,372		12,389		(10,017)	(80.9%)		21,409		39,486		(18,077)	(45.8%)		5,375		8,521		(3,146)	(36.9%)
Adjusted EBITDA	$	21,243	$	24,209	$	(2,966)	(12.3%)	$	63,936	$	74,585	$	(10,649)	(14.3%)	$	19,772	$	20,315	$	(543)	(2.7%)

Sports wagering in Colorado became legal onin May 1, 2020. We have partnered with sports betting operators that will conduct sports wagering under each of the three Colorado master licenses for sports wagering held by our Colorado subsidiaries. One of these mobile sports betting apps launched in July 2020, a second launched in August 2021, and the third sports betting app launched in September 2022. Each agreement with the sports betting operators provides for a share of net gaming revenue and a minimum revenue guarantee each year.

~~New table games and unlimited betting began in May 2021 in Colorado.~~

~~In December 2020, we entered into an agreement with an iGaming partner to utilize our license with the state of West Virginia to~~We operate an internet and mobile interactive gaming ~~application.~~application in West Virginia with two iGaming partners. The ~~iGaming app launched in April 2021. The agreement provides~~agreements provide for a share of net ~~gaming~~iGaming revenue.

~~We recorded income tax expense of $6.8 million~~There are two potential competing casinos that may open in the ~~third quarter~~Central City, Colorado market in 2024. An increase in competitors could have a negative impact on our results of ~~2022 due to the release of the US valuation allowance. The income tax expense reflects the full nine months ended September 30, 2022.~~

operations in Central City.

The table below provides results by operating segment within the United States reportable segment.


	For the three months							For the nine months							For the three months
	ended September 30,						%	ended September 30,						%	ended March 31,						%
Amounts in millions		2022		2021		Change	Change		2022		2021		Change	Change		2023		2022		Change	Change
Net Operating Revenue
Colorado	$	13.5	$	12.5	$	1.0	8.1%	$	35.4	$	34.0	$	1.4	4.2%	$	10.6	$	10.3	$	0.3	3.1%
West Virginia		30.4		31.7		(1.3)	(4.2%)		86.4		86.2		0.2	0.1%		26.7		26.3		0.4	1.4%
Missouri		26.8		29.7		(2.9)	(9.6%)		84.5		94.8		(10.3)	(10.8%)		29.1		28.7		0.4	1.5%
Total United States		70.7		73.9		(3.2)	(4.3%)		206.3		215.0		(8.7)	(4.0%)		66.4		65.3		1.1	1.7%

Operating Costs and Expenses ⁽¹⁾
Colorado	$	8.2	$	7.6	$	0.6	7.9%	$	22.4	$	21.1	$	1.3	6.2%	$	7.5	$	7.1	$	0.4	5.6%
West Virginia		25.1		25.9		(0.8)	(3.1%)		71.9		70.6		1.3	1.8%		22.7		22.0		0.7	3.2%
Missouri		16.2		16.3		(0.1)	(0.6%)		48.1		49.0		(0.9)	(1.8%)		16.8		15.9		0.9	5.7%
Total United States		49.5		49.8		(0.3)	(0.6%)		142.4		140.7		1.7	1.2%		47.0		45.0		2.0	4.4%

(1)Operating costs and expenses are calculated as total operating costs and expenses less depreciation and amortization.

‎

3936

Three Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~

The following discussion highlights results for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

Colorado – ~~Gaming~~Net operating revenue ~~at Cripple Creek and Central City~~ increased ~~by $0.8 million, or 7.1%, primarily~~due to revenue from the third sports betting app that launched in September 2022. Operating expenses increased due to increased slot revenue at both properties. In addition, at Central City food and beverage revenue increased by $0.1 million, or 33.1%, primarily due to increased customer visits. COVID-19 restrictions were lifted on restaurants during the third quarter of 2021, but we saw a slow increase in visits during 2021. Operating expenses increased by $0.6 million, or 7.9%, due to increased payroll costs, maintenance costs, supply costs and gaming-related expenses.

West Virginia – Net operating revenue ~~decreased~~increased from increased hotel revenue due to ~~decreased gaming revenue of ($2.3) million, or (9.2%),~~increased hotel occupancy and room rates. Operating expenses increased due to ~~lower customer volumes believed to be from economic~~increased gaming-related expenses and inflationary factors. The decreased gaming revenue was offset by increased revenue in all other revenue categories due to the lack of COVID-19 restrictions in 2022. Operating expenses decreased by ($0.8) million, or (3.1%), due to decreased payroll costs and gaming-related expenses.insurance costs.

Missouri – ~~Gaming~~Net operating revenue increased due to increased gaming revenue at ~~Caruthersville and~~ Cape Girardeau ~~decreased by ($2.9) million, or (10.0%),~~and hotel revenue from The Farmstead, which opened in October 2022. We moved our Caruthersville casino from the riverboat and barge to a temporary land-based location in December 2022 due to lower customer volumes believed to be from economic and inflationary factors and decreased table game offerings due to staffing issues. Operating expenses at Caruthersville decreased by ($0.1) million, or (0.6%), due to decreased gaming-related expenses offset by increased payroll costs and expenses related torecord low water levels in the Mississippi ~~River beginning in August 2022.~~

~~Nine Months Ended September 30, 2022 and 2021~~

~~2021 COVID-19 Restrictions~~

~~Colorado~~ ~~– Table games were closed in January 2021 at both properties. In Central City, there were restrictions on~~River. The temporary casino location holds fewer machines than the ~~number of slot machines open during the first quarter of 2021 with approximately 66% of the slot floor open due to a county variance requiring every other machine to be powered off.~~

~~West Virginia~~ – During the first quarter of 2021, approximately 85% of the gaming floor was open with machines limited to six feet apart or with barriers, casino hours of operation were reduced and there were capacity restrictions within the casino. In addition, during the first quarter of 2021, food and beverage outlets were operating with reduced hours and capacity, the hotel was operating at reduced capacity and the convention spaces were closed.

~~Missouri –~~ ~~During the first quarter of 2021, the casinos were operating with reduced hours, and there were state-wide smoking restrictions through May 2021. During the first and second quarters of 2021,~~riverboat; however, gaming revenue ~~was positively impacted by federal stimulus payments.~~

~~2022 Results~~ ~~– Our United States properties operated with very few COVID-19 restrictions. We continue to adjust the operation of amenities at our properties based on staffing and varying levels of demand.~~

~~Colorado~~ – The increase in net operating revenue was primarily due to a second sports betting app that launched in August 2021 and a third sports betting app that launched in September 2022. Gaming revenue increased by $0.9 million, or 2.9%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, primarily due to increased revenue in the thirdremained constant quarter ~~of 2022. Colorado’s operating costs and~~over quarter. Operating expenses ~~have~~ increased due to increased payroll ~~resulting from table game operations, no restrictions on food~~ and ~~beverage outlets as well as increased gaming-related expenses.~~

~~West Virginia~~ – Net operating revenue increased by $0.2 million, or 0.1%, due to increased revenue in all categories due to the lack of COVID-19 restrictions in 2022. These increases were offset by decreased gaming revenue in the third quarter due to lower customer volumes believed to be from economic and inflationary factors. West Virginia’s operatingmarketing costs and expenses have increased due to gaming-related expenses, marketing expenses and general and administrative expenses, offset by decreased payroll costs. In March 2022, weekend operating hours increased to 24 hours per day.

~~Missouri~~ – Gaming revenue decreased ($10.3) million, or (11.2%), compared to the nine months ended September 30, 2021. The decrease in gaming revenue was due to the positive impact of the stimulus payments in 2021 as well as the third quarter of 2022 decreases due to lower customer volumes believed to be from economic and inflationary factors and decreased table game offerings due to staffing issues. Operating costs and expenses decreased due to decreased gaming-related expenses offset by minimum wage increases in Missouri and expenses at Caruthersville related to ~~low water levels in~~disposing of assets after terminating operations from the ~~Mississippi River beginning in August 2022~~

~~We continue to follow any government~~riverboat and ~~local health board mandates related to COVID-19 and will adjust operations if there are any future COVID-19 related impacts.~~barge.

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


Canada
	For the three months
	ended March 31,						%
Amounts in thousands		2023		2022		Change	Change
Gaming Revenue	$	10,598	$	9,976	$	622	6.2%
Pari-mutuel, Sports Betting and iGaming Revenue		2,103		2,467		(364)	(14.8%)
Hotel Revenue		119		84		35	41.7%
Food and Beverage Revenue		2,426		1,914		512	26.8%
Other Revenue		1,257		1,558		(301)	(19.3%)
Net Operating Revenue		16,503		15,999		504	3.2%
Gaming Expenses		(2,257)		(2,217)		40	1.8%
Pari-mutuel, Sports Betting and iGaming Expenses		(3,081)		(3,301)		(220)	(6.7%)
Hotel Expenses		(64)		(46)		18	39.1%
Food and Beverage Expenses		(2,182)		(1,767)		415	23.5%
General and Administrative Expenses		(4,365)		(4,689)		(324)	(6.9%)
Depreciation and Amortization		(1,127)		(1,225)		(98)	(8.0%)
Gain on Sale of Casino Operations		574		—		574	100.0%
Loss on Sale of Assets		—		(2,154)		(2,154)	(100.0%)
Total Operating Costs and Expenses		(12,502)		(15,399)		(2,897)	(18.8%)
Earnings from Operations		4,001		600		3,401	566.8%

Income Tax Expense		(1,634)		(622)		1,012	162.7%
Non-Controlling Interest		(3,488)		(2,025)		1,463	72.2%
Net Earnings (Loss) Attributable to Century Casinos, Inc. Shareholders		1,867		(703)		2,570	365.6%
Adjusted EBITDA	$	4,557	$	3,994	$	563	14.1%

Canada
For the three months
For the nine months
ended September 30,
%
ended September 30,
%
Amounts in thousands
2022
2021
Change
Change
2022
2021
Change
Change
Gaming Revenue
$
11,841
$
12,917
$
(1,076)
(8.3%)
$
33,728
$
15,937
$
17,791
111.6%
Pari-mutuel, Sports Betting and iGaming Revenue
3,102
3,583
(481)
(13.4%)
8,455
7,517
938
12.5%
Hotel Revenue
134
—
134
100.0%
339
—
339
100.0%
Food and Beverage Revenue
3,509
2,962
547
18.5%
8,171
3,504
4,667
133.2%
Other Revenue
1,479
1,906
(427)
(22.4%)
4,412
3,073
1,339
43.6%
Net Operating Revenue
20,065
21,368
(1,303)
(6.1%)
55,105
30,031
25,074
83.5%
Gaming Expenses
(2,831)
(2,045)
786
38.4%
(7,482)
(2,500)
4,982
199.3%
Pari-mutuel, Sports Betting and iGaming Expenses
(4,665)
(4,561)
104
2.3%
(12,170)
(9,389)
2,781
29.6%
Hotel Expenses
(74)
(8)
66
825.0%
(186)
(11)
175
1590.9%
Food and Beverage Expenses
(2,741)
(2,224)
517
23.2%
(6,804)
(2,791)
4,013
143.8%
General and Administrative Expenses
(4,669)
(4,520)
149
3.3%
(13,837)
(9,297)
4,540
48.8%
Depreciation and Amortization
(1,180)
(1,217)
(37)
(3.0%)
(3,632)
(3,689)
(57)
(1.5%)
Loss on Sale of Assets
—
—
—
—
(2,154)
—
2,154
100.0%
Total Operating Costs and Expenses
(16,160)
(14,575)
1,585
10.9%
(46,265)
(27,677)
18,588
67.2%
Earnings from Operations
3,905
6,793
(2,888)
(42.5%)
8,840
2,354
6,486
275.5%
Income Tax Expense
(522)
(499)
23
4.6%
(1,718)
(661)
1,057
159.9%
Non-Controlling Interest
(250)
(435)
(185)
(42.5%)
(2,608)
(802)
1,806
225.2%
Net Earnings Attributable to Century Casinos, Inc. Shareholders
2,623
5,308
(2,685)
(50.6%)
4,797
265
4,532
1710.2%
Adjusted EBITDA
$
5,085
$
7,966
$
(2,881)
(36.2%)
$
14,649
$
6,112
$
8,537
139.7%

In February 2022, we sold the land and building we owned in Calgary, transferred the lease agreement for the casino premises to the buyer and ceased operating Century Sports, which impacts comparability of the Calgary operating segment in 2022. In March 2023, we received an earn out payment of CAD 0.8 million ($0.6 million based on the exchange rate on March 31, 2023) related to the 2020 sale of our Calgary casino operations.

The AGLC approved the relocation of a competing casino to a new site approximately eight miles south of Century Downs that opened in late November 2022. Competition from this casino has had a negative impact on financial results at this location. In addition, in January 2022, the AGLC removed the moratorium on gaming facilities. While we do not expect new gaming facilities in the markets in which we operate, an increase in competitors could have a negative impact on our results of operations in Alberta.

On February 28, 2023, the AGLC approved a temporary increase from 15% of slot machine net sales retained by casinos to 17% effective from April 1, 2023 through March 31, 2025. The increase in the slot machine net sales retention percentage is expected to have a positive impact on net operating revenue and results of operations at our Canadian properties.

Results in US dollars were impacted by a ~~(3.6%) and a (2.5%~~(6.7%) decrease in the average exchange rate between the US dollar and Canadian dollar for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 compared to the three ~~and nine~~ months ended ~~September 30, 2021, respectively.~~March 31, 2022.

The ~~table~~tables below ~~provides~~provide results by operating segment within the ~~December 2020 closure and 2021 reopen dates for casinos in~~ Canada ~~due to COVID-19.~~reportable segment.


~~Closure Date~~	~~Reopen Date~~
~~December 13, 2020~~	~~June 10, 2021~~


	For the three months
	ended March 31,						%
Amounts in CAD, in millions		2023		2022		Change	Change
Net Operating Revenue
Edmonton	$	16.2	$	13.6	$	2.6	18.8%
Calgary		6.2		6.7		(0.5)	(7.5%)
Total Canada		22.4		20.3		2.1	10.2%

Operating Costs and Expenses ⁽¹⁾
Edmonton	$	12.4	$	11.2	$	1.2	10.7%
Calgary		3.0		4.0		(1.0)	(25.0%)
Total Canada		15.4		15.2		0.2	1.3%

‎

The results below are presented to illustrate the estimated impact of COVID-19 on net operating revenue in the Canada segment for the three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021.

Amounts in millions
Q1
Q2
Jul
Aug
Sep
Q3
YTD
Edmonton - CAD
2022
13.6
16.8
5.8
6.1
5.9
17.8
48.2
2021
1.3
5.1
6.1
6.2
5.5
17.8
24.2
2022/2021
12.3
11.7
(0.3)
(0.1)
0.4
—
24.0
926.4%
230.1%
(4.9%)
(1.6%)
7.3%
—
99.0%
Edmonton - USD
2022
10.7
13.2
4.5
4.8
4.4
13.7
37.6
2021
1.0
4.2
4.9
4.9
4.4
14.2
19.4
2022/2021
9.7
9.0
(0.4)
(0.1)
—
(0.5)
18.2
923.5%
216.8%
(8.2%)
(2.0%)
—
(3.4%)
94.1%


	For the three months
	ended March 31,						%
Amounts in USD, in millions		2023		2022		Change	Change
Net Operating Revenue
Edmonton	$	11.9	$	10.7	$	1.2	11.3%
Calgary		4.6		5.3		(0.7)	(13.4%)
Total Canada		16.5		16.0		0.5	3.2%

Operating Costs and Expenses ⁽¹⁾
Edmonton	$	9.1	$	8.9	$	0.2	2.2%
Calgary		2.8		3.2		(0.4)	(12.5%)
Total Canada		11.9		12.1		(0.2)	(1.7%)

(1)

Amounts in millions
Q1
Q2
Jul
Aug
Sep
Q3
YTD
Calgary - CAD
2022
6.7
7.5
2.7
3.1
2.5
8.3
22.5
2021
1.2
3.1
3.1
3.3
2.7
9.1
13.4
2022/2021
5.5
4.4
(0.4)
(0.2)
(0.2)
(0.8)
9.1
449.4%
144.5%
(12.9%)
(6.1%)
(7.4%)
(8.3%)
68.4%
Calgary - USD
2022
5.3
5.8
2.1
2.4
1.9
6.4
17.5
2021
1.0
2.5
2.4
2.6
2.1
7.1
10.6
2022/2021
4.3
3.3
(0.3)
(0.2)
(0.2)
(0.7)
6.9
447.1%
134.9%
(12.5%)
(7.7%)
(9.5%)
(11.5%)
64.3%

~~The results below~~Operating costs and expenses are ~~presented to illustrate the estimated impact of COVID-19 on~~calculated as total operating costs and expenses ~~in the Canada segment for the three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021, excluding~~less depreciation and amortization ~~expense~~and gain on sale of casino operations and loss on sale of assets.

Amounts in millions
Q1
Q2
Jul
Aug
Sep
Q3
YTD
Edmonton - CAD
2022
11.2
13.0
4.6
5.0
4.7
14.3
38.5
2021
3.7
4.9
3.6
4.1
4.4
12.1
20.7
2022/2021
7.5
8.1
1.0
0.9
0.3
2.2
17.8
202.7%
165.3%
27.8%
22.0%
6.8%
18.2%
86.0%
Edmonton - USD
2022
8.9
10.2
3.5
3.9
3.5
10.9
30.0
2021
3.0
3.9
2.9
3.2
3.5
9.6
16.5
2022/2021
5.9
6.3
0.6
0.7
—
1.3
13.5
196.7%
161.5%
20.7%
21.9%
—
13.5%
81.8%

Three Months Ended March 31, 2023 and 2022

Amounts in millions
Q1
Q2
Jul
Aug
Sep
Q3
YTD
Calgary - CAD
2022
4.0
4.2
1.5
2.3
1.5
5.3
13.5
2021
2.1
2.6
1.5
1.7
1.5
4.7
9.4
2022/2021
1.9
1.6
—
0.6
—
0.6
4.1
90.5%
61.5%
—
35.3%
—
12.8%
43.6%
Calgary - USD
2022
3.2
3.3
1.2
1.8
1.1
4.1
10.6
2021
1.7
2.0
1.2
1.4
1.2
3.8
7.5
2022/2021
1.5
1.3
—
0.4
(0.1)
0.3
3.1
88.2%
65.0%
—
28.6%
(8.3%)
7.9%
41.3%

~~Net operating revenue~~The following discussion highlights results for the ~~nine~~three months ended ~~September 30, 2021 was impacted negatively by closures due~~March 31, 2023 compared to ~~COVID-19 as detailed in~~ the ~~tables above.~~three months ended March 31, 2022. Explanations below are provided based on CAD results.

~~First and Second Quarter 2021~~ – During the first five months of 2021, our revenue in the Canada segment was primarily from advance deposit wagering on horse races. In March 2021, we reopened some restaurants within our casinos. We reopened our casinos on June 10, 2021. Operating expenses were reduced by wage subsidies provided by the Canadian government through the Canada Emergency Wage Subsidy (“CEWS”) that was enacted in April 2020 as a result of COVID-19 to help employers offset a portion of their employee wages for a limited period. During the first six months of 2021, the qualified government wage subsidies reduced operating expenses by CAD 2.7 million ($2.2 million based on the average exchange rate for the nine months ended September 30, 2021).

During the Canadian closures, we suspended marketing initiatives, furloughed employees and reduced operating costs and expenses as much as possible. We believe that we have captured operating synergies, labor savings and cost savings following the reopening of our Canada properties in June 2021.

~~First and Second Quarter 2022~~ – Through early February 2022 we required customers to provide proof of vaccination, a negative rapid test result or an original medical ~~exception~~exemption letter for entry to comply with a government mandate. In accordance with a government mandate, all customers and employees were required to wear masks while indoors through early March 2022. ~~Since~~

Edmonton – Revenue increased at all of our Edmonton locations for the ~~lifting of these~~three months ended March 31, 2023 compared to the three months ended March 31, 2022 due to the COVID-19 restrictions ~~we have seen~~lifting. We continue to see a positive impact in the number of customers coming to our casinos and in operating results. Operating costs and expenses increased due to increased payroll and marketing costs and cost of goods sold.

~~Three Months Ended September 30, 2022 and 2021~~Calgary

~~During the three months ended September 30, 2021, operating expenses were reduced~~ – Gaming revenue decreased at Century Downs by ~~CAD~~ (CAD 0.2 million), or (5.3%), ($0.4 million, or 11.3%), due to a competitor opening close to the casino in November 2022. The sale of the land and building ceasing operations at Century Sports contributed to a decrease in net operating revenue of (CAD 0.3 million) ($0.3 ~~million based on the average exchange rate~~million) and decreased operating costs and expenses of (CAD 0.3 million) ($0.2 million) for the three months ended ~~September 30, 2021) due~~March 31, 2023 compared to ~~wage subsidies provided by~~ the ~~Canadian government through CEWS.~~


~~In CAD~~		~~In USD~~
~~Edmonton~~ – Net operating revenue decreased by CAD (0.5) million, or (7.4%), due to decreased gaming revenue. The gaming floor fully reopened in the third quarter of 2021, and there was a post-COVID increase in revenue that has since leveled off. Decreased gaming revenue was offset by increased hotel and food and beverage revenue. Restaurants and hotels were still operating with COVID-19 restrictions in the third quarter of 2021. Operating costs and expenses increased by CAD 0.6 million, or 17.5%, due to increased payroll costs and general and administrative expenses.		~~Edmonton~~ ~~– Net operating revenue decreased by ($0.6) million, or (10.6%). Operating costs and expenses increased by $0.4 million, or 13.5%.~~

~~St. Albert~~ – Net operating revenue decreased by CAD (0.3) million, or (8.6%), due to decreased gaming revenue. The gaming floor fully reopened in the third quarter of 2021, and there was a post-COVID increase in revenue that has since leveled off. Decreased gaming revenue was offset by increased food and beverage revenue. Restaurants were still operating with COVID-19 restrictions in the third quarter of 2021. Operating costs and expenses increased by CAD 0.3 million, or 17.2%, primarily due to increased payroll costs.		~~St. Albert~~ ~~– Net operating revenue decreased by ($0.3) million, or (11.8%). Operating costs and expenses increased by $0.2 million, or 13.2%.~~

~~Century Mile~~ – Net operating revenue increased CAD 0.8 million, or 9.0%, primarily due to increased gaming and food and beverage revenue. The increase was offset by decreased pari-mutuel revenue due to a decrease in advance deposit wagering. Operating costs and expenses increased by CAD 1.2 million, or 16.8%, due to increased payroll costs, marketing expenses and general and administrative expenses.		~~Century Mile~~ ~~– Net operating revenue increased by $0.4 million, or 5.3%. Operating costs and expenses increased by $0.7 million, or 12.8%.~~

‎


~~Century Downs~~ – Net operating revenue increased CAD 0.3 million, or 3.7%, primarily due to increased food and beverage revenue. The increased food and beverage revenue was due to restaurants still operating under COVID-19 restrictions in the third quarter of 2021. Operating costs and expenses increased by CAD 1.5 million, or 38.9%, due to increased payroll costs, marketing expenses and general and administrative fees. Operating costs and expenses also increased due to hosting the World Professional Chuckwagon Association World Finals in the third quarter ofthree months ended March 31, 2022.		~~Century Downs~~ ~~– Net operating revenue remained constant. Operating costs and expenses increased by $1.0 million, or 34.4%.~~

~~We continue to follow any government and local health board mandates related to COVID-19 and will adjust operations if there are any future COVID-19 related impacts.~~

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

‎


Poland
	For the three months							For the nine months							For the three months
	ended September 30,						%	ended September 30,						%	ended March 31,						%
Amounts in thousands		2022		2021		Change	Change		2022		2021		Change	Change		2023		2022		Change	Change
Gaming Revenue	$	21,478	$	20,811	$	667	3.2%	$	64,481	$	34,514	$	29,967	86.8%	$	25,249	$	21,625	$	3,624	16.8%
Food and Beverage Revenue		203		166		37	22.3%		610		221		389	176.0%		231		190		41	21.6%
Other Revenue		52		174		(122)	(70.1%)		174		1,016		(842)	(82.9%)		99		9		90	1000.0%
Net Operating Revenue		21,733		21,151		582	2.8%		65,265		35,751		29,514	82.6%		25,579		21,824		3,755	17.2%
Gaming Expenses		(13,518)		(12,565)		953	7.6%		(40,405)		(22,385)		18,020	80.5%		(16,101)		(13,450)		2,651	19.7%
Food and Beverage Expenses		(741)		(677)		64	9.5%		(2,269)		(1,317)		952	72.3%		(921)		(726)		195	26.9%
General and Administrative Expenses		(4,190)		(4,507)		(317)	(7.0%)		(13,943)		(12,255)		1,688	13.8%		(5,279)		(5,007)		272	5.4%
Depreciation and Amortization		(623)		(760)		(137)	(18.0%)		(1,979)		(2,320)		(341)	(14.7%)		(635)		(681)		(46)	(6.8%)
Total Operating Costs and Expenses		(19,072)		(18,509)		563	3.0%		(58,596)		(38,277)		20,319	53.1%		(22,936)		(19,864)		3,072	15.5%
Earnings (Loss) from Operations		2,661		2,642		19	0.7%		6,669		(2,526)		9,195	364.0%
Earnings from Operations																2,643		1,960		683	34.8%

Income Tax (Expense) Benefit		(465)		(674)		(209)	(31.0%)		(1,538)		216		1,754	812.0%
Income Tax Expense																(632)		(558)		74	13.3%
Non-Controlling Interest		(1,016)		(718)		298	41.5%		(2,144)		716		2,860	399.4%		(786)		(466)		320	68.7%
Net Earnings (Loss) Attributable to Century Casinos, Inc. Shareholders		2,032		1,437		595	41.4%		4,285		(1,432)		5,717	399.2%
Net Earnings Attributable to Century Casinos, Inc. Shareholders																1,574		931		643	69.1%
Adjusted EBITDA	$	3,311	$	3,005	$	306	10.2%	$	8,679	$	(603)	$	9,282	1539.3%	$	3,279	$	2,644	$	635	24.0%

In Poland, casino gaming licenses are granted for a term of six years. These licenses are not renewable. Before a gaming license expires, there is a public notification of the available license and any gaming company can apply for a new license for that city. CPL was awarded a casino gaming license in the Warsaw market which it is currently using at the casino in the Warsaw Marriott. In September 2022, CPL transferred the casino license for the Warsaw Marriott Hotel expiring in July 2024 to the Warsaw Hilton Hotel, and CPL was granted a new license for the Warsaw Marriott Hotel expiring in September 2028. The next license expiration for a CPL casino occurs in October 2023 in Bielsko-Biala and Katowice and November 2023 in Wroclaw.

Results in US dollars were impacted by a ~~(21.4%) and (15.6%~~(6.6%) decrease in the average exchange rate between the US dollar and Polish zloty for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 compared to the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2022.

The ~~table~~tables below ~~provides~~provide results for the ~~closure and reopen dates for casinos in~~ Poland ~~due to COVID-19 in December 2020 and in 2021.~~reportable segment.


~~Closure Date~~	~~Reopen Date~~
~~December 29, 2020~~	~~February 12, 2021~~
~~March 20, 2021~~	~~May 28, 2021~~


	For the three months
	ended March 31,						%
Amounts in PLN, in millions		2023		2022		Change	Change
Net Operating Revenue
Poland	$	112.3	$	90.2	$	22.1	24.6%

Operating Costs and Expenses ⁽¹⁾
Poland	$	97.9	$	79.1	$	18.8	23.8%

‎


	For the three months
	ended March 31,						%
Amounts in USD, in millions		2023		2022		Change	Change
Net Operating Revenue
Poland	$	25.6	$	21.8	$	3.8	17.2%

Operating Costs and Expenses ⁽¹⁾
Poland	$	22.3	$	19.2	$	3.1	16.1%

(1)Operating costs and expenses are calculated as total operating costs and expenses less depreciation and amortization.

Three Months Ended March 31, 2023 and 2022

The following discussion highlights results ~~below are presented to illustrate the estimated impact of COVID-19 on net operating revenue in the Poland segment~~ for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 compared to the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2022. Explanations below are provided based on PLN results.

Amounts in millions
Q1
Q2
Jul
Aug
Sep
Q3
YTD
PLN
2022
90.2
94.6
34.2
34.0
34.0
102.2
287.0
2021
22.4
32.4
25.5
28.8
27.7
82.0
136.8
2022/2021
67.8
62.2
8.7
5.2
6.3
20.2
150.2
303.4%
191.4%
34.1%
18.1%
22.7%
24.8%
109.9%
USD
2022
21.8
21.7
7.3
7.3
7.2
21.8
65.3
2021
5.9
8.7
6.6
7.4
7.2
21.2
35.8
2022/2021
15.9
13.0
0.7
(0.1)
—
0.6
29.5
269.3%
149.8%
10.6%
(1.4%)
—
2.8%
82.6%

The results below are presented to illustrate the estimated impact of COVID-19 on operating expenses in the Poland segment for the three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021 excluding depreciation and amortization expense.

Amounts in millions
Q1
Q2
Jul
Aug
Sep
Q3
YTD
PLN
2022
79.1
82.8
27.6
29.0
30.2
86.8
248.7
2021
32.0
36.5
21.9
24.2
22.6
68.7
137.2
2022/2021
47.1
46.3
5.7
4.8
7.6
18.1
111.5
147.2%
126.8%
26.0%
19.8%
33.6%
26.3%
81.3%
USD
2022
19.2
19.0
5.9
6.2
6.3
18.4
56.6
2021
8.5
9.7
5.7
6.2
5.9
17.8
36.0
2022/2021
10.7
9.3
0.2
—
0.4
0.6
20.6
125.9%
95.9%
3.5%
—
6.8%
3.4%
57.2%

~~First and Second Quarter 2021~~ – Net operating revenue ~~was negatively impacted by temporary closures and reduced tourism in Warsaw~~increased primarily due to ~~COVID-19. The casinos~~increased gaming revenue. We saw an increase in ~~Poland reopened on May 28, 2021. During the closures of our Poland casinos, we reduced operating~~revenue throughout 2022 and into 2023 as COVID-19 related travel restrictions lessened. Operating costs and expenses ~~as much as possible.~~

~~First~~increased due to an increase in payroll costs and ~~Second Quarter 2022~~ – Travel and hotel occupancy in Poland have increased since most COVID-19 travel restrictions have been lifted. We have not seen a material negative impact on our operations as a result of the war in Ukraine. Although Poland borders Ukraine, our casinos are not located near the border. However, continued conflict in that region could have a negative impact on our results of operations.

~~Three Months Ended September 30, 2022 and 2021~~


~~In PLN~~		~~In USD~~
Net operating revenue increased by PLN 20.3 million, or 24.8%, due primarily to increased gaming revenue. Gaming revenue increased as COVID-19 travel restrictions lessened. Operating costs and expenses increased by PLN 18.1 million, or 26.3%, due to increased gaming-related ~~expenses, including gaming tax expense, payroll costs and marketing~~ expenses.		~~Net operating revenue increased by $0.6 million, or 2.8%. Operating costs and expenses increased by $0.6 million, or 3.4%.~~

~~We continue to follow any government and local health board mandates related to COVID-19 and will adjust operations if there are any future COVID-19 related impacts.~~

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

‎

4539


Corporate and Other
	For the three months							For the nine months							For the three months
	ended September 30,						%	ended September 30,						%	ended March 31,						%
Amounts in thousands		2022		2021		Change	Change		2022		2021		Change	Change		2023		2022		Change	Change
Gaming Revenue	$	36	$	69	$	(33)	(47.8%)	$	120	$	84	$	36	42.9%	$	57	$	30	$	27	90.0%
Other Revenue		—		125		(125)	(100.0%)		11		372		(361)	(97.0%)		—		2		(2)	(100.0%)
Net Operating Revenue		36		194		(158)	(81.4%)		131		456		(325)	(71.3%)		57		32		25	78.1%
Gaming Expenses		(29)		(49)		(20)	(40.8%)		(87)		(62)		25	40.3%		(42)		(27)		15	55.6%
General and Administrative Expenses		(3,897)		(3,255)		642	19.7%		(12,997)		(8,385)		4,612	55.0%		(3,559)		(4,927)		(1,368)	(27.8%)
Depreciation and Amortization		(81)		(108)		(27)	(25.0%)		(321)		(317)		4	1.3%		(61)		(121)		(60)	(49.6%)
Total Operating Costs and Expenses		(4,007)		(3,412)		595	17.4%		(13,405)		(8,764)		4,641	53.0%		(3,662)		(5,075)		(1,413)	(27.8%)
Earnings from Equity Investment		1,071		—		1,071	100.0%		2,134		—		2,134	100.0%		1,091		—		1,091	100.0%
Loss from Operations		(2,900)		(3,218)		318	9.9%		(11,140)		(8,308)		(2,832)	(34.1%)		(2,514)		(5,043)		2,529	50.1%

Income Tax Benefit (Expense)		6,899		(1,420)		(8,319)	(585.8%)		18,153		(3,368)		(21,521)	(639.0%)		2,419		(255)		(2,674)	(1048.6%)
Net Loss Attributable to Century Casinos, Inc. Shareholders		(4,083)		(7,908)		3,825	48.4%		(18,473)		(21,657)		3,184	14.7%		(10,059)		(8,531)		(1,528)	(17.9%)
Adjusted EBITDA	$	(1,571)	$	(2,124)	$	553	26.0%	$	(5,593)	$	(7,054)	$	1,461	20.7%	$	(1,554)	$	(3,129)	$	1,575	50.3%

The following operations ~~and agreements~~ make up the reporting unit Cruise Ships & Other in the Corporate and Other reportable segment:

As of ~~September 30, 2022,~~March 31, 2023, we had a concession agreement with TUI Cruises for one ship-based ~~casino that ends in the second quarter of~~casino. The agreement ended on April 16, 2023. The table below illustrates the ships operating during the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.


Ship	Operated From	Operated To
Mein Schiff Herz	April 5, 2022	~~Currently operating~~April 16, 2023
Mein Schiff 6	June 11, 2021	April 18, 2022

Through our subsidiary CRM, we had a 7.5% ownership interest in MCE that was sold in November 2021 for nominal consideration. In addition, the consulting services agreement under which CRM provided advice to MCE on casino matters was terminated in November 2021. See Note 1, “Description of Business and Basis of Presentation,” to our condensed consolidated financial statements in Part I, Item 1 of this report for additional information related to MCE.

~~Our corporate reporting units include certain corporate and management operations.~~

Three Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~

The following discussion highlights results for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the three months ended ~~September 30, 2021.~~March 31, 2022.

~~Revenue Highlights~~

~~Non-Corporate Reporting Units~~ –Net operating revenue ~~decreased~~remained constant due to ~~termination~~the operation of one ship-based casino in each of the ~~MCE consulting services agreement~~three months ended March 31, 2023 and 2022, as detailed in ~~November 2021.~~the table above.

~~Operating Expense Highlights~~

~~Non-Corporate Reporting Units~~ – ~~Total operating~~General and administrative expenses decreased by ($1.4) million, or (27.8%), due primarily to decreased acquisition costs and ~~expenses remained constant.~~

~~Corporate Reporting Units~~ – Total operating costs and expenses excluding depreciation and amortization expense, increased by $0.7 million, or 23.0%, primarily due to increased payroll costs and acquisition costs related to the Nugget Acquisition and the Rocky Gap Acquisition.insurance costs. Earnings from equity investment relates to income from our 50% membership interest in ~~PropCo.~~

‎

~~Nine Months Ended September 30, 2022 and 2021~~

~~The following discussion highlights results for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.~~

~~Revenue Highlights~~

~~Non-Corporate Reporting Units~~ –~~Net operating revenue decreased due to termination of the MCE consulting services agreement in November 2021.~~

~~Operating Expense Highlights~~

~~Non-Corporate Reporting Units~~ ~~– Total operating costs and expenses decreased due to the sale of gaming equipment during the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.~~

~~Corporate Reporting Units~~ – Total operating costs and expenses excluding depreciation and amortization expense, increased by $5.0 million, or 60.9%, primarily due to acquisition costs related to the Nugget Acquisition and the Rocky Gap Acquisition and increased payroll expense. Earnings from equity investment relates to income from our 50% membership interest in PropCo.Smooth Bourbon.

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

Non-Operating Income (Expense)

Non-operating income (expense) was as follows:


	For the three months							For the nine months							For the three months
	ended September 30,						%	ended September 30,						%	ended March 31,						%
Amounts in thousands	2022		2021		$ Change		Change	2022		2021		$ Change		Change	2023		2022		$ Change		Change
Interest Income	$	574	$	164	$	410	250.0%	$	699	$	164	$	535	326.2%	$	145	$	17	$	128	752.9%
Interest Expense		(15,924)		(10,784)		5,140	47.7%		(48,638)		(31,994)		16,644	52.0%		(17,649)		(10,811)		6,838	63.3%
Gain (Loss) on Foreign Currency Transactions, Cost Recovery Income and Other		409		(135)		544	403.0%		2,725		302		2,423	802.3%
Gain on Foreign Currency Transactions, Cost Recovery Income and Other																3,758		1,893		1,865	98.5%
Non-Operating (Expense) Income	$	(14,941)	$	(10,755)	$	4,186	38.9%	$	(45,214)	$	(31,528)	$	13,686	43.4%	$	(13,746)	$	(8,901)	$	4,845	54.4%

Interest income

Interest income is directly related to interest earned on our cash reserves and the Acquisition Escrow.

‎

Interest expense

Interest expense is directly related to interest owed on our borrowings under our Goldman Credit Agreement, Macquarie Credit Agreement, our financing obligation with VICI PropCo, our CPL and CRM borrowings, our capital lease agreements and interest expense related to the CDR land lease. We ~~wrote off approximately $7.3~~Interest expense increased as a result of an additional $176.9 million in principal debt as of ~~deferred financing costs~~March 31, 2023 under the Goldman Credit Agreement compared to ~~interest expense in~~ the ~~nine months ended September 30,~~principal debt as of March 31, 2022 ~~in connection with the prepayment of~~under the Macquarie ~~Term Loan.~~Credit Agreement.

Gain ~~(loss)~~ on foreign currency transactions, cost recovery income and other

~~Cost~~CDR received cost recovery income of ~~$1.9~~$3.5 million ~~was received by CDR~~ for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 related to infrastructure built during the development of the Century Downs REC project. The distribution to CDR’s non-controlling shareholders through non-controlling interest is part of a credit agreement between CRM and CDR. Cost recovery income of ~~$0.7~~$1.9 million was received by CDR for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022.

Taxes

Income tax expense is recorded relative to the jurisdictions that recognize book earnings. During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, we recognized income tax ~~benefit~~expense of ~~($8.1)~~$1.6 million on pre-tax income of ~~$8.6~~$4.7 million, representing an effective income tax rate of ~~(94.1%)~~34.9%, compared to income tax expense of ~~$3.8~~$1.4 million on pre-tax income of ~~$20.6~~$4.1 million, representing an effective income tax rate of ~~18.5%~~34.6% for the same period in ~~2021.~~2022. For further discussion of our effective income tax rates and an analysis of our effective income tax rate compared to the US federal statutory income tax rate, see Note 8, “Income Taxes,” to our condensed consolidated financial statements included in Part I, Item 1 of this report.

‎

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.

Cash Flows – Summary

Our cash flows; cash, cash equivalents and restricted cash; and working capital consisted of the following:


	For the nine months				For the three months
	ended September 30,				ended March 31,
Amounts in thousands	2022		2021		2023		2022
Net cash provided by operating activities	$	36,688	$	48,681	$	12,280	$	11,545
Net cash used in investing activities		(100,892)		(7,373)
Net cash provided by (used in) financing activities		158,443		(3,327)
Net cash (used in) provided by investing activities						(10,791)		1,082
Net cash used in financing activities						(337)		(3,412)

Cash, cash equivalents and restricted cash ⁽¹⁾	$	199,499	$	101,182	$	203,104	$	117,433
Working capital ⁽²⁾	$	65,181	$	69,506	$	161,237	$	80,157

(1)Cash, cash equivalents and restricted cash as of ~~September 30, 2022~~March 31, 2023 includes ~~$100.1~~$100.2 million related to the Acquisition Escrow.

(2)Working capital is defined as current assets ~~excluding restricted cash,~~ minus current ~~liabilities.~~liabilities and includes the $100.2 million related to the Acquisition Escrow.

Operating Activities

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.

Investing Activities

Net cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 consisted of ~~$95.0 million for the purchase of the 50% equity interest in Smooth Bourbon, $0.4 million for the purchase of a casino license in Poland, $1.6~~$0.9 million for slot machine purchases and $0.2 million in gaming-related purchases ~~$0.1 million for outdoor pool and patio furniture and $0.1 million for hotel carpet~~ in West Virginia, ~~$0.9~~$4.3 million for our hotel ~~remodel~~project in Cape Girardeau, ~~$1.3~~$3.2 million for our casino project in Caruthersville, ~~$1.9~~$0.2 million for our stand-alone hotel project in Caruthersville, ~~$1.5~~$0.3 million for slot machine purchases and $0.4 million for surveillance equipment at our Missouri properties, ~~$0.4~~$0.1 million for slot machine purchases, $0.2 million in gaming-related purchases and ~~$0.2~~$0.1 million in camera upgrades at our Colorado properties, ~~$0.6 million for employee housing in Cripple Creek, $0.7~~$3.1 million in slot machine ~~and table game~~ purchases in Poland, ~~$0.2~~$0.4 million ~~for carpet~~related to adding sportsbooks at ~~Century Downs~~our Canada properties and ~~$3.0~~$0.3 million in other fixed asset additions at our properties, offset by $0.6 million in proceeds from the earn out related to the sale of casino operations in Calgary in 2020 and $2.3 million in dividends from Smooth Bourbon.

Net cash provided by investing activities for the three months ended March 31, 2022 consisted of $6.3 million in proceeds from the sale of the land and building in Calgary, ~~$1.0 million in dividends from Smooth Bourbon and $0.1 million in proceeds from the disposition of assets.~~

Net cash used in investing activities for the nine months ended September 30, 2021 consisted of $0.6 million for slot machine purchases, $0.2 million in energy efficiency upgrades, and $0.7 million in gaming floor upgrades at our West Virginia property; $1.0 million for slot machine purchases, $0.4 million in other gaming equipment, $0.4 million in restaurant rebranding, $0.9 million in hotel renovations and $0.2 million in surveillance equipment at our Missouri properties; $0.2 million in building and improvements, $0.1offset by $1.5 million for slot machine purchases and $0.2 million in gaming-related purchases in West Virginia, $0.2 million for our hotel project in Cape Girardeau, $0.5 million for our casino project in Caruthersville, $0.6 million for our stand-alone hotel project in ~~server upgrades~~Caruthersville, $0.5 million for slot machine purchases at our ~~Colorado properties;~~Missouri properties, and ~~$2.1~~$1.7 million in other fixed asset additions at our properties and $0.1 million in working capital adjustments paid to the buyer of Century Casino Calgary, offset by less than $0.1 million in proceeds from the Century Casino Calgary sale earn out and less than $0.1 million in proceeds from the sale of fixed assets.properties.

Financing Activities

Net cash provided by financing activities for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 consisted of ~~$179.9~~$4.5 million in proceeds from borrowings net of principal payments, offset by $1.3 million to repurchase shares to satisfy tax withholding related to our performance stock unit awards and ~~$0.3~~$3.5 million in ~~proceeds from~~distributions to non-controlling interests in CDR.

Net cash used in financing activities for the ~~exercise~~three months ended March 31, 2022 consisted of ~~stock options, offset by $18.9~~$1.0 million in principal payments ~~of deferred financing costs,~~on borrowings, $0.4 million to repurchase shares to satisfy tax withholding related to our performance stock unit awards and ~~$2.4~~a $2.0 million ~~in distributions~~distribution to non-controlling interests in ~~CDR and CPL.~~CDR.

Net cash used in financing activities for the nine months ended September 30, 2021 consisted of $2.9 million in principal payments on borrowings and a $0.7 million distribution to non-controlling interest in CDR, offset by $0.2 million in proceeds from the exercise of stock options.

Borrowings and Repayments of Long-Term Debt and Lease Agreements

As of ~~September 30, 2022,~~March 31, 2023, our total debt under bank borrowings and other agreements net of ~~$17.5~~$16.2 million related to deferred financing costs was ~~$349.8~~$349.0 million, of which ~~$344.4~~$343.8 million was long-term debt and ~~$5.3~~$5.2 million was the current portion of long-term debt. The current portion relates to payments due within one year under our Goldman Credit Agreement and the UniCredit Term Loans. On April 1, 2022, we entered into the Goldman Credit Agreement which provides for a $350.0 million term loan and a $30.0 million revolving line of credit. We drew the $350.0 million under the Goldman Term Loan on April 1, 2022 and used the proceeds as well as approximately $29.3 million of cash on hand to fund the ~~PropCo~~Smooth Bourbon Acquisition, repay the $166.2 million outstanding on the Macquarie Credit Agreement, fund $100.0 million of Acquisition Escrow for the Nugget Acquisition and for related fees and expenses. For a description of our debt agreements, see Note 5, “Long-Term Debt” to our condensed consolidated financial statements included in Part I, Item 1 of this report. Net Debt was ~~$268.0~~$262.5 million as of ~~September 30, 2022~~March 31, 2023 compared to ~~$89.8~~$71.1 million as of ~~September 30, 2021.~~March 31, 2022. The increase in Net Debt was primarily due to a ~~$167.3~~$176.9 million increase in long-term ~~debt.~~debt related to the Goldman Credit Agreement. For the definition and reconciliation of Net Debt to the most directly comparable US GAAP measure, see “Non-US GAAP Measures – Net Debt” above.

The following table lists the amount of remaining ~~2022~~2023 maturities of our debt:


Amounts in thousands	Amounts in thousands							Amounts in thousands
Goldman Credit Agreement⁽¹⁾	Goldman Credit Agreement⁽¹⁾	UniCredit Term Loans		Century Downs ‎Land Lease		Total		Goldman Credit Agreement⁽¹⁾	UniCredit Term Loans		Century Downs ‎Land Lease		Total
$	875	$	464	$	—	$	1,339	2,625	$	1,359	$	—	$	3,984

(1)The Term Loan under the Goldman Credit Agreement requires scheduled quarterly payments of $875,000, equal to 0.25% of the original aggregate principal amount of the Term Loan, with the balance due at maturity.

Based on our current interest and Term Loan payment requirements under the Goldman Credit Agreement, we expect our cash payments under the Goldman Credit Agreement due for the remainder of 2023 will be approximately $31.0 million.

The following table lists the amount of remaining ~~2022~~2023 payments due under our operating and finance lease ~~agreements and our Master Lease:~~agreements:


Amounts in thousands	Amounts in thousands					Amounts in thousands
Operating Leases	Operating Leases	Finance Leases		Master Lease		Operating Leases	Finance Leases
$	1,215	$	49	$	4,250	3,948	$	137

Cash payments due under the Master Lease for the remainder of 2023 are $18.3 million, which includes a CPI increase and excludes the increased rent due to the Rocky Gap acquisition discussed below.

Common Stock Repurchase Program

Since March 2000, we have had a discretionary program to repurchase our outstanding common stock. The total amount remaining under the repurchase program was $14.7 million as of ~~September 30, 2022.~~March 31, 2023. We did not repurchase any common stock during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. The repurchase program has no set expiration or termination date.

‎

Potential Sources of Liquidity and Short-Term Liquidity

Historically, our primary source of liquidity and capital resources has been cash flow from operations. As of ~~September 30, 2022,~~March 31, 2023, we had ~~$99.3~~$102.7 million in cash and cash equivalents compared to ~~$107.8~~$101.8 million in cash and cash equivalents at December 31, ~~2021. We~~2022. As of March 31, 2023, we also ~~have $100.1~~had $100.2 million of restricted cash in the Acquisition Escrow to fund the purchase price for the OpCo Acquisition. The Acquisition Escrow was used to fund the OpCo Acquisition at the Second Closing on April 3, 2023. When necessary and available, we supplement the cash flows generated by our operations with funds provided by bank borrowings or other debt or equity financing activities. As of ~~September 30, 2022,~~March 31, 2023, we had $30.0 million available on our Revolving Facility. In addition, we have generated cash from sales of existing casino operations and proceeds from the issuance of equity securities upon the exercise of stock options.

Impact of COVID-19

The duration and impact of the COVID-19 pandemic remains uncertain. We cannot predict the negative impacts that COVID-19 will have on our consumer demand, workforce, suppliers, contractors and other partners, and, whether future closures will be required. While the severity and duration of such business impacts cannot currently be estimated, the effects of COVID-19, governmental health and safety requirements and any future closures are expected to have a material impact on our business. We will continue to monitor our liquidity and make reductions to marketing and operating expenditures, where possible, if future government mandates or closures are required that would have an adverse impact on us.

‎

Planned Projects, the Nugget Acquisition, the Rocky Gap Acquisition and Sources of Liquidity

Planned capital expenditures for the remainder of ~~2022~~2023 include approximately ~~$1.7~~$27.4 million in gaming equipment and renovations to various properties, including the Nugget, and security system upgrades. We refurbished a hotel near Century Casino Caruthersville that opened on October 30, 2022. As of September 30, 2022, we have spent $2.7 million on this project and estimate an additional $1.0 million will be spent in the fourth quarter of 2022. We funded this project with cash on hand. We plan to move our Century Casino Caruthersville riverboat casino toare constructing a new land-based casino with a small hotel adjacent to and connected with the existing ~~building.~~pavilion building at Century Casino Caruthersville. Construction began in ~~October~~December 2022 with completion expected in ~~the second half of~~late 2024. We estimate this project will cost $51.9 ~~million and we plan to fund the cost of this~~million. The project is being financed with ~~a combination of~~ financing ~~and cash on hand.~~provided by VICI PropCo. As of ~~September 30, 2022,~~March 31, 2023, we have received $10.9 million from VICI PropCo and have spent approximately ~~$2.1~~$5.4 million of those funds on this project. We estimate that we will spend approximately $34.6 million on this project ~~and estimate $2.5 million of capital expenditures related to this project~~ in the ~~fourth quarter~~remainder of ~~2022.~~2023, which will be financed by VICI PropCo. We ~~plan to build~~are also building a hotel at our Cape Girardeau location. ~~Planning, design and preparations for the project are substantially complete.~~ Construction began in September 2022 and is expected to be completed in the first half of 2024. We estimate this project will cost approximately $30.5 ~~million and we~~million. We plan to fund the project with cash on hand. As of ~~September 30, 2022,~~March 31, 2023, we have spent approximately ~~$1.4~~$7.1 million on this project. We estimate that we will spend approximately $22.5 million on this project ~~and estimate $2.9 million of capital expenditures related to this project~~ in the ~~fourth quarter~~remainder of ~~2022.~~2023.

In February 2022, we entered into a definitive agreement to purchase (i) 50% of the membership interests in ~~PropCo,~~Smooth Bourbon, and (ii) 100% of the membership interests of ~~OpCo. OpCo~~Nugget. Nugget owns and operates the Nugget Casino Resort in Sparks, Nevada, and ~~PropCo~~Smooth Bourbon owns the real property on which the casino is located. At the First Closing, on April 1, 2022, we purchased 50% of the membership interests in ~~PropCo~~Smooth Bourbon for approximately $95.0 million and ~~PropCo~~Smooth Bourbon entered into a lease with ~~OpCo~~Nugget for an annual rent of $15.0 million. We used approximately $29.3 million of cash on hand and borrowings under the Goldman Credit Agreement in connection with the First Closing. ~~Subject to approval from the Nevada Gaming Commission, our purchase of~~On April 3, 2023, we purchased 100% of the membership interests in ~~OpCo~~Nugget for approximately $100.0 million (subject to certain adjustments) ~~is expected to close within one year after~~using the ~~First Closing, at which point we will own the operating assets of Nugget Casino Resort and 50% of the membership interests~~funds in ~~PropCo.~~Acquisition Escrow. We also have a five-year option to acquire the remaining 50% of the membership interests in ~~PropCo~~Smooth Bourbon for $105.0 million plus 2% per annum.

As stated above, in connection with the Nugget Acquisition we have entered into the Goldman Credit Agreement for (i) $350.0 million in senior secured term loan debt financing to refinance our existing debt under the Macquarie Credit Agreement, fund the Nugget Acquisition, and to pay related expenses, and (ii) a $30.0 million senior secured revolving credit facility. The purchase price for the OpCo Acquisition will be paid from $100.0 million of proceeds of the Goldman Term Loan that were borrowed and deposited in the Acquisition Escrow on the First Closing date. Based on our current interest and Term Loan payment requirements under the Goldman Credit Agreement, we expect that our annual debt service payments will increase by $19.2 million compared to the year ended December 31, 2021.

On August 24, 2022, we entered into a definitive agreement with Lakes Maryland, Golden, and VICI PropCo, pursuant to which we agreed to acquire the operations of Rocky Gap for approximately $56.1 million subject to the conditions and terms set forth therein. Pursuant to a real estate purchase agreement, dated August 24, 2022, by and between Evitts and an affiliate of VICI PropCo, VICI PropCo agreed to acquire the real estate assets relating to Rocky Gap for approximately $203.9 million, subject to the conditions and terms set forth therein. In connection with the closing of this transaction, one of our subsidiaries and a subsidiary of VICI PropCo will enter into an amendment the Master Lease to (i) add Rocky Gap to the Master Lease, (ii) provide for an initial annual rent for Rocky Gap of approximately $15.5 million, and (iii) extend the initial Master Lease term for 15 years from the date of the amendment (subject to the existing four five-year renewal options). We plan to fund the acquisition with cash on hand.

We may be required to raise additional capital to address our liquidity and capital needs. We have a shelf registration statement with the SEC that became effective in July 2020 under which we may issue, from time to time, up to $100 million of common stock, preferred stock, debt securities and other securities. We intend to renew the shelf registration statement in 2023.

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. Our access to and cost of financing will depend on, among other things, global economic conditions, conditions in the financing markets, the availability of sufficient amounts of financing, our prospects and our credit ratings. 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. The failure to raise the funds necessary to fund our debt service and rent obligations and finance our operations and other capital requirements could have a material and adverse effect on our business, financial condition and liquidity.

In addition, we expect our US domestic cash resources will be sufficient to fund our US operating activities and cash commitments for investing and financing activities. While we currently do not have an intent nor foresee a need to repatriate funds, we could require more capital in the US than is generated by our US operations for operations, capital expenditures or significant discretionary activities such as acquisitions of businesses and share repurchases. If so, we could elect to repatriate earnings from foreign jurisdictions in the form of a cash dividend, which would generally be exempt from taxation with the exception of the adverse impact of withholding taxes. We also could elect to raise capital in the US through debt or equity issuances. We estimate that approximately ~~$34.4~~$39.3 million of our total ~~$99.3~~$102.7 million in cash and cash equivalents at ~~September 30, 2022~~March 31, 2023 is held by our foreign subsidiaries and is not available to fund US operations unless repatriated.

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, ~~2021.~~2022.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures – Our management, with the participation of our principal executive officers and principal financial 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 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, 2022~~March 31, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1A. Risk Factors

We may not be fully compensated to relocate the Nugget Casino and may be required to seek additional funding if the Nevada Department of Transportation (“NDOT”) project moves forward.

A majority of the casino floor at the Nugget Casino is located beneath Interstate 80 (“I-80”) in Sparks, Nevada. NDOT has discussed the possibility of expanding I-80, which would require us to rebuild the Nugget Casino on existing land owned by Smooth Bourbon and leased to Nugget. We anticipate that NDOT would compensate us to move the casino to a new location; however, the value that is determined by NDOT for purposes of compensating us may not cover the full construction costs. If we are unable to get fully compensated for building a new casino, we may be required to use cash on hand or seek financing, which may not be available on favorable terms or at all.

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, 2022.~~March 31, 2023. There were no repurchases of common stock during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023.

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5144

Item 6. Exhibits


Exhibit No.	Document
~~2.1~~	Equity Purchase Agreement, dated as of August 24, 2022, by and among Lakes Maryland Development, LLC, Century Casinos, Inc., VICI Properties L.P. and Golden Entertainment, Inc., is hereby incorporated by reference to the Company’s Current Report on Form 8-K filed on August 26, 2022.
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 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 Stock Unit Agreement is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 21, 2023.
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~~President..
31.3*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Chief Financial ~~Officer~~Officer..
32.1**	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Co-Chief Executive ~~Officer~~Officer..
32.2**	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Co-Chief Executive Officer and ~~President~~President..
32.3**	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Chief Financial ~~Officer~~Officer..
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File, formatted in Inline XBRL and contained in Exhibit 101

* Filed herewith.

** Furnished herewith.

P Filed on Paper

5245

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

Chief Financial Officer

Date: ~~November 3, 2022~~May 8, 2023

5346


Amounts in millions	Q1	Q2	Jul	Aug	Sep	Q3	YTD
Edmonton - CAD
2022	13.6	16.8	5.8	6.1	5.9	17.8	48.2
2021	1.3	5.1	6.1	6.2	5.5	17.8	24.2
2022/2021	12.3	11.7	(0.3)	(0.1)	0.4	—	24.0
	926.4%	230.1%	(4.9%)	(1.6%)	7.3%	—	99.0%
Edmonton - USD
2022	10.7	13.2	4.5	4.8	4.4	13.7	37.6
2021	1.0	4.2	4.9	4.9	4.4	14.2	19.4
2022/2021	9.7	9.0	(0.4)	(0.1)	—	(0.5)	18.2
	923.5%	216.8%	(8.2%)	(2.0%)	—	(3.4%)	94.1%


Amounts in millions	Q1	Q2	Jul	Aug	Sep	Q3	YTD
Calgary - CAD
2022	6.7	7.5	2.7	3.1	2.5	8.3	22.5
2021	1.2	3.1	3.1	3.3	2.7	9.1	13.4
2022/2021	5.5	4.4	(0.4)	(0.2)	(0.2)	(0.8)	9.1
	449.4%	144.5%	(12.9%)	(6.1%)	(7.4%)	(8.3%)	68.4%
Calgary - USD
2022	5.3	5.8	2.1	2.4	1.9	6.4	17.5
2021	1.0	2.5	2.4	2.6	2.1	7.1	10.6
2022/2021	4.3	3.3	(0.3)	(0.2)	(0.2)	(0.7)	6.9
	447.1%	134.9%	(12.5%)	(7.7%)	(9.5%)	(11.5%)	64.3%