****
 **UNITED
STATES**
 **SECURITIES
AND EXCHANGE COMMISSION**
 **Washington,
D.C. 20549**
 **FORM
10-K**
 
 ___ X ___  ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the
fiscal year ended December
31, 2004 .
 OR
 _______  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 0-22290
 
 CENTURY
CASINOS, INC.
 (Exact
name of registrant as specified in its charter)
 
 **DELAWARE**
    **84-1271317**(State or other jurisdiction of incorporation
    (I.R.S. Employeror organization)
    Identification No.)
 
 1263 Lake
Plaza Drive, Suite A, Colorado Springs, Colorado 80906
 (Address
of principal executive offices) (Zip Code)
 (719)
527-8300
 (Registrant’s
telephone number, including area code)
 
 Securities
Registered Pursuant to Section 12(b) of the Act: None.
 
 Securities
Registered Pursuant to Section 12(g) of the Act:
 Common
Stock, $.01 Par Value
 (Title of
class)
 
 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 X  No
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K . [ X ]
 
 Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Act). Yes  No
_ X_
 
 The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant as of June 30, 2004, based upon the average bid
and asked price of $5.51 for the Common Stock on the NASDAQ Stock Market on that
date, was $55,179,489.
 
 As of
March 21, 2005, the Registrant had 13,754,900 shares of Common Stock
outstanding.
 
 DOCUMENTS
INCORPORATED BY REFERENCE: Part
III incorporates by reference from the Registrant’s Definitive Proxy Statement
for its 2005 Annual Meeting of Stockholders to be filed with the Commission
within 120 days of December 31, 2004.
 
 1
   **INDEX**
 **Part
      I**
    
    **Page****Item
      1.**
    **Business**
    **4****Item
      2.**
    **Properties**
    **19****Item
      3.**
    **Legal
      Proceedings**
    **20****Item
      4.**
    **Submission
      of Matters to a Vote of Security Holders**
    **20****Part
      II****Item
      5.**
    **Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities**
    **21****Item
      6.**
    **Selected
      Financial Data**
    **23****Item
      7.**
    **Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations**
    **24****Item
      7A.**
    **Quantitative
      and Qualitative Disclosures About Market Risk**
    **48****Item
      8.**
    **Financial
      Statements and Supplementary Data**
    **48****Report
      of Independent Registered Public Accounting Firm - Grant Thornton
      LLP**
    **F1******
      **Report
      of Independent Certified Public Accountants - PricewaterhouseCoopers
      Inc.**
    **F2****Consolidated
      Balance Sheets as of December 31, 2004 and 2003**
    **F3****Consolidated
      Statements of Earnings for the Years Ended December 31, 2004, 2003 and
      2002**
    **F4****Consolidated
      Statements of Shareholders’ Equity and Comprehensive Income for the Years
      Ended December 31, 2004, 2003, and 2002**
    **F5****Consolidated
      Statements of Cash Flows for the Years Ended December 31, 2004, 2003 and
      2002**
    **F6****Notes
      to Consolidated Financial Statements**
    **F8****Item
      9A.**
    **Controls
      and Procedures**
    **48**
  2
  
 **Part
      III****Item
      10.**
    **Directors
      and Executive Officers of the Registrant**
    **50****Item
      11.**
    **Executive
      Compensation**
    **50****Item
      12.**
    **Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters**
    **50****Item
      13.**
    **Certain
      Relationships and Related Transactions**
    **50****Item 14.**
    **Principal
      Accountant Fees and Services**
    ****
      **50****Part
      IV****Item
      15.**
    **Exhibits
      and Financial Statement Schedules**
    **51****SIGNATURES**
    **59**
 
   3
   **DISCLOSURE
REGARDING FORWARD-LOOKING STATEMENTS**
 
 **This
Annual Report on Form 10-K and certain information incorporated herein by
reference contain forward-looking statements within the meaning of Section 21E
of the Securities and Exchange Act of 1934, and, as such, may involve risks and
uncertainties. All statements included or incorporated by reference in this
Annual Report on Form 10-K, other than statements that are purely historical,
are forward-looking statements. Forward-looking statements generally can be
identified by the use of forward-looking terminology such as “may,” “will,”
“expect,” “intend,” “estimate,” “anticipate,” “believe,” “could,” “potential”
“continue,” or similar terminology. Forward-looking statements are not
guarantees of future performance and are subject to risks and uncertainties that
could cause actual results to differ materially from the results contemplated by
the forward-looking statements.**
 
 **The
forward-looking statements in the Annual Report on Form 10-K are subject to
additional risks and uncertainties further discussed under “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations -
Factors that May Affect Future Results” and are based on information available
to us on the filing date of this Annual Report on Form 10-K. We assume no
obligation to update any forward-looking statements. Readers are cautioned not
to place undue reliance on forward-looking statements, which speak only as of
the date of this Annual Report on Form 10-K. Readers should also consult the
forward-looking statements and risk factors listed from time to time in our
Reports on Forms 10-Q, 8-K, 10-K and in our Annual Report to
Stockholders.**
 
 **As
used in this report, the terms “CCI,” the “Company,” “we,” “our,” or “us” refer
to Century Casinos, Inc., and each of its consolidated subsidiaries, taken as a
whole, unless the context otherwise indicates.**
 
 
 **PART
I**
 
 The
following information should be read in conjunction with the Consolidated
Financial Statements and notes thereto included in “Item 8 - Financial
Statements and Supplementary Data” of this Annual Report on Form
10-K.
 
 **Item
1. Business.**
 
 **General**
 
 Century
Casinos, Inc. is an international gaming company involved in developing and
operating gaming establishments and related lodging and restaurant facilities.
CCI is a Delaware corporation and was founded in 1992 to acquire ownership
interests in, and to obtain management contracts with, gaming
establishments.
 
 We
currently own and operate two gaming facilities and manage and facilitate nine
other casino establishments. Our owner/operator facilities include Womacks
Casino and Hotel (Womacks) in Cripple Creek, Colorado and the Caledon Hotel, Spa
and Casino (Caledon) in Caledon, South Africa. We also own 50% of Casino
Millennium, which is located within the Marriott Hotel in Prague, Czech
Republic, and we provide technical casino services to the casino for a fixed
monthly fee. We also provide gaming services and equipment to eight luxury
cruise vessels on three cruise lines that include the six-star Silversea
Cruises, The World of ResidenSea and Oceania Cruises.
 
 On
December 30, 2004 we acquired a 65% interest in CC Tollgate LLC which was formed
to develop and operate a casino and hotel in Central City, Colorado and is in
the process
of securing project financing and obtaining licensing from the Colorado Division
of Gaming. We have also entered into a long-term agreement to manage the
facility if a
  4
 gaming
license is awarded. The project is planned to include a 60,000 square foot
limited stakes casino with 625 gaming machines, six gaming tables, 25 hotel
rooms, retail, food and beverage amenities and a 500 space on-site covered
parking facility. Construction is expected to take approximately 14 months from
finalization of funding arrangements.
 
 Effective
February 24, 2005, we also own a 56.4% interest in Century Resorts Alberta, Inc.
(“CRA”) which plans to develop the Celebrations Casino and Hotel in Edmonton,
Canada. We had subscribed to 55% of the shares of CRA in September 2003 but
subsequently increased our participation in the project. The project is planned
to include a casino with 600 gaming machines, 31 gaming tables, food and
beverage amenities, a dinner theater, a 300 space underground parking facility,
approximately 600 surface parking spaces and a 40-room hotel. The project is
expected to cost approximately $22.8 million ($27.5 million Canadian dollars)
excluding the value of the contributed land and hotel. Construction is expected
to take approximately 14 months from finalization of funding arrangements. Upon
completion of construction, Century Resorts Alberta, Inc. expects to receive its
gaming license from the Alberta Gaming and Liquor Commission (AGLC). On December
17, 2004, the AGLC granted approval to begin construction of the casino
property. As is customary, the issuance of the license does not occur until
completion of construction and after all federal and provincial legislation,
regulation and policies, and municipal requirements, permits, licenses and/or
authorizations have been met. We have also entered into a long-term agreement to
manage the facility if a gaming license is awarded.
 
 In
November 2004, we joined with Landmark Gaming LC of Franklin County, Iowa, in
submitting, as co-applicant with the Franklin County Development Association
(FCDA), an application to the Iowa Racing and Gaming Commission (IRGC) to
develop and operate a moored barge casino, hotel and entertainment facility in
Franklin County, Iowa.
 
 In
December of 2004, we entered into agreements to sell a portion of our interest
in the Gauteng, South Africa, project we had previously been pursuing jointly
with Silverstar Development Ltd. and granted options to Silverstar and a group
led by Akani Leisure Investments, Ltd. to purchase our remaining interests in
the Gauteng project. We received an initial payment of approximately $1.7
million, or 10.0 million Rand, for the sale of 100% of the outstanding common
stock of Verkrans Ontwikkelings Maatskappy (Pty) Ltd., a wholly owned subsidiary
of CCA, whose only asset was land related to this project, and for funds
previously advanced to Silverstar. Also in conjunction with the agreements, we
loaned Silverstar $0.5 million, 3.0 million Rand repayable in six equal
installments with interest. We have, therefore, only recognized net proceeds of
7.0 million Rand in the transaction. The exercise price of the purchase owe
granted to Silverstar and the Akani group totals approximately $6.8 million, or
40.3 million Rand.  Exercisability of the purchase option is
contingent on regulatory and related approvals being secured by Silverstar and
the Akani group. The outcome of these approvals is unknown at this
time.
 
 For more
information about Century Casinos, Inc. please visit us on the Internet at
http://www.cnty.com. Our most recent annual report on Form 10-K and certain of
our other filings with the Securities and Exchange Commission (SEC) are
available free of charge through our Investor Relations website at  http://www.cnty.com/index.php?id=28 . Our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K and amendments to those reports are also available on the SEC website
at http://www.sec.gov . None of
the information posted to the Company’s website is incorporated by reference
into this Annual Report.
 
 **Overview
of Business Segments**
 
 Our
operations are conducted through five business segments: Cripple Creek, Colorado
(formerly Colorado segment); Central City, Colorado; South Africa; Cruise Ship
Operations; and Corporate and Other operations. As of December 31, 2004, we
owned, operated or managed the properties noted in the table below.
 
 5
 **Summary
of Property Information**
 
 **Property**
    **Casino**
      **Space**
      **Sq
      Ft (1)**
    **Acreage**
    **Number
      of**
      **Slot**
      **Machines**
    **Number
      of**
      **Table**
      **Games**
    **Number
      of**
      **Hotel**
      **Rooms**
    **Number
      of**
      **Restaurants**Womacks
    23,000
    2.7
    640
    6
    21
    2Caledon
    12,260
    600
    300
    10
    92
    4Casino
      Millennium(2)
    6,200
    -
    38
    16
    -
    -Cruise
      Ships (total of eight)(3)
    6,460
    -
    208
    30
    -
    -
 
 (1)
    Approximate.
 
 (2)
    Operated
      under a casino services agreement. In January 2004, we purchased 40% of
      the operation, bringing our ownership interest to 50% as of that
      date.
 
 (3)
    Operated
      under concession agreements. Seven vessels were actually in service as of
      December 31, 2004.
 
 **Womacks
Casino and Hotel - Cripple Creek, Colorado**
 
 Since
1996 we have owned and operated Womacks Casino and Hotel in Cripple Creek,
Colorado through our wholly owned subsidiary WMCK Venture Corporation. Womacks
currently has approximately 640 slot machines, six limited stakes gaming tables,
21 hotel rooms, and two restaurants. It has 150 feet of frontage on Bennett
Avenue, the main gaming thoroughfare in Cripple Creek, and 125 feet of frontage
on Second Street, also known as Highway 67, with approximately 23,000 square
feet of floor space.  Gaming in
Colorado is “limited stakes”; which restricts any single wager to a maximum of
$5.00. While this limits the revenue potential of table games, management
believes that slot machine play, which accounts for over 98% of total gaming
revenues at Womacks and over 96% in Cripple Creek, is currently impacted only
marginally by the $5.00 limitation.
 
 Management
believes that an integral component in attracting gaming patrons to Cripple
Creek is the availability of adequate, nearby parking spaces. We presently own
approximately 310 parking spaces and lease an additional 90 spaces for a total
of 400 spaces. An agreement with the City of Cripple Creek for the leased
parking spaces includes annual lease payments of approximately $90 thousand,
expires on May 31, 2010 and includes a purchase option, whereby we may purchase
the property for $3.25 million less cumulative lease payments, at any time
during the remainder of the lease term. We believe we have sufficient close
proximity parking, but covered parking garages maintained by two of our
competitors provide them with an advantage during inclement
weather.
 
 Expansion
projects at Womacks in 2002 and 2003 increased gaming space by approximately
5,000 square feet. Most importantly, because the construction spanned an alley
behind the existing property, Womacks will be able to continue a single level
expansion of the casino to the rear of the property, if desired, at a later
date. The total construction cost, excluding new slot machines, was
approximately $2.3 million.
 
 6
 **Caledon
Hotel, Spa and Casino - Caledon, South Africa**
 
 The
Caledon Hotel, Spa and Casino currently has approximately 300 slot machines, 10
unlimited stakes gaming tables, 92 hotel rooms, and four restaurants.  Casino
gaming in South Africa is “unlimited wagering” where each casino can set its own
limits. As a result, the relationship between table games revenue and slot
revenue (9% from tables and 91% from slots) resembles more traditional gaming
markets, unlike Cripple Creek, where over 96% of gaming revenue is derived from
slot machines.
 
 Caledon
lies on the N-2 highway - the main thoroughfare between Cape Town and Durban -
and is known for its wild flower shows, wineries and the natural historic hot
springs located on the Caledon Hotel, Spa and Casino site. Caledon experiences
its heaviest traffic during the December holiday season (summer in South
Africa), which offers us some protection from seasonality because Womack’s
revenues are higher during summer.
 
 At
December 31, 2000, we held a 65% ownership position in Caledon Hotel, Spa and
Casino which we acquired through a series of transactions for a total of $5.6
million, consisting of the purchase of $2.7 million of common stock and the
issuance of debt totaling $2.9 million. In January 2003, we acquired the
remaining 35% interest for 21.5 million Rand, or $2.6 million, becoming the sole
owner of the Caledon Hotel, Spa and Casino property. We currently operate the
Caledon Hotel, Spa and Casino through our subsidiary Century Resorts Ltd.
 
 **Casino
Millennium - Prague, Czech Republic**
 
 In
January 1999, we, through our wholly owned subsidiary Century Casinos
Management, Inc., entered into a 20-year agreement with Casino Millennium a.s.,
a Czech company, and with B.H. Centrum a.s., a Czech subsidiary of Bau Holding
AG, one of the largest construction and development companies in Europe, to
operate a casino in the five star Marriott Hotel in Prague, Czech Republic.
During 2001, Bau Holding AG changed its name to Strabag AG. We agreed to provide
technical casino services in exchange for 10% of the casino’s gross revenue, and
provide gaming equipment for 45% of the casino’s net profit. The hotel and
casino opened in July 1999.
 
 In
January 2000, we entered into a memorandum of agreement to either acquire a 50%
ownership interest in Casino Millennium a.s. or to form a new joint venture with
B.H. Centrum a.s., which joint venture would acquire all of the assets of Casino
Millennium a.s. We and Strabag AG each agreed to purchase a 50% ownership
interest. Approval for this transaction was obtained, as required, from the
Ministry of Finance of the Czech Republic. The first step in acquiring the 50%
ownership interest was taken in December 2002 with the payment of approximately
$0.24 million in cash in exchange for a 10% ownership in Casino Millennium a.s.
Effective January 3, 2004, we, through our wholly-owned Austrian subsidiary,
Century Management u. Beteiligungs GmbH, acquired an additional 40% of Casino
Millennium a.s. by contributing gaming equipment, advances and receivables
valued at approximately $0.60 million. We account for the 50% investment in
Casino Millennium on the equity method. In addition to the 50% ownership, we
retain our rights under the 1999 c asino
services agreement, as amended.
 
 **Cruise
Ships**
 
 **Silversea
Cruises**
 
 On May
27, 2000, we signed a casino concession agreement with Silversea Cruises, a
world-renowned, six-star cruise line based in Fort Lauderdale, Florida. The
agreement gives us the exclusive right to install and operate casinos aboard
four Silversea vessels for a term of five years on each vessel.  We
operate each shipboard casino for our own account and pay concession fees based
on gross gaming revenue.
 
 7
 Starting
in late September 2000 with the new, 388-passenger Silver Shadow, we began our
shipboard casino operations. Within 60 days thereafter, we installed casinos on
the 296-passenger vessels Silver Wind and Silver Cloud. In June 2001, we
installed our fourth casino aboard the new, 388-passenger Silver Whisper.
 
 The
Silver Cloud resumed operations in March 2004 after completing six months of
routine maintenance. The Silver Wind was taken out of service following the
events of September 11, 2001 and resumed operations on May 23, 2003. We have a
total of 74 slot machines and 14 tables on the four Silverseas shipboard
casinos.
 
 **The
World of ResidenSea** ****
 
 On August
30, 2000, we signed a casino concession agreement with ResidenSea Ltd., the
operator of The World of ResidenSea, which is the world’s first luxury
residential resort community at sea continuously circumnavigating the globe.
 
 We have
equipped the casino with 20 slot machines and three gaming tables and operate
the casino aboard the vessel for a five-year term, which commenced with the
vessel’s maiden voyage in March 2002. We operate the casino for our own account
and pay concession fees based on gross gaming revenue. In addition, we have a
right of first refusal to install casinos aboard any new ships built or acquired
by ResidenSea during the term of the agreement.
 
 **Oceania
Cruises**
 
 On March
28, 2003, we signed a casino concession agreement with Oceania Cruises, Inc., a
Miami-based operator in the upper premium segment of the cruise industry. The
agreement gives us the exclusive right to install and operate casinos aboard
three 684-passenger cruise vessels, the Insignia, the Regatta and the Nautica,
for a term of five years on each vessel, as well as the exclusive right to
become Oceania’s exclusive casino concessionaire for any new ships that Oceania
might bring into service.
 
 In April
2003, we successfully opened a casino aboard the Insignia. The opening of the
casino aboard the Regatta followed in June 2003. Each of the casinos is equipped
with 36 slot machines and five gaming tables. The Insignia resumed operations in
late March 2004 following six months of routine maintenance after its first
season.
 
 In April
2004, we opened a casino aboard the Nautica, equipped with 42 slot machines and
three gaming tables. In November 2004, the Nautica was taken out of service
following completion of its 2004 cruise schedule and will return to service
chartered to a third party for the 2005 season. As a result we are not currently
operating the casino aboard the Nautica.
 
 **Additional
Company Projects**
 
 In
addition to the operations described above, we have a number of potential gaming
projects in various stages of development. Along with the capital needs of these
potential projects, there are various other risks which, if they materialize,
could have a materially adverse effect on a proposed project or eliminate its
feasibility altogether. For example, in order to conduct gaming operations in
most jurisdictions, we must first obtain gaming licenses or receive regulatory
clearances. To date, we have obtained gaming licenses or approval to operate
gaming facilities in Colorado, Louisiana, on an American Indian reservation in
California, the Czech Republic, the Western Cape province of South Africa and in
 
 8
 Alberta,
Canada. While management believes that we are licensable in any jurisdiction,
each licensing process is unique and requires a significant amount of funds and
management time. The licensing process in any particular jurisdiction can take
significant time and expense through licensing fees, background investigation
costs, fees of counsel and other associated preparation costs. Moreover, should
we proceed with a licensing approval process with industry partners, such
industry partners would be subject to regulatory review as well. We seek to
satisfy ourselves that industry partners are licensable, but cannot assure that
such partners will, in fact, be licensable. Additional risks before commencing
operations include the time and expense incurred and unforeseen difficulties in
obtaining suitable sites, liquor licenses, building permits, materials,
competent and able contractors, supplies, employees, gaming devices and related
matters. In addition, certain licenses include competitive situations where,
even if we are licensable, other factors such as the economic impact of gaming,
financial and operational capabilities of competitors must be analyzed by
regulatory authorities. All of these risks should be viewed in light of our
limited staff and limited capital.
 
 Also, our
ability to expand to additional locations will depend upon a number of factors,
including, but not limited to: (i) the identification and availability of
suitable locations, and the negotiation of acceptable purchase, lease, joint
venture or other terms; (ii) the securing of required state and local licenses,
permits and approvals, which in some jurisdictions are limited in number; (iii)
political factors; (iv) the risks typically associated with any new construction
project; (v) the availability of adequate financing on acceptable terms; and
(vi) for locations outside the United States, all the risks of foreign
operations, including currency controls, unforeseen local regulations, political
instability and other related risks. Certain jurisdictions issue licenses or
approval for gaming operations by inviting proposals from all interested
parties, which may increase competition for such licenses or approvals. The
development of dockside and riverboat casinos in the United States of America
may require approval from the Army Corps of Engineers and will be subject to
significant Coast Guard regulations governing design and operation. Most of
these factors are beyond the control of the Company. As a result, there can be
no assurance that we will be able to expand to additional locations or, if such
expansion occurs, that it will be successful. Further we anticipate that we will
continue to expense certain costs, which have been substantial in the past and
may continue to be substantial in the future, in connection with the pursuit of
expansion projects.
 
  **Central
City, Colorado** - On
October 13, 2004, our wholly owned subsidiary, Century Casinos Tollgate, Inc.,
entered into an agreement with Tollgate Venture LLC to develop and operate a
proposed casino and hotel in Central City, Colorado. The $40.0 million
development is planned to include a 60,000 square foot casino and back of house
with 625 slot machines, six table games, 25 hotel rooms, retail, food and
beverage amenities and a 500-space on-site covered parking garage. We
contributed $3.5 million to the project through Century Casinos Tollgate, Inc.,
in exchange for a controlling 65% interest, and Tollgate Venture LLC contributed
three existing non-operating casino buildings, land and land options for a 35%
interest. The newly formed entity, CC Tollgate LLC, is in the process of
securing acceptable financing and obtaining licensing from the Colorado Division
of Gaming. Another of our wholly owned subsidiaries, Century Casinos Management,
Inc., has entered into a Casino Services Agreement to manage the property once
the project is operational. Completion of the project is subject to various
conditions and approvals, including, but not limited to securing acceptable
financing, satisfactory environmental studies, licensing by the Colorado
Division of Gaming, and other due diligence. Casino licenses in Colorado are not
limited in number by state gaming laws and are primarily subject to successful
background investigations by the Colorado Division of Gaming. We currently are
licensed in Colorado for gaming at Womacks Casino and Hotel in Cripple Creek.
The principals of Tollgate Venture LLC currently have gaming licenses for other
projects in the State of Colorado as well. Construction is expected to be
completed approximately 14 months after funding arrangements have been
finalized.
 
 
 9
 
 Central
City and Black Hawk are historical mining towns situated adjacent to each other
and located in the Rocky Mountains approximately 35 miles west of Denver. Each
city
 offers
limited stakes gaming, and the first casinos opened in both cities in 1991. On
November 19, 2004, a new $45.2 million four lane highway (Central City Parkway)
opened to the public. We believe this road offers a safer and faster alternative
route from the greater Denver area to Central City and Black Hawk, Colorado. The
Central City Parkway is entirely new construction and connects I-70, the main
east/west interstate highway in Colorado, first to Central City and then on to
Black Hawk. We believe that the alternate route, which is a narrow two lane
highway that enters these cities first at Black Hawk, is a more dangerous drive
than the Central City Parkway. We believe Central City is now a prime location
for limited stakes gambling establishments because the new parkway provides easy
access from I-70 and because the parkway goes through Central City before going
on to Black Hawk. All traffic entering Central City via this parkway must go
directly past our proposed casino’s main entrance and parking structure. The
Colorado Division of Gaming reports an increase in Adjusted Gross Proceeds (AGP)
of 44.18% for Central City casinos and a 3.7% increase for Black Hawk for the
month of February 2005 as compared to February 2004. We believe the substantial
increase in AGP for Central City is attributable to the Central City
Parkway.
 
 **Edmonton,
Canada** - On
February 24, 2005, through our wholly owned subsidiary, Century Resorts
International, we acquired a 56.4% interest in Century Resorts Alberta, Inc. for
approximately $2.4 million ($3.0 million Canadian dollars). We had subscribed to
55% of the shares of CRA in September 2003 but, prior to settlement, increased
our participation in the project. Our local partner, 746306 Alberta, Ltd.,
contributed a 7.25 acre parcel of land and an existing 40 room hotel for the
remaining 43.6% interest. Century Resorts Alberta, Inc. plans to develop the
Celebrations Casino and Hotel in Edmonton, Alberta, Canada. The project is
expected to include a casino with 600 gaming machines, 31 gaming tables, food
and beverage amenities, a dinner theater, a 300 space underground parking
facility, approximately 600 surface parking spaces and a 40-room hotel. The
project is expected to cost approximately $22.8 million ($27.5 million Canadian
dollars). Completion of this project is subject to obtaining acceptable project
financing. Construction is expected to take approximately 14 months from
finalization of funding arrangements. Upon completion of construction, Century
Resorts Alberta, Inc. expects to receive its gaming license from the Alberta
Gaming and Liquor Commission (AGLC). On December 17, 2004, the AGLC granted
approval to begin construction of the casino property. As is customary, the
issuance of the license does not occur until completion of construction and
after all federal and provincial legislation, regulation and policies, and
municipal requirements, permits, licenses and/or authorizations have been met.
We have also entered into a long-term agreement to manage the facility if a
gaming license is awarded.
 
 Edmonton
is one of the fastest growing cities in Canada, with a strong economic climate.
Tourism is a significant part of the economy, and Edmonton offers a wide range
of activities, including sports and outdoor activities, sightseeing, and
nightlife/casinos. Edmonton is also home of the world’s largest shopping mall.
(Source: Tourism in Canadian Cities - A Statistical Outlook 2001.) There are
currently six casinos in the Edmonton area, including one racino. The Innovation
Group, Littleton, Colorado, estimates that by combining the local and tourist
markets, 2005 gaming revenues for the greater Edmonton area are projected to be
$376 million Canadian dollars, an average annual increase of 13.3% over
2002/2001.
 
 **Franklin
County, Iowa** - On
October 18, 2004, we entered into an agreement with the owners of Landmark
Gaming LC of Franklin County, Iowa, to jointly submit as co-applicant with the
Franklin County Development Association (FCDA) an application to the Iowa Racing
and Gaming Commission (IRGC) to develop and operate a moored barge casino, hotel
and entertainment facility in Franklin County, Iowa. The application was
submitted on November 11, 2004.
 
 If a
license is granted, we will contribute $1.25 million in cash through Century
Casinos Iowa, Inc., our wholly owned subsidiary, to Landmark Gaming LC, in
exchange for a 40% ownership interest. The current owners of Landmark Gaming LC
will contribute the land to be used for the project and certain land options in
return for a 60% ownership interest.
 
 10
 Century
Casinos Management, Inc. has entered into a long term agreement to manage the
casino once the project is operational in return for a share in gross revenues
plus a share in EBITDA. Our cash contribution and the beginning of construction
are subject to various conditions and approvals, including but not limited to
awarding of a license by the IRGC, securing acceptable financing and other due
diligence. We anticipate that the IRGC will notify us on May 11, 2005
whether a license has been granted to us.
 
 If a
casino license is awarded to Landmark Gaming LC, the Landmark Hotel and Casino
is projected to be open within 15 months of license award and finalization of
funding arrangements. The proposal includes a casino with up to 1,200 slot
machines, 34 tables, 120 hotel rooms, 1,500 parking spaces and will employ
approximately 600 people. A study completed by independent casino and lodging
industry consultants, Gaming & Resort Development, Inc., estimates total
development costs to be $67.0 million and projected first year net revenue of
$72.0 million.
 
 There are
currently ten river boats, three racetrack slot machine operations, and three
Class III Indian gaming venues in the state of Iowa. According to information
provided by the IRGC, the ten river boat casinos have generated approximately
$715 million in gross gaming revenues from July 2003 to June 2004. Licensing
requires sponsorship by an approved charitable organization that receives a
percentage of the gaming revenues. The FCDA is the sponsoring charitable
organization for this project. Casino licenses are awarded based on the merit of
the project. The number of licenses awarded is determined by the IRGC. The site
of the proposed project is located approximately 80 miles north of Des Moines,
Iowa and 52 miles south of the Iowa-Minnesota border. The proposed project will
be located on a manmade body of water adjacent to, and with a clear view for
travelers on Interstate 35, Iowa’s primary north-south link between Minneapolis
and Des Moines, along Iowa Highway 3. We believe that the proposed casino’s
proximity to major roadways and its location in a county that is very supportive
of the project and proactive in seeking large businesses such as this to provide
employment opportunities for the residents of Franklin and surrounding counties
could give the county an edge over others competing for a license.
 
 **Gauteng,
South Africa** - In
1997, together with Silverstar Development Ltd, we applied to the Gauteng
Gambling Board (GGB) for a casino license in Gauteng, South Africa. After a
preliminary determination to award a license to the project and a subsequent
series of legal challenges and lawsuits, the license has still not been issued,
resulting in Silverstar not being able to commence with the casino development.
On March 29, 2005, the Supreme Court of Appeal upheld an earlier High Court
decision to award the license to Silverstar, but the project remains subject to
uncertainty.
 
 In
December of 2004, we entered into agreements to sell a portion of our interest
in the Gauteng, South Africa, project we had previously been pursuing jointly
with Silverstar Development Ltd. and granted options to Silverstar and a group
led by Akani Leisure Investments, Ltd. to purchase our remaining interests in
the Gauteng project. We received an initial payment of approximately $1.7
million, or 10.0 million Rand, for the sale of 100% of the outstanding common
stock of Verkrans Ontwikkelings Maatskappy (Pty) Ltd., a wholly owned subsidiary
of CCA, whose only asset was land related to this project, and for funds
previously advanced to Silverstar. Also in conjunction with the agreements, we
loaned Silverstar $0.5 million, 3.0 million Rand repayable in six equal
installments with interest. We have, therefore, only recognized net proceeds of
$1.2 million, 7.0 million Rand in the transaction.
 
 The
exercise price of the purchase options totals approximately $6.8 million, or
40.3 million Rand. Exercisability of the purchase options is contingent on
regulatory and related approvals being secured by Silverstar and the Akani
Group. Notwithstanding the decision by the Supreme Court of Appeal on March 29,
2005, the outcome of these approvals is unknown at this time.
 
 Pending
the exercise of the purchase options, a resort management agreement that we
executed to manage the project once it becomes operational remains in effect. We
also have retained an option granted to us by Silverstar to purchase a minority
equity interest in the project. In the event Silverstar or the Akani group
exercise the options we granted them to purchase our remaining interest in the
project, the management agreement and equity options we own would be
terminated.
 
 11
 The Akani
group has agreed to provide the funds necessary for Silverstar to complete the
project in the event the license is ultimately issued. With the financial
backing of the Akani group, we believe funding is now available for Silverstar
to complete its tasks and provide a higher level of assurance that we will
ultimately get a return, via the exercise of the option, on our efforts to date.
Pursuant to its 1997 application, the Silverstar project provides for up to
1,350 slot machines and 50 gaming tables in a phased development that includes a
hotel and other entertainment, dining, and recreational activities with a first
phase of 950 slot machines and 30 gaming tables. Should the option not be
exercised, CCI’s involvement in the project will be restored to the previous
level of ownership and management.
 
 **Marketing
Strategy**
 
 Our
marketing strategy centers around rewarding repeat customers through our
players’ club programs. We maintain a proprietary database of primarily slot
machine customers that allows us to create effective targeted marketing and
promotional programs, cash and merchandise giveaways, coupons, preferred
parking, food, lodging, game tournaments and other special events. These
programs are designed to reward customer loyalty and attract new customers to
our properties through a multi-tiered reward program that rewards players based
on total amount wagered and frequency of visits. Currently, our players’ club
cards allow us to update our database and track member gaming preferences,
maximum, minimum, and total amount wagered and frequency of visits. All visitors
to our properties are offered an opportunity to join our players’ club. Our
Womacks players’ club database contains profiles on over 100,000 members.
 
 We place
significant emphasis on attracting local and surrounding community residents and
seek to maintain a strong local identity in each market in which we operate. We
use broadcast media, including outdoor, radio and television advertising, and
print media and direct mail advertising to promote our properties.
 
 **Competition**
 
 **The
Cripple Creek, Colorado Market** -
Cripple Creek, located approximately 45 miles southwest of Colorado Springs,
Colorado, is a historic mining town dating back to the late 1800’s that has
developed into a tourist stop. Traffic generally is heaviest in the summer
months and decreases to its low point in the winter months.
 
 Cripple
Creek is one of only three Colorado cities, exclusive of Indian gaming
operations, where casino gaming is legal, the others being Central City and
Black Hawk. As of December 31, 2004, there were 19 casinos operating in Cripple
Creek, which represented 27% of the gaming devices and generated 20% of gaming
revenues from these three cities for the year then ended.
 
 The
tables below set forth information obtained from the Colorado Division of Gaming
regarding gaming revenue by market and slot machine data for Cripple Creek from
calendar year 2001 through 2004. Adjusted Gross Proceeds (“AGP”) is the net win
from gaming activities reported to the licensing jurisdiction. We use AGP to
measure performance relative to competitors within our respective markets. This
data is not intended by us to imply, nor should the reader infer, that it is any
indication of future Colorado or Company gaming revenue.
  12
  **ANNUAL
GAMING REVENUE BY MARKET**
 *Amounts
shown in thousands*
 **%
      change**
    
    
    **%
      change**
    
    
    **%
      change**
    
    
    **%
      change****Over**
    
    
    **Over**
    
    
    **Over**
    
    
    **Over****2004**
    **Prior
      Year**
    
    **2003**
    **Prior
      Year**
    
    **2002**
    **Prior
      Year**
    
    **2001**
    **Prior
      Year****CRIPPLE
      CREEK**
    **$**
    **148,689**
    **4.3%**
    **$**
    **142,525**
    **0.0%**
    **$**
    **142,436**
    **2.8%**
    **$**
    **138,618**
    **3.0%**Black
      Hawk
    $
    524,035
    3.6%
    $
    505,851
    -3.5%
    $
    524,465
    9.6%
    $
    478,326
    10.3%Central
      City
    $
    53,179
    6.6%
    $
    49,909
    -5.5%
    $
    52,800
    -11.6%
    $
    59,730
    -5.9%**COLORADO
      TOTAL**
    **$**
    **725,903**
    **4.0%**
    **$**
    **698,285**
    **-3.0%**
    **$**
    **719,701**
    **6.4%**
    **$**
    **676,674**
    **7.1%**
 
 
 **ANNUAL
CRIPPLE CREEK SLOT DATA**
 *Amounts
shown in thousands, except slot data*
 **%
      change**
    
    
    **%
      change**
    
    
    **%
      change**
    
    
    **%
      change****Over**
    
    
    **Over**
    
    
    **Over**
    
    
    **Over****2004**
    **Prior
      Year**
    
    **2003**
    **Prior
      Year**
    
    **2002**
    **Prior
      Year**
    
    **2001**
    **Prior
      Year**Total
      Slot Revenue
    $
    143,802
    3.8%
    $
    138,560
    0.0%
    $
    138,645
    3.2%
    $
    134,330
    3.7%Average
      NumberOf
      Slots
    
    4,618
    9.2%
    
    4,228
    1.0%
    
    4,187
    0.4%
    
    4,170
    0.5%Average
      Win PerSlot
      Per Day
    
    85
      dollars
    -5.6%
    
    90
      dollars
    -1.1%
    
    91
      dollars
    3.4%
    
    88
      dollars
    3.5%
 
 
 **ANNUAL
WOMACKS CASINO SLOT DATA**
 *Amounts
shown in thousands except slot data*
 **%
      change**
    
    
    **%
      change**
    
    
    **%
      change**
    
    
    **%
      change****Over**
    
    
    **Over**
    
    
    **Over**
    
    
    **Over****2004**
    **Prior
      Year**
    
    **2003**
    **Prior
      Year**
    
    **2002**
    **Prior
      Year**
    
    **2001**
    **Prior
      Year**Total
      Slot Revenue
    $
    19,262
    -6.6%
    $
    20,625
    -12.5%
    $
    23,563
    1.8%
    $
    23,142
    -2.2%Average
      NumberOf
      Slots
    
    649
    4.3%
    
    622
    -2.8%
    
    640
    7.9%
    
    593
    -5.4%Average
      Win PerSlot
      Per Day
    
    81
      dollars
    -11.0%
    
    91
      dollars
    -9.9%
    
    101
      dollars
    -5.6%
    
    107
      dollars
    3.6%Market
      Share of Cripple Creek AGP
    
    13.4%
    -10.1%
    
    14.9%
    -12.4%
    
    17.0%
    -1.3%
    
    17.2%
    -5.7%
 
 Gaming in
Colorado is “limited stakes,” which restricts any single wager to a maximum of
five dollars. While this limits the revenue potential of table games, management
believes that slot machine play, which accounts for over 98% of total gaming
revenues at Womacks and 96% in Cripple Creek, is currently impacted only
marginally by the five dollar limitation.
 
 13
 We face
intense competition from other casinos in Cripple Creek, including a handful of
casinos of similar size and many other smaller casinos. There can be no
assurance that other casinos in Cripple Creek will not undertake expansion
efforts similar to or more substantial than those recently undertaken by us,
thereby further increasing competition, or that large, established gaming
operators will not enter the Cripple Creek market. We seek to compete against
these casinos through promotion of Womacks Gold Club and other marketing
efforts. We believe that the casinos likely to be more successful and best able
to take advantage of the market potential of Cripple Creek will be the larger
casinos, such as Womacks, that have reached a certain critical mass.
 
 Womacks
competes, to a far lesser extent, with 22 casinos in Black Hawk and five casinos
in Central City. Black Hawk and Central City are also small mountain tourist
towns, which adjoin each other and are approximately 35 miles from Denver and a
two and one-half hour drive from Cripple Creek. The primary market for Cripple
Creek is the Colorado Springs metropolitan area, and the primary market for
Black Hawk and Central City is the Denver metropolitan area. Subsequent to
December 31, 2004, two additional casinos have opened in Central
City.
 
 There can
be no assurance that the number of casino and hotel operations will not exceed
market demand or that additional hotel rooms or casino capacity will not
adversely affect the operations of the Company.
 
 **The
Caledon, South Africa Market** -
Caledon is a small agricultural community located approximately 60 miles east of
Cape Town. It lies on the N-2 highway - the main thoroughfare between Cape Town
and Durban - and is known for its wild flower shows, wineries and the natural
historic hot springs located on the Caledon Hotel, Spa and Casino site. Caledon
experiences its heaviest traffic during the December holiday season (summer in
South Africa).
 
 The
Caledon Hotel, Spa and Casino operates its casino under one of only four
licenses awarded in the Western Cape Province, which has a population of
approximately four million. Although the competition is limited by the number of
casino licenses and the casinos are geographically distributed, management
believes that the Caledon Hotel, Spa and Casino faces intense competition from a
large casino located in Cape Town approximately one hour from Caledon and, to a
much lesser degree, two other casinos. We compete against these casinos by
emphasizing Caledon’s destination resort appeal in its marketing campaign, by
promotion of its players club and by superior service to its players.
Construction by a competitor of a casino in Worcester, the fifth and last one
permitted in the Western Cape under the Gaming act, is expected to begin in
November 2005 with an opening projected by the second quarter of
2006.
 
 We
believe we have fewer financial, operational and personnel resources than many
of our competitors in the Western Cape. There can be no assurance that the
number of casino and hotel operations will not exceed market demand or that
additional hotel rooms or casino capacity will not adversely affect the
operations of the Company.
 
 The
National Gambling Board has approved the introduction of Limited Payout Machines
(LPM) and has approved 105 such devices for the Overberg region of the Western
Cape, the market in which we operate. An approved operator, which can have a
maximum of five devices, will be permitted to operate the devices without the
overhead of a typical casino. They will, however, be subject to central
monitoring. Currently 110 LPM sites are approved in Cape Town, and 45 sites are
operational. The roll out in the Western Cape will continue in April 2005 in the
Southern Cape (Mosselbay). There is no indication when the roll out in the
Overberg Region will start and we believe it is most likely that this will not
happen in 2005.
 
 14
 Casino
gaming in South Africa operates on an “unlimited wagering” basis where each
casino sets its own limits. As a result, the relationship between table game
revenue and slot revenue (9% from tables and 91% from slots) resembles more
traditional gaming markets (unlike Cripple Creek where over 96% of gaming
revenues are derived from the slot machines). Caledon has 300 slot machines and
10 table games including blackjack, roulette and poker.
 
 The
tables below set forth information obtained from the Western Cape Gambling and
Racing Board regarding gaming revenue by market and slot machine data for the
Western Cape market from calendar year 2002 through 2004. AGP is the net win
from gaming activities reported to the licensing jurisdiction. We use AGP to
measure performance relative to competitors within this market. This data is not
intended by us to imply, nor should the reader infer, that it is any indication
of future South African or Company gaming revenue.
 
 **ANNUAL
GAMING REVENUE BY MARKET**
 *Amounts
shown in thousands*
 
 **%
      change**
    
    **%
      change**
    
    **%
      change****Over**
    
    **Over**
    
    **Over****2004**
    **Prior
      Year (1)**
    **2003**
    **Prior
      Year (1)**
    **2002**
    **Prior
      Year (1)****CALEDON
      CASINO**
    **Rand**
    **R80,088**
    **17.8%**
    **R67,976**
    **11.3%**
    **R61,100**
    **21.3%**USD
      equivalent
    $12,540
    
    $9,211
    
    $5,899Other
      three casinos
    **Rand**
    **R1,279,219**
    **20.8%**
    **R1,058,619**
    **12.2%**
    **R943,346**
    **26.5%**USD
      equivalent
    $200,346
    
    $143,298
    
    $91,162**WESTERN
      CAPE TOTAL(1)**
    **Rand**
    **R1,359,307**
    **20.7%**
    **R1,126,595**
    **12.2%**
    **R1,004,446**
    **26.1%**USD
      equivalent
    $212,886
    
    $152,509
    
    $97,061
 
 (1)
    Excluding
      effects of fluctuations in foreign exchange
rate.
 
  15
  **THE
CALEDON HOTEL SPA AND CASINO ANNUAL DATA**
 *Amounts
shown in thousands, except slot data*
  **%
      change**
    
    **%
      change**
    
    **%
      change****Over**
    
    **Over**
    
    **Over****2004**
    **Prior
      Year**
    **2003**
    **Prior
      Year**
    **2002**
    **Prior
      Year**Total
      Slot Revenue
    R73,066
    17.2%
    R62,345
    12.8%
    R55,276
    26.3%$11,440
    35.5%
    $8,443
    58.0%
    $5,343
    4.7%Market
      Share in % (1)
    5.9%
    -1.7%
    6.0%
    -1.6%
    6.1%
    -3.2%Average
      NumberOf
      Slots
    288
    5.1%
    274
    7.9%
    254
    1.6%Average
      Win Per Slot Per Day
    693
      rand
    11.3%
    623
      rand
    4.5%
    596
      rand
    24.4%109
      dollars
    29.8%
    84
      dollars
    44.8%
    58
      dollars
    3.6%#
      of Slot Machines % of TotalWestern
      Cape Market
    11.3%
    3.7%
    10.9%
    -2.7%
    11.2%
    0.9%Average
      NumberOf
      Tables
    9
    12.5%
    8
    0.0%
    8
    -42.9%#
      of Tables % of TotalWestern
      Cape Market
    9.8%
    11.4%
    8.8%
    -11.1
      %
    9.9%
    -34.9%
 (1)
    Based
      on the total Adjusted Gaming Revenue of Western
Cape.
 
 **Employees**
 
 **Womacks
Casino and Hotel** **-** We employ
approximately 215 persons in Cripple Creek, Colorado on a full-time equivalent
basis, including cashiers, dealers, food and beverage service personnel,
facilities maintenance staff, security, accounting and marketing personnel. No
labor unions represent any employee group . A
standard package of employee benefits is provided to full-time employees along
with training and job advancement opportunities.
 
 **Caledon
Hotel, Spa and Casino** - The
Caledon Hotel, Spa and Casino employs approximately 320 persons on a full-time
equivalent basis, including cashiers, dealers, room service, food and beverage
service personnel, facilities maintenance staff, security, accounting and
marketing personnel. A standard package of employee benefits is provided to
full-time employees along with training and job advancement opportunities.
 
 Casino
and hotel employees were represented by the T.E.U.S.A. (Technical Employee Union
of South Africa). Membership in the union is not mandatory and less than 50% of
eligible employees are currently members. On November 24, 2001, the T.E.U.S.A.
initiated a strike action against the hotel and casino. An application for a
temporary interdict was granted by the Labor Court with cost to the union and
union officials. Employees returned to work on December 15, 2001 and on January
29, 2002 the temporary interdict was made final. There was no further industrial
action and there have been no strikes since that time. We notified T.E.U.S.A. on
January 27, 2004 that it was no longer representative of the employees of the
casino and hotel. A new union, the SACCAWU, has started recruiting members, but
has not recruited the 50% necessary to represent them as a union. We do not
believe there is a risk of a strike in the near term.
 
 16
 **Cruise
Ships -** We
employ approximately 32 employees onboard the cruise ships. Employees are hired
on a short-term contract basis. No labor unions represent the group. Training
and supervision is provided by management at Casino
Millennium.
 
 **Seasonality**
 
 **Womacks
Casino and Hotel -** Our
business in Cripple Creek, Colorado is at its highest levels during the tourist
season (i.e., from May through September). Its base level (i.e., October through
April) is expected to remain fairly constant although weather conditions during
this period could have a significant impact on business levels in
Colorado.
 
 **Caledon
Hotel, Spa and Casino -** Our
business in Caledon is at its highest levels of business during the holiday
season in December. Caledon has a comparatively mild climate.
  **Cruise Ships
-** Our
business on the ships is generally not impacted by the time of
year.
 
 **Governmental
Regulation and Licensing**
 
 The
ownership and operation of casino gaming facilities are subject to extensive
state and local regulations. We are required to obtain and maintain gaming
licenses in each of the jurisdictions in which we conduct gaming. The
limitation, conditioning, suspension, revocation or non-renewal of gaming
licenses, or the failure to reauthorize gaming in certain jurisdictions would
materially adversely affect our gaming operation in that jurisdiction. In
addition, changes in law that restrict or prohibit gaming operations in any
jurisdiction could have a material adverse effect on our financial position,
results of operations and cash flows.
 
 Statutes
and regulations can require us to meet various standards relating to, among
other matters, business licenses, registration of employees, floor plans,
background investigations of licensees and employees, historic preservation,
building, fire and accessibility requirements, payment of gaming taxes, and
regulations concerning equipment, machines, tokens, gaming participants, and
ownership interests. Civil and criminal penalties can be assessed against us
and/or our officers or shareholders to the extent of their individual
participation in, or association with, a violation of any of the state and local
gaming statutes or regulations. Such laws and regulations apply in all
jurisdictions within the United States in which we may do business. Management
believes that we are in compliance with applicable gaming regulations.
 
 Colorado,
United States
 
 The
Colorado Limited Gaming Control Commission (Commission) has adopted regulations
regarding the ownership of gaming establishments by publicly held companies (the
Regulations). The Regulations require the prior clearance of, or notification
to, the Commission before any public offering of any securities of any gaming
licensee or any affiliated company. The Regulations require all publicly traded
or publicly owned gaming licensees to comply with numerous regulatory gaming
requirements including, but not limited to, notifying/filing with the Colorado
Division of Gaming any proxy statements, lists of shareholders, new officers and
directors of the Company, any shareholders obtaining 5% or more of the Company’s
common stock and any issuance of new voting securities. We believe that the
Company is in compliance with applicable gaming regulations.
 
 Other
state regulatory agencies also impact the Company's operations, particularly its
license to serve alcoholic beverages. Rules and regulations in this regard are
strict, and loss or suspension of a liquor license could significantly impair,
if not ruin, a licensee's operation. Local building, parking and fire codes and
similar regulations could also impact the Company's operations and proposed
development of its properties.
 
 17
 Caledon,
South Africa
 
 Caledon’s
gaming operations are subject to strict regulations by the Western Cape Gambling
and Racing Board under national and provincial legislation. Statutes and
regulations require us to meet various standards relating to, among other
matters, business licenses, licensing of employees, historic preservation,
building, fire and accessibility requirements, payment of gaming taxes, and
regulations concerning equipment, machines, tokens, gaming participants, and
ownership interests. Civil and criminal penalties can be assessed against us
and/or our officers to the extent of their individual participation in, or
association with, a violation of any of these gaming statutes or regulations. We
believe that we are in compliance with applicable gaming
regulations.
 
 Prague,
Czech Republic
 
 Casino
Millennium’s gaming operations are subject to strict regulations by the Czech
Republic under national legislation. Statutes and regulations require us to meet
various standards relating to, among other matters, business licenses, building,
fire and accessibility requirements, payment of gaming taxes, and regulations
concerning equipment, machines, tokens, gaming participants, and ownership
interests. Civil and criminal penalties can be assessed against us and/or our
officers to the extent of their individual participation in, or association
with, a violation of any of these gaming statutes or regulations. We believe
that we are in compliance with applicable gaming regulations.
 
 Cruise
Ships
 
 The
casinos onboard the cruise ships only operate when they are in international
waters. Therefore, the gaming operations are not regulated by any national or
local regulatory body. However, we follow standardized rules and practices in
the daily operation of the casinos. This segment of our operations accounted for
almost 8% of our total net operating revenue for 2004, compared to 6% for 2003
and less than 3% for 2002.
 
 Non-Gaming
Regulation
 
 We are
subject to certain federal, state and local safety and health, employment and
environmental laws, regulations and ordinances that apply to our non-gaming
operations. We have not made, and do not anticipate making material expenditures
with respect to such employment and environmental laws and regulations. However,
the coverage and attendant compliance costs associated with such laws,
regulations and ordinances may result in future additional costs to our
operations.
 
 A minimum
of 80% of the labor force in Caledon must be comprised of designated persons. A
designated person is any person of color plus white females. Currently, 93% of
the labor force in Caledon is comprised of designated persons. The license
holder must undertake to allocate 20% of net profit of the casino, as defined in
the casino license agreement, to Black Empowerment Partners. Caledon is obliged
to allocate at least 50% of its procurement costs to Black Empowerment companies
by 2006.
 
 **Financial
Information By Segment**
 
 See “Item
8 - Financial Statements and Supplementary Data” - Note 7 of the Notes to
Consolidated Financial Statements for certain financial information concerning
each of the Company’s operating segments.
 
 18
 **Item
2** **.**  **** **Properties** **.**
 
 *Colorado,
United States*
 
 Cripple
Creek
  We own
approximately 2.7 acres in Cripple Creek, Colorado used in connection with the
operations of Womacks Casino and Hotel which includes buildings and parking
spaces related to our casino and hotel operations. This property is
collateralized by a first mortgage held by Wells Fargo Bank in connection with
our credit agreement. See Note 5, “Long-Term Debt”, to the Consolidated
Financial Statements for further information.
 
 In
addition, we hold a subleasehold interest in real property and improvements on
approximately 0.8 acres of property in Cripple Creek, Colorado that expires on
June 20, 2005. We have given notice that we will exercise an option to acquire
the property at the expiration of the sublease at the exercise price of $1.5
million.
 
 We lease
10 city lots from the City of Cripple Creek, Colorado for parking. The lease
terms include annual rental payments of $90 thousand and an expiration date of
May 31, 2010. The agreement contains a purchase option for us to purchase the
property for $3.25 million, less cumulative lease payments, at any time during
the remainder of the lease term.
 
 We lease
2,847 square feet of office space in Colorado Springs, Colorado that houses our
corporate administrative personnel. The lease will expire in July 2005. We do
not expect any problems in extending the term.
  Central
City
 
 We own a
65% interest in a venture that owns approximately 1.10 acres in Central City,
Colorado to be used for the development of a casino, hotel and parking garage.
All together, the new development is expected to contain approximately 60,000
square feet of casino and back of house and 500 parking spaces within a 155,000
square feet, four story, parking structure.
  *Caledon,
South Africa*
 
 We own
approximately 600 acres in Caledon, South Africa. This property contains a
180,000 square foot building for our casino, hotel and spa operations and is
collateralized by a first mortgage bond over land, buildings and equipment held
by ABSA Bank Limited of South Africa. Approximately 500 acres of this property
is undeveloped at this time.
 
 *Alberta,
Canada*
 
 Effective
February 24, 2005, we own a 56.4% interest in a project in Edmonton, Alberta,
Canada. We had subscribed to 55% of the shares of CRA in September 2003 but
subsequently increased our participation in the project. The project is on a
7.25 acre facility site and when completed is expected to include a casino with
600 slot machines and approximately 31 table games, food and beverage amenities,
a dinner theatre, a 300 space underground parking garage and an existing 40-room
hotel.
 
 19
 **Item
3** **.** **Legal
Proceedings** **.**
 
 We are
not a party to, nor are we aware of, any pending or threatened litigation which,
in management’s opinion, could have a material adverse effect on our financial
position or results of operations.
 
 **Item
4** **.** **Submission
of Matters to a Vote of Security Holders** **.**
 
 No
matters were submitted to a vote of security holders during the fourth quarter
of fiscal year ended December 31, 2004.
  20
   **PART
II**
 
 **Item
5** **.**  **** **Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities** **.**
 
 Our
common stock began trading in the NASDAQ SmallCap Market on November 10, 1993.
The following table sets forth the low and high sale price per share quotations
of the common stock as reported on the NASDAQ Stock Market for the periods
indicated. These quotations reflect inter-dealer prices, without retail markup,
markdown or commission and may not necessarily represent actual transactions.
Actual prices may vary.
 
 Quarter
      Ended
    
    Low
    
    HighMarch
      31, 2003
    
    $
    1.85
    
    $
    2.50June
      30, 2003
    
    $
    1.88
    
    $
    2.49September
      30, 2003
    
    $
    2.11
    
    $
    3.00December
      31, 2003
    
    $
    2.20
    
    $
    3.93March
      31, 2004
    
    $
    2.76
    
    $
    3.50June
      30, 2004
    
    $
    3.26
    
    $
    6.30September
      30, 2004
    
    $
    3.75
    
    $
    6.20December
      31, 2004
    
    $
    5.27
    
    $
    9.77
 
 At
December 31, 2004, we had approximately 90 ****** holders
of record of our common stock. We estimate that the number of beneficial owners
is approximately 3,000.
 
 At the
present time, we intend to use any earnings that may be generated to finance the
growth of the Company’s business. Our credit facility with Wells Fargo Bank
currently limits the payment of dividends. No dividends have been declared or
paid by the Company, and we do not presently intend to pay
dividends.
 
 
  21
  The
following table provides the information as of December 31, 2004 relating to
securities authorized for issuance under equity compensation plans.
 Plan
      category
    Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
    Weighted-average
      exercise price of outstanding options, warrants and rights
    Number
      of securities remaining available for future issuance under equity
      compensation plans (excluding securities underlying outstanding options,
      warrants and rights)Equity
      compensation plans approved by security holders
    3,464,210
    $1.92
    -Equity
      compensation plans not approved by security holders
    -
    -
    -Total
    3,464,210
    $1.92
    -
 
 We had an
Employees’ Equity Incentive Plan (the Plan) that provided for the grant of
awards to eligible employees in the form of stock, restricted stock, stock
options, stock appreciation rights, performance shares or performance units, all
as defined in the Plan. The Plan expired in April 2004. The Plan provided for
the issuance of up to 4,500,000 shares of common stock to eligible employees
through the various forms of awards permitted. Only incentive stock option
awards, for which the option price was not less than fair market value at the
date of grant, or non-statutory options, which were granted at any option price,
could have been granted under the Plan. All options had to have an exercise
period not to exceed ten years. Options granted have one-year, two-year or
four-year vesting periods. The Company’s Incentive Plan Committee has the power
and discretion to, among other things, prescribe the terms and conditions for
the exercise of, or modification of, any outstanding awards in the event of
merger, acquisition or any other form of acquisition other than a reorganization
of the Company under United States Bankruptcy Code or liquidation of the
Company. The Plan also allowed limited transferability of any non-statutory
stock options to legal entities that are 100% - owned or controlled by the
optionee or to the optionee’s family trust. The Company last granted options to
any officers in March 2004. As of December 31, 2004 there were 3,464,210 options
outstanding under the Plan. We believe an equity compensation plan will help us
to remain competitive and to retain the services of key employees and
accordingly, we plan to ask our stockholders to approve a new plan at the 2005
annual stockholders meeting.
 
  22
  **Item
6** **.** **Selected
Financial Data**
 
 **For
      the Year Ended December 31,***Amounts
      shown in thousands except for share information*
    
    **2004**
    
    **2003**
    
    **2002**
    
    **2001**
    
    **2000**(1)
    
    
    
    
    
    
    
    
    
    
    
    (1)**Results
      of Operations:**Net
      Operating Revenue
    
    
    
    
    $
    35,765
    
    
    
    
    $
    31,402
    
    
    
    
    $
    29,337
    
    
    
    
    $
    29,456
    
    
    
    
    $
    26,232Net
      Earnings (2) (3) (7)
    
    
    
    
    
    4,738
    
    
    
    
    
    3,246
    
    
    
    
    
    3,079
    
    
    
    
    
    2,455
    
    
    
    
    
    3,253Net
      Earnings per Share:Basic
    
    
    
    
    $
    0.35
    
    
    
    
    $
    0.24
    
    
    
    
    $
    0.23
    
    
    
    
    $
    0.18
    
    
    
    
    $
    0.23Diluted
    
    
    
    
    $
    0.30
    
    
    
    
    $
    0.22
    
    
    
    
    $
    0.20
    
    
    
    
    $
    0.16
    
    
    
    
    $
    0.22**Balance
      Sheet:**Cash
      and Cash Equivalents (6)
    
    
    
    
    $
    8,411
    
    
    
    
    $
    4,729
    
    
    
    
    $
    4,582
    
    
    
    
    $
    3,031
    
    
    
    
    $
    9,077Total
      Assets (4)
    
    
    
    
    
    71,204
    
    
    
    
    
    54,817
    
    
    
    
    
    51,143
    
    
    
    
    
    44,819
    
    
    
    
    
    56,122Long-Term
      Debt
    
    
    
    
    
    17,970
    
    
    
    
    
    14,913
    
    
    
    
    
    16,531
    
    
    
    
    
    15,991
    
    
    
    
    
    20,314Total
      Liabilities (6)
    
    
    
    
    
    30,825
    
    
    
    
    
    21,769
    
    
    
    
    
    24,040
    
    
    
    
    
    22,641
    
    
    
    
    
    33,152Total
      Shareholders’ Equity
    
    
    
    
    
    40,379
    
    
    
    
    
    33,048
    
    
    
    
    
    27,103
    
    
    
    
    
    22,178
    
    
    
    
    
    22,970Cash
      Dividends Per Common
      Share (5)
    
    
    
    
    $
    --
    
    
    
    
    $
    --
    
    
    
    
    $
    --
    
    
    
    
    $
    --
    
    
    
    
    $
    --
 
 (1)
    In
      April 2000, we, through CCA, purchased a 50% interest in CCAL, which was
      awarded a casino license in April 2000. The Caledon Hotel, Spa and Casino
      opened for business in October 2000. In December 2000, we, through CCA,
      acquired an additional 15% of The Caledon Hotel, Spa and Casino, raising
      ownership of the project to 65%. In January 2003, we, through CCA,
      acquired the remaining 35% interest in
CCAL.
 
 (2)
    Effective
      2002, in accordance with SFAS No. 142, we no longer amortize goodwill and
      other intangible assets with indefinite useful lives. The goodwill
      amortization expense, net of income taxes, for the years ended December
      31, 2001 and 2000 was $1.2 million and $1.1 million, respectively.
 
 (3)
    In
      2002, we wrote down the value of the non-operating casino property and
      land held for sale in Nevada by approximately $0.45 million and recorded
      an approximately $0.40 million write-off for advances made and
      pre-construction costs incurred in conjunction with the Gauteng project
      and an approximately $0.30 million write-off for unpaid casino technical
      service fees from Casino Millennium. See Note 12, “Property Write-Down and
      Other Write-Offs”, to the Consolidated Financial
    Statements.
 
 (4)
    In
      2004, the increase in total assets is primarily the result of the
      contribution of $9.2 million in land and buildings to the Central City
      project by the minority partner, approximately $3 million in capital
      improvements at Womacks, including new slot machines and new slot
      accounting software and increases in foreign denominated assets resulting
      from fluctuations in currency exchange rates. In 2001, the reduction in
      total assets is principally the result of the effects of the change in the
      exchange rate on assets we held in our South African
      operations.
 
 (5) We
have not declared any cash dividends on our common stock and do not expect to
pay any such dividends in the foreseeable future.
  (6)
Approximately $3.5 million was borrowed against the Wells Fargo revolving credit
facility on December 30, 2004 to finance our cash contribution to the Central
City Project. A $4.2 million increase in the minority interest liability in 2004
is directly related to the Central City project.
  (7)  In 2004,
we recovered approximately $0.20 million in receivables that had been written
off in 2002.
 
  23
 
 
 ****
 **Item
7** **.** **Management’s
Discussion and Analysis of Financial Condition and Results of
Operations**
 
 The
following discussion should be read in conjunction with “Item 8. Financial
Statements and Supplementary Data” included elsewhere herein. Information
contained in the following discussion of results of operations and financial
condition of the Company contains forward-looking statements within the meaning
of Section 21E of the Securities and Exchange Act of 1934, and as such, are
based on current expectations and are subject to certain risks and
uncertainties. The reader should not place undue reliance on these
forward-looking statements for many reasons including those risks discussed
under “Factors that May Affect Future Results” and elsewhere in this document.
Forward-looking statements may be identified by the use of forward-looking words
or phrases such as “may,” “will,” “believe,” “expect,” “intend,” “anticipate,”
“could,” “should,” “plan,” “estimate,” “potential” or “continue”, or variations
thereon or comparable terminology. In addition, all statements other than
statements of historical facts are forward-looking statements.
 
 **Critical
Accounting Estimates**
 
 The
preparation of financial statements requires us to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenue and expenses,
and related disclosure of contingent assets and liabilities. On an on-going
basis, we evaluate these estimates, including those related to goodwill and
other intangible assets and property and equipment. We base our estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ materially
from these estimates under different assumptions or conditions. Our significant
accounting policies are discussed in Note 2 of the Notes to Consolidated
Financial Statements; critical estimates inherent in these accounting policies
are discussed in the following paragraphs.
 
 ***Goodwill
and Other Intangible Assets*** - Our
goodwill results from the acquisitions of casino and hotel operations and
represents excess of the purchase price over the fair value of identifiable net
tangible and intangible assets acquired. Goodwill and intangible assets with
indefinite lives are required to be tested for impairment at least annually or
more frequently if an event occurs or circumstances change that may reduce the
fair value of the asset below its carrying value. We have completed our
assessment of goodwill and other intangibles with indefinite lives for
impairment at December 31, 2004 and determined that there have been no
significant changes in the fair value of the assets, no adverse changes in the
projected cash flows or any events or circumstances that would lead management
to believe that the fair value of the assets are less than the current carrying
value of the reporting units. For reporting units with goodwill and/or
intangible assets with indefinite lives, this test requires the comparison of
the implied fair value of each reporting unit to its carrying value. The implied
fair value includes estimates of future cash flows, as well as estimates of
critical valuation inputs such as discount rates, terminal values and similar
data based on reasonable and supportable assumptions that represent our best
estimates. Changes in estimates or application of alternative assumptions and
definitions could produce significantly different results. We will continue to
assess goodwill and other intangibles with indefinite lives for impairment at
least annually hereafter.  We will also continue to assess the propriety of
our assignment of indefinite useful lives to intangible assets through analysis
of all pertinent factors used in making such estimates.  Included in assets
at December 31, 2004 is goodwill of approximately $8.8 million and casino
licenses of approximately $2.2 million.
 
 ***Property
and Equipment*** - At
December 31, 2004, we had property and equipment totaling $48.6 million,
representing 68% of total assets. We capitalize the cost of property and
equipment. Maintenance and repairs that neither materially add to the value of
the property nor appreciably prolong its life are charged to expense as
incurred. We depreciate property and equipment on a straight-line basis over
their estimated useful lives. The estimated useful lives are based on the nature
of the assets and our current operating expectations. Future events such as
property expansions, new competition and new regulations could result in a
change in the manner in which we are using certain assets requiring a
 
 24
 change in
the estimated useful lives of such assets. We evaluate long-lived assets for
impairment whenever events or changes in circumstances indicate that such
carrying values may not be recoverable. Under current standards, the assets must
be carried at historical cost if the projected cash flows from their use will
recover their carrying amounts on an undiscounted basis and without considering
interest. However, if projected cash flows are less than their carrying value,
the long-lived assets must be reduced to their estimated fair value.
Considerable judgment is required to project such cash flows and, if required,
estimate the fair value of the impaired long-lived asset. The estimated future
cash flows are based upon, among other things, assumptions about expected future
operating performance and may differ from actual cash flows. There can be no
assurance that future long-lived asset impairments will not occur. We capitalize
the cost of property and equipment that is contributed in a business combination
at the fair value of the assets that are contributed.  Capital assets
contributed by our minority interest partner in CC Tollgate LLC were recorded at
estimated fair value based on an appraisal at the time of the
contribution.  Appraisals, by their nature, involve estimations and
judgment.
 
 **Results
of Operations**
 
 *Overview*
 
 Since our
inception, we have been primarily engaged in developing and operating gaming
establishments and the related lodging and restaurant facilities. We derive
revenue from the net proceeds of our gaming machines and tables, and from hotel
and restaurant facilities.
 
 We are
managed in five segments: (i) Cripple Creek, Colorado (formerly Colorado
segment), the operations of Womacks Casino and Hotel; (ii) Central City,
Colorado, the development of a new casino, (iii) South Africa, primarily related
to the operations of the Caledon Hotel, Spa and Casino; (iv) cruise ship casino
operations for eight vessels; and (v) Corporate and other operations including
corporate gaming projects for which we have long-term service contracts.
 
 Our total
net operating revenue was $35.8 million, $31.4 million and $29.3 million for
2004, 2003 and 2002, respectively. For 2004, 2003 and 2002 Womacks represented
49%, 59% and 72% of total net operating revenue, respectively, while Caledon
represented 42%, 36% and 24% for the same periods.
 
 Earnings
from operations were $7.0 million, $6.8 million and $7.3 million for 2004, 2003
and 2002, respectively. The Womacks and Caledon casino and hotel operations had
operating earnings of $5.0 million and $3.81 million, respectively, for the year
ended December 31, 2004, $6.3 million and $2.5 million, respectively, for the
year ended December 31, 2003 and $9.09 million and $1.45 million, respectively,
for the year ended December 31, 2002. Cruise ship operations had earnings from
operations of $0.82 million, $0.49 million and $0.24 million in 2004, 2003 and
2002, respectively. Corporate operations incurred losses from operations of $1.6
million, $2.2 million and $2.9 million in 2004, 2003 and 2002,
respectively.
 
 We
continue to experience strong competition in both our Cripple Creek, Colorado
and South African segments. We face competition in both segments from larger
casinos in the area. In our Cripple Creek, Colorado segment two of our
competitors provide covered parking garages adjacent to their facilities which
provide them with an advantage during inclement weather and peak tourist season.
We continue to aggressively market in both Cripple Creek, Colorado and South
Africa, primarily through the use of our players’ club programs.
 
 25
 **Results
of Operations for the Years ended December 31, 2004, 2003 and 2002**
 
 We
reported net operating revenue of $35.8 million for the year ended December 31,
2004, compared to $31.4 million in 2003 and $29.3 million in 2002.
 
 Casino
revenue increased $2.8 million, or 8.7%, to $34.6 million in 2004 as compared to
2003. Casino revenue in 2003 increased $1.3 million, or 4.1%, to $31.9 million
as compared to 2002. These increases are primarily the result of gains made in
the South African Market. Hotel, food and beverage revenue increased $0.75
million, or 21.1%, to $4.3 million during 2004 as compared to 2003. Hotel, food
and beverage revenue increased $0.94 million or 35.7% in 2003 as compared to
2002. The increases in hotel, food and beverage revenue during the three year
period is primarily attributable to renovating and relocating certain restaurant
facilities in Cripple Creek, Colorado and increased theme dinners and banquets
at our South Africa property. Other revenue increased by $0.47 million or 75.6%
to $1.1 million in 2004 as compared to 2003, primarily as the result of the
foreign currency gain of $0.38 million recognized on the disposition of
Verkrans. Promotional allowances, which are made up of complimentary revenue,
cash points and coupons, are rewards we give our loyal customers to encourage
them to continue to patronize our properties. Such awards reduced gross revenues
by approximately 11% in 2004 and 13% in 2003 and 2002.
 
 Casino
operating expenses were $13.8 million, $11.7 million and $9.9 million for 2004,
2003 and 2002, respectively. 2004 casino operating expenses increased $2.1
million, or 17.9%, as compared to 2003 primarily due to growth in the South
African and ship segments and fluctuation in the currency exchange rate. The
increase of $1.8 million, or 18%, from 2002 to 2003 is primarily the result of
revenue volume increases and a 29% negative change in currency exchange rates in
the South African segment.
 
 Hotel,
food and beverage expenses were $3.1 million in 2004, $2.6 million in 2003 and
$1.5 million in 2002. Hotel, food and beverage expenses increased $0.6 million,
or 22.8%, from 2003 to 2004 because of the corresponding increase in food and
beverage revenues generated at additional outlets opened or expanded between
2003 and 2004. The increase of $1.1 million from 2002 to 2003 resulted from a
40% increase in repair costs related to improvements we are making at our South
African property and the effects of inflation and currency exchange rate
fluctuations during the period.
 
 General
and administrative expenses were $9.1 million in 2004 compared to $7.7 million
in 2003 and $7.2 million in 2002. General and administrative expenses increased
$1.4 million in 2004 over 2003 primarily as a result of staff increases at the
corporate level to support the expansion efforts and compliance requirements,
expenditures incurred in conjunction with new Company projects and the effect of
foreign currency fluctuations, primarily the Rand. The increase of $0.6 million
from 2002 to 2003 is primarily the result of currency exchange rate fluctuations
during the period.
 
 Depreciation
expense was $3.0 million in 2004, $2.7 million in 2003 and $2.3 million in 2002.
Changes in depreciation expenses during the three year period ended December 31,
2004 relate to on-going property improvement projects.
 
 Our
earnings from operations for the year ended December 31, 2004 were $7.0 million
compared to $6.8 million in 2003 and $7.3 million in 2002. Earnings from
operations increased $0.2 million, or 2.9% in 2004, primarily as a result of an
increase in earnings from operations in Caledon and, the gain recognized on the
sale of Verkrans, the recovery of receivables from the sale of our interest in
Gauteng, South Africa offset by a decrease in earnings from operations in
Cripple Creek, Colorado. The change from 2002 to 2003 is primarily an increase
in earnings from operations from Caledon of $1.1 million, a decrease from
Womacks of $2.8 million, and a charge of $1.1 million for property write-down
and other write-offs in 2002.
 
 
 26
 Interest
expense was $1.6 million in 2004, $2.0 million in 2003 and $1.9 million in 2002
and results primarily from our credit facility with Wells Fargo and the
outstanding note to ABSA Bank in South Africa. Please see Note 5, “Long-term
Debt” of the Notes to Consolidated Financial Statements for further information.
 
 Income
tax expense was $0.7 million for 2004 compared to $1.8 million in 2003 and $2.5
million in 2002. The decrease of $1.1 million in 2004 as compared to 2003 is
primarily related to a reduction in the effective tax rate on fees paid by the
South African operations to the Mauritian parent. Approximately $2.1 million of
our pre-tax income totaling $5.2 million is attributable to our Mauritian
subsidiary and is taxed at an effective rate of 3%. The decrease in 2003 when
compared to 2002 is mainly attributable to lower pre-tax income and lower
effective tax rate in South Africa in 2003.
 
 Our net
earnings for 2004 were $4.7 million, or $0.35 per share compared to net earnings
of $3.2 million, or $0.24 per share in 2003 and $3.1 million, or $0.23 per share
in 2002.
 
 A
discussion by business segment follows below.
 
 **Cripple
Creek, Colorado Segment**
 
 The
operating results of the Cripple Creek, Colorado segment, primarily the
operations of Womacks, for the years ended December 31, 2004, 2003 and 2002 are
as follows:
 
 *Dollar
      amounts shown in thousands*
    
    **2004**
    **2003**
    **2002**
    
    **%
      Change 2004 v. 2003**
    
    
    **%
      Change 2003 v. 2002**Operating
      RevenueCasino
    
    
    
    
    $
    19,486
    
    
    
    
    $
    20,981
    
    
    
    
    $
    23,922
    
    
    -7.1
    %
    
    -12.3
    %Hotel,
      food and beverage
    
    
    
    
    
    1,544
    
    
    
    
    
    1,267
    
    
    
    
    
    1,193
    
    
    21.9
    %
    
    6.2
    %Other
      (including promotional allowances)
    
    
    
    
    
    (3,469
    )
    
    
    
    
    (3,846
    )
    
    
    
    
    (3,855
    )
    
    -9.8
    %
    
    -0.2
    %Net
      operating revenue
    
    
    
    
    
    17,561
    
    
    
    
    
    18,402
    
    
    
    
    
    21,260
    
    
    -4.6
    %
    
    -13.4
    %Costs
      and ExpensesCasino
    
    
    
    
    
    6,828
    
    
    
    
    
    6,702
    
    
    
    
    
    7,038
    
    
    1.9
    %
    
    -4.8
    %Hotel,
      food and beverage
    
    
    
    
    
    586
    
    
    
    
    
    357
    
    
    
    
    
    277
    
    
    64.1
    %
    
    28.9
    %General
      and administrative
    
    
    
    
    
    3,638
    
    
    
    
    
    3,686
    
    
    
    
    
    3,521
    
    
    -1.3
    %
    
    4.7
    %Property
      write-down and other write offs net of
      (recoveries)
    
    
    
    
    
    3
    
    
    
    
    
    -
    
    
    
    
    
    -
    
    
    100.
    %
    
    -Depreciation
    
    
    
    
    
    1,512
    
    
    
    
    
    1,349
    
    
    
    
    
    1,334
    
    
    12.1
    %
    
    1.1
    %12,567
    
    
    
    
    
    12,094
    
    
    
    
    
    12,170
    
    
    3.9
    %
    
    -0.6
    %Earnings
      from operations
    
    
    
    
    
    4,994
    
    
    
    
    
    6,308
    
    
    
    
    
    9,090
    
    
    -20.8
    %
    
    -30.6
    %Interest
      (income) expense, net
    
    
    
    
    
    (123
    )
    
    
    
    
    1
    
    
    
    
    
    269
    
    
    -122.0
    %
    
    -99.6
    %Other
      income, net
    
    
    
    
    
    12
    
    
    
    
    
    42
    
    
    
    
    
    25
    
    
    -71.4
    %
    
    68.0
    %Earnings
      before income taxes
    
    
    
    
    
    5,129
    
    
    
    
    
    6,349
    
    
    
    
    
    8,846
    
    
    -19.2
    %
    
    -28.2
    %Income
      tax expense
    
    
    
    
    
    1,949
    
    
    
    
    
    2,413
    
    
    
    
    
    4,069
    
    
    -19.2
    %
    
    -40.7
    %**Net
      Earnings**
    
    
    
    
    $
    3,180
    
    
    
    
    $
    3,936
    
    
    
    
    $
    4,777
    
    
    **-19.2**
    **%**
    
    **-17.6**
    **%**
 
  27
  Overall
operating results for the segment were impacted by the casino results detailed
below.
 
 **Market
Data**
 
 **2004**
    **2003**
    **2002**Market
      share of the Cripple Creek Slot AGP
    13.4%
    14.9%
    17.0%Average
      number of slot machines
    649
    622
    640Market
      share of Cripple Creek gaming devices
    14.1%
    14.8%
    15.3%Average
      slot machine win per day
    81
      dollars
    91
      dollars
    101
      dollarsCripple
      Creek average slot machine win per day
    85
      dollars
    90
      dollars
    91
      dollars
 
 When comparing 2004 to 2003, the
Cripple Creek market grew by 4.3%. Management continues to focus on the
marketing of the Womacks Casino through the expansion of the successful Gold
Club. In December 2003 and in June 2004, additional casinos opened in Cripple
Creek, bringing the total number of casino licenses to 19 as of December 31,
2004 compared to 17 for the majority of 2003 and reduced Womacks’ market share
of gaming devices by 5%. We have spent approximately $3 million in 2004 to
upgrade the product mix on the gaming floor, improve the player tracking system
and introduce cashless gaming machines. Womacks will convert as many slot
machines as possible to cashless gaming machines. These ongoing improvements are
expected to add to the customer experience and further improve customer service.
Womacks has also implemented an employee training program focused on intensive
guest service. During 2004, Womacks replaced approximately 149 slot machines and
added 20 slot machines to the floor.
  During
this period, the relative percentage of personnel cost, device fees and the cost
of participation machines to net operating revenue contributed to the erosion in
earnings from operations. Management regularly evaluates these overhead costs to
maintain a good cost benefit relationship. During the fourth quarter of 2004,
changes in management were made to facilitate and manage this
relationship.
  When
comparing 2003 to 2002, there was no growth in the Cripple Creek market. For us,
distractions from major construction in the casino, limited access to the casino
from the adjoining parking lot during the first four months of the year, and
poor weather conditions, particularly in March and April 2003, had an adverse
effect on casino revenue and overall operating results. The casino has expanded
the use of both radio and TV advertising in its efforts to compete for the pool
of entertainment dollars. Management continues to focus on the marketing of the
casino through the expansion of the successful Gold Club. However, covered
parking garages provided by two of our competitors, completed by September 2002,
have impacted the casino, particularly during inclement weather, providing both
with a significant number of close proximity parking places, an advantage
previously held by Womacks. Both competitors also have a larger number of hotel
rooms, providing them with an advantage during inclement weather and the peak
tourist season. We have not yet decided on the next phase of expansion, but we
own all of the vacant property adjacent to the casino and are able to expand if
we conclude that expansion is in our best interest.
  In order
to outfit Womacks with the most popular gaming machines, Womacks leased
approximately 39 slot machines in 2004, compared to 37 in 2003 and an average of
42 in 2002, from manufacturers, on which it pays a fee calculated as a
percentage of the net win. All of the leases have short term commitment periods
not exceeding three months and are classified as operating leases. The leases
can be cancelled with no more than 30 days written notice. On a portion of the
leases, the manufacturer is guaranteed a minimum fee per day that can range from
15 dollars to 35 dollars for the duration of the lease. In most instances, the
branded games that are being introduced to the market are not available for
purchase.
 
 
 28
 For
financial reporting purposes, the net win on the slot machines is included in
our revenue and the amount due to the manufacturer is recorded as an expense, in
the period during which the revenue is earned, as casino operating cost.
Management makes its decisions to introduce these machines based on the consumer
demand for the product. The amount paid under these agreements was $0.46
million, $0.42 million and $0.42 million in 2004, 2003 and 2002,
respectively.
 ****
 **Hotel,
Food and Beverage**
 
 When comparing 2004
and 2003, hotel revenue, included in hotel, food and beverage revenue, increased
by 21.9%, as a result of an increase in the hotel occupancy rate to 92% in 2004
from 85% in both 2003 and 2002, and the opening of an additional food outlet.
All of the revenue generated by the hotel operations is derived from comps to
better players, the value of which is included in promotional
allowances.
  In May 2004, Womacks
added an additional restaurant, the “Cut Above Buffet”, on the second floor of
the casino. The restaurant operates on a limited schedule and provides an
alternative menu for patrons of the casino. Overall cost of operating the “Cut
Above Buffet” accounts for the significantly higher percentage increase in the
combined cost of hotel, food and beverage when compared to the percentage
increase in the corresponding revenue. The “Cut Above Buffet” offers a premium
menu, incurring a higher cost of sales, and has fulfilled the intention of
attracting new customers to Womacks Gold Club.
 
 When comparing 2003
and 2002, an increase of 7.8% in restaurant revenues is primarily a result of
the visibility obtained by opening Bob’s Grill on the gaming floor. In the third
quarter of 2002 Womacks introduced Bob’s Grill on the first floor of the casino
and operated the Gold Mine restaurant on a limited schedule. Relocation of the
restaurant to the first floor increased its visibility. In February 2003, we
doubled the capacity of Bob’s Grill and limited the use of the former Gold Mine
restaurant, which is located on the second floor, to weekend and holiday
buffets.
 
 **Other**
  Comparing
2004 to 2003, we were able to marginally reduce general and administrative
costs.
  Comparing
2003 to 2002, the increase in general and administrative costs is primarily
attributable to Womacks’ contributions to the campaign organized by Colorado’s
gaming industry against the proposed introduction of video lottery terminals
(VLT’s) (see “Liquidity and Capital Resources”). Womacks’ contribution to the
campaign totaled $0.13 million in 2003.
  The $0.16
million increase in depreciation expense when comparing 2004 to 2003 results
from an increase of approximately $0.19 million in depreciation on new additions
less the reduction in depreciation on assets that are fully depreciated. The
Company allocated $1.2 million in interest expense to the Corporate & Other
segment during the year ended December 31, 2004. Interest expense on the amounts
advanced, but not repaid, to fund the Company’s acquisitions and the repurchase
of the Company’s common stock is calculated using the effective rate on all
borrowings under the RCF. The Company reduces the interest expense incurred by
WMCK under the RCF by the amount of interest allocated to the Corporate &
Other segment. The Company has not repaid the funds advanced for the Company’s
acquisitions or the repurchase of the Company’s common stock, and therefore the
debt and accumulated interest allocated to the Corporate & Other segment
exceeded the total outstanding borrowing. As a result, Womacks
 
 29
 reported
a net negative $0.12 million in interest expense and debt issuance cost. During
the same period in 2003, Womacks reported interest expense and debt issuance
cost, of $1 thousand, net of $1.4 million in interest expense allocated to the
Corporate & Other segment. Such decrease is attributable to the decrease in
the weighted-average interest rate on the borrowings under the RCF, including
effects of swap agreements, to 6.30% from 8.06% and a reduction in the average
outstanding balance under the RCF to $11.8 million in 2004 from $12.6 million in
2003.
 
 The
decrease in interest expense, including debt issuance cost, to $1 thousand in
2003, net of $1.40 million in interest allocated to the Corporate & Other
segment, from $0.27 million, net of $1.15 million in interest allocated to the
Corporate & Other segment in 2002, is attributable to the decrease in the
weighted-average interest rate on the borrowings under our credit facility with
Wells Fargo, including effects of the swap agreements, to 8.72% from 9.75%. The
average balance of the Wells Fargo credit facility increased to $12.6 million in
2003 from $11.7 million in 2002. The major factor for the increase in the
average balance was $2.6 million borrowed in January 2003 to fund the purchase
of the remaining 35% interest in Caledon. Since the second quarter of 2000, we
have borrowed a total of $9.5 million under the Wells Fargo credit facility to
fund other Company projects and an additional $3.8 million to fund the
repurchase of shares of the Company’s common stock. The interest on the combined
amount has resulted in a charge of approximately $1.4 million and $1.2 million
to our Corporate & Other segment and is recognized as a reduction of
interest expense in our Cripple Creek, Colorado segment in 2003 and 2002,
respectively.
 
 The
Cripple Creek, Colorado segment recognized income tax expense of $1.9 million in
2004 versus $2.4 million in 2003, and $4.1 million in 2002, principally the
result of a decrease in earnings before income taxes.
 
 **Central
City, Colorado Segment**
 
 We
are **** developing
a casino and hotel project in Central City, Colorado. The proposed $40.0 million
development includes a 60,000 square foot casino and back of house with 625 slot
machines, six table games, 25 hotel rooms, retail, food and beverage amenities
and a 500-space on-site covered parking garage. We have also entered into a
long-term agreement to manage the facility upon completion and licensing.
Completion of the project is subject to various conditions and approvals,
including, but not limited to securing acceptable financing, satisfactory
environmental studies and licensing by the Colorado Division of Gaming. Casino
licenses in Colorado are not limited in number by state gaming laws and are
primarily subject to successful background investigations by the Colorado
Division of Gaming. Century currently is licensed in Colorado for gaming at
Womacks Casino and Hotel in Cripple Creek. Construction is expected to be
completed approximately 14 months after funding arrangements have been
finalized.
 
 In
conjunction with the settlement of the property on December 30, 2004, we
incurred $8 thousand dollars in expenses that were allocated to the minority
partner by agreement and therefore had no impact on the consolidated
results.
 
  30
  **South
African Segment**
 
 The
operating results of the South African segment are primarily those related to
the operations of the Caledon Hotel, Spa and Casino. Inter-company transactions,
including fees to its Mauritian parent, shareholder’s interest and their related
tax effects have been eliminated in the consolidated results. Improvement in the
Rand versus the dollar when comparing 2004 to 2003 and 2003 to 2002 has had a
positive impact on the reported revenues and a negative impact on expenses.
Operational results in US dollars for the years ended December 31, 2004, 2003
and 2002 are as follows: (See next page for results in Rand).
 
 **CALEDON***Amounts
      shown in thousands*
    **2004**
    **2003**
    **2002**
    **%
      Change****2004
      v. 2003**
    **%
      Change**
      **2003
      v. 2002**Operating
      RevenueCasino
    $
    12,540
    $
    9,211
    $
    5,899
    36.1%
    56.1%Hotel,
      food and beverage
    
    2,778
    
    2,301
    
    1,437
    20.7%
    60.1%Other
      (including promotional allowances)
    
    (348)
    
    (363)
    
    (253)
    -4.1%
    43.5%Net
      operating revenue
    
    14,970
    
    11,149
    
    7,083
    34.3%
    57.4%Costs
      and ExpensesCasino
    
    5,096
    
    3,993
    
    2,322
    27.6%
    72.0%Hotel,
      food and beverage
    
    2,548
    
    1,996
    
    1,232
    27.7%
    62.0%General
      and administrative
    
    2,171
    
    1,552
    
    1,342
    39.9%
    15.6%Depreciation
    
    1,343
    
    1,070
    
    734
    25.5%
    45.8%11,158
    
    8,611
    
    5,630
    29.6%
    52.9%Earnings
      from operations
    
    3,812
    
    2,538
    
    1,453
    50.2%
    74.7%Interest
      expense
    
    788
    
    929
    
    804
    -15.2%
    15.5%Other
      income, net
    
    112
    
    154
    
    146
    -27.3%
    5.5%Earnings
      before income taxes
    
    3,136
    
    1,763
    
    795
    77.9%
    121.8%Income
      tax expense
    
    943
    
    581
    
    256
    62.3%
    127.0%**Net
      Earnings**
    **$**
    **2,193**
    **$**
    **1,182**
    **$**
    **539**
    **85.5%**
    **119.3%**
 
 **CENTURY
      CASINOS AFRICA**Operating
      RevenueOther
      (including promotional allowances) (1)
    $
    364
    $
    -
    $
    -
    100.0%
    -Net
      operating revenue
    
    364
    
    -
    
    -
    100.0%
    -Costs
      and ExpensesGeneral
      and administrative
    
    1,528
    
    352
    
    155
    334.1%
    127.1%Depreciation
    
    -
    
    3
    
    -
    -100.0%
    100.0%Property
      write-down and other write offs, net of (recoveries)
    
    (175)
    
    -
    
    399
    100.0%
    -100.0%1,353
    
    355
    
    554
    281.1%
    -35.9%Loss
      from operations
    
    (989)
    
    (355)
    
    (554)
    178.6%
    -35.9%Interest
      expense, net
    
    597
    
    -
    
    -
    100.0%
    -Other
      income, net
    
    39
    
    28
    
    23
    39.3%
    21.7%Loss
      before income taxes
    
    (1,547)
    
    (327)
    
    (531)
    373.1%
    -38.4%Income
      tax expense (benefit)
    
    (627)
    
    **(**94)
    ****
    160
    567.0%
    -158.8%**Net
      Loss**
    **$**
    **(920)**
    **$**
    **(233)**
    **$**
    **(691)**
    **294.8%**
    **-66.3%**MINORITY
      INTEREST EXPENSE
    $
    -
    $
    (22)
    $
    (31)
    -100.0%
    -29.0%**SOUTH
      AFRICA NET EARNINGS (LOSS)**
    **$**
    **1,273**
    **$**
    **927**
    **$**
    **(183)**
    **37.3%**
    **606.6%**
 
 **Average
      exchange rate (Rand/USD)**
    
    **6.45**
    
    **7.43**
    
    **10.41**
    **-13.2%**
    **-28.6%**
 
 (1)
Includes foreign currency translation adjustment for sale of Verkrans, net of
cost of disposition.
  31
  Operational
results in Rand for the years ended December 31, 2004, 2003 and 2002 are as
follows:
 
 **CALEDON**
    
    **%
      Change****2004
      v. 2003**
    **%
      Change**
      **2003
      v. 2002***Amounts
      shown in thousands*
    **2004**
    **2003**
    **2002**Operating
      RevenueCasino
    R
    80,088
    R
    67,976
    R
    61,100
    17.8%
    11.3%Hotel,
      food and beverage
    
    17,753
    
    17,061
    
    14,863
    4.1%
    14.8%Other
      (including promotional allowances)
    
    (2,260)
    
    (2,584)
    
    (2,619)
    -12.5%
    -1.3%Net
      operating revenue
    
    95,581
    
    82,453
    
    73,344
    15.9%
    12.4%Costs
      and ExpensesCasino
    
    32,555
    
    29,365
    
    24,131
    10.9%
    21.7%Hotel,
      food and beverage
    
    16,247
    
    14,998
    
    12,717
    8.3%
    17.9%General
      and administrative
    
    13,813
    
    11,484
    
    13,847
    20.3%
    -17.1%Depreciation
    
    8,595
    
    7,950
    
    7,532
    8.1%
    5.5%71,210
    
    63,797
    
    58,227
    11.6%
    9.6%Earnings
      from operations
    
    24,371
    
    18,656
    
    15,117
    30.6%
    23.4%Interest
      expense
    
    5,072
    
    6,950
    
    8,394
    -27.0%
    -17.2%Other
      income, net
    
    729
    
    1,167
    
    1,495
    -37.5%
    -21.9%Earnings
      before income taxes
    
    20,028
    
    12,873
    
    8,218
    55.6%
    56.6%Income
      tax expense
    
    6,018
    
    4,284
    
    2,618
    40.5%
    63.6%**Net
      Earnings**
    **R**
    **14,010**
    **R**
    **8,589**
    **R**
    **5,600**
    **63.1%**
    **53.4%**
 
 **CENTURY
      CASINOS AFRICA**Operating
      RevenueOther
      (including promotional allowances)
    **R**
    (86)
    **R**
    -
    **R**
    -
    -100.0%
    -Net
      operating revenue (loss)
    
    (86)
    
    -
    
    -
    -100.0%
    -Costs
      and ExpensesGeneral
      and administrative
    
    8,836
    
    2,640
    
    1,677
    234.7%
    57.4%Depreciation
    
    -
    
    18
    
    -
    -100.0%
    100.0%Property
      write-down and other write offs, net of (recoveries)
    
    (1,003)
    
    -
    
    4,182
    -100.0%
    -100.0%7,833
    
    2,658
    
    5,859
    194.7%
    -54.6%Loss
      from operations
    
    (7,919)
    
    (2,658)
    
    (5,859)
    197.9%
    -54.6%Interest
      expense, net
    
    3,749
    
    -
    
    -
    100.0%
    -Other
      income, net
    
    325
    
    215
    
    242
    51.2%
    -11.2%Loss
      before income taxes
    
    (11,343)
    
    (2,443)
    
    (5,617)
    364.3%
    -56.5%Income
      tax expense (benefit)
    
    3,686
    
    **(**713)
    
    (1,005**)**
    417.0%
    -29.1%**Net
      Loss**
    **R**
    **(7,657)**
    **R**
    **(1,730)**
    **R**
    **(4,612)**
    342.6%
    -62.5%MINORITY
      INTEREST EXPENSE
    R
    -
    R
    (176)
    R
    (490)
    -100.0%
    -64.1%**SOUTH
      AFRICA NET EARNINGS**
    **R**
    **6,353**
    **R**
    **6,683**
    **R**
    **498**
    40.0%
    1,242.0%
 
   32
  **Casino
Market Data (in Rand)**
 
 **2004**
    **2003**
    **2002**Market
      share of the Western Cape AGP
    5.9%
    6.0%
    6.1%Market
      share of Western Cape gaming devices
    11.3%
    10.9%
    11.2%Average
      number of slot machines
    288
    274
    254Average
      slot machine win per day
    693
      Rand
    623
      Rand
    596
      RandAverage
      number of tables
    9
    8
    8Average
      table win per day
    2,132
      Rand
    1,928
      Rand
    1,995
      Rand
 
 The
results discussed below are all based on the Rand to eliminate the effect of
fluctuations in foreign currency exchange rates.
 
 When
comparing 2004 and 2003, the 17.8% increase in gross gaming revenue is
attributable to a number of factors including an increase in the number of slot
machines to 300 and tables to 10, the continuous marketing of cash coupons and
improved management. We market an array of amenities at the resort to our guests
as a complement to the gaming experience. These currently include a 92-room
hotel, a variety of dining experiences, 3 bars, the historic mineral hot spring
and spa, the outdoor experience (a team building facility) and an equestrian
center.
 
 When
comparing 2003 and 2002, the 11.3% increase in the gross casino revenue is
attributable to a number of factors including an increase in the number of slot
machines, the introduction of cash couponing and other successful marketing
efforts, an expanded smoking section, improved management and employee training.
The increase in casino expenses in excess of the increase in the corresponding
revenue is attributable to the increased cost of marketing the casino, period
cost associated with routine maintenance to the property, and to the effect of
inflation. The Caledon Hotel, Spa and Casino competes against a much larger
competitor located in a more populous area of the Western Cape.
 
 **Hotel,
Food and Beverage**
 
 When
comparing 2004 and 2003, hotel revenue increased 5.6%. Hotel occupancy was 48%
for 2004 compared to 57% for 2003. Conference sales decreased 19.4%, while gift
and leisure sales improved 110.1%. In June 2004, Caledon added a fourth
restaurant to the already varied selection. This restaurant offers patrons
Italian cuisine. Food and beverage revenue increased 6.2% in 2004 compared to
2003, as a result of the additional food and beverage facility plus changes to
operating hours and a general price increase.
 
 Hotel
occupancy was 57% for 2003 compared to 58% in 2002. Conference sales showed a
10% improvement for 2003 compared to 2002, while leisure sales decreased by 6%
in the corresponding period. Food and beverage revenue increased by 17.9%,
primarily due to the increase in the number of theme dinners and banquets, as
well as a general price increase.
 
 We
continue to make a number of repairs and improvements to the resort on an
ongoing basis. Additionally, continuing inflationary pressures in South Africa
have driven up base costs such as labor and supplies. When comparing 2003 and
2002, hotel repair cost increased by 40.1%, accounting for R0.84 million of the
increase in expenses. Labor cost, including health insurance and uniforms,
increased by 39.4%, accounting for R1.9 million of the increase in expenses.
 
  33
  **Other**
 
 Other
operating revenue principally consists of promotional allowances and revenue
generated from the resort’s ancillary services, which include the adventure
center, spa center, and conference room rental.
 
 The
weighted-average interest rate on the borrowings under the ABSA Bank loan
agreement is 16.9% in 2004, 2003 and 2002. When comparing 2004 to 2003, interest
expense has decreased by 27.0% as the principal balance of the term loans and
capitalized lease are repaid. When comparing 2003 and 2002 interest expense has
decreased by 17.2%, as the principal balance of the term loans and capitalized
leases are repaid.
 
 General
and administrative expenses in Century Casinos Africa include R7.8 million in
fees paid to CRI for services provided in 2004, which are eliminated in the
consolidated results.
 
 The R1.0
million in Property write-down and other write offs, net of (recoveries) is the
recovery of the receivables in connection with the sale of our interests in
Gauteng, South Africa.
 
 We
recognized a foreign currency translation gain on the disposition of Verkrans,
resulting from the difference between the exchange rate at the time of purchase
in March 2002 and the exchange rate at the time of sale in December 2004. The
reported results include a gain of $0.38 million in US dollars, but no
corresponding gain in Rand.
 
 The
interest expense at Century Casinos Africa is generated by loan agreements with
its Mauritian parent, CRL and is eliminated in the consolidated
results.
 
 **Cruise
Ships Segment**
 
 The
Cruise ships’ segment operating results for the years ended December 31, 2004,
2003 and 2002 are as follows:
 
 *Amounts
      shown in thousands*
    **2004**
    **2003**
    **2002**
    **%
      Change**
      **2004
      v. 2003**
    **%
      Change**
      **2003
      v. 2002**Operating
      RevenueCasino
    $
    2,615
    $
    1,677
    $
    786
    55.9%
    113.4%Other
      (including promotional allowances)
    
    154
    
    60
    
    38
    156.7%
    57.9%Net
      operating revenue
    
    2,769
    
    1,737
    
    824
    59.4%
    110.8%Costs
      and ExpensesCasino
    
    1,836
    
    1,172
    
    537
    56.7%
    118.2%General
      and administrative
    
    -
    
    3
    
    1
    -100.0%
    200.0%Depreciation
    
    110
    
    74
    
    45
    48.6%
    64.4%1,946
    
    1,249
    
    583
    55.8%
    114.2%Earnings
      from operations
    
    823
    
    488
    
    241
    68.6%
    102.5%Other
      income, net
    
    -
    
    17
    
    -
    -100.0%
    100.0%Earnings
      before income taxes
    
    823
    
    505
    
    241
    63.0%
    109.5%Income
      tax expense
    
    25
    
    150
    
    88
    -83.3%
    70.5%**Net
      Earnings**
    **$**
    **798**
    **$**
    **355**
    **$**
    **153**
    **124.8%**
    **132.0%**
 
 34
 In 2004
we operated casinos on eight ships, four on Silversea, one on the World of
ResidenSea and three on Oceania Cruises. In 2003 we operated seven casinos, four
aboard Silversea, one on the World of ResidenSea and two on Oceania Cruises.
During 2003 the Silversea’s Silver Wind ship returned to service in May after
periodic maintenance operations. During the same year we opened casinos aboard
the Oceania Insignia and Regatta. Following six months of routine maintenance
operations, Silversea’s Silver Cloud and Oceania’s Insignia returned to
operations in March 2004. In April 2004, we opened a casino aboard Oceania’s
Nautica. The Nautica remained in service until November 2004, when it went into
dry dock for routine maintenance.
 
 In 2003
we operated casinos on a total of seven ships: four from Silversea, one on the
World of ResidenSea and two on Oceania Cruises. In 2002, the Company operated
casinos on four ships, three on Silversea and one on the World of ResidenSea. In
May 2003, Silversea’s Silver Wind ship, which was taken out of service in
October 2001 after the events of September 11, 2001, returned to operation. In
April 2003, the Company opened a casino aboard Oceania’s Insignia and a casino
aboard their Regatta ship in June 2003.
 
 Concession
fees paid to the ship operators in accordance with the agreements accounted for
approximately $1.0 million, $0.6 million and $0.14 million of the total casino
expenses incurred in 2004, 2003 and 2002, respectively.
 
 Casino
expenses, excluding concession fees, dropped to 30.8% of casino revenue in 2004
compared to 34.8% in 2003, reflecting our ability to leverage cruise ship
operations. In 2002, casino expenses, excluding concession fees, constituted
50.8% of casino revenues.
 
 We
anticipate we will repeatedly experience severe fluctuations in the revenue
generated on each cruise depending on the number of passengers and the quality
of the players. This is a condition that is beyond our control.
 
 The
cruise ship concession agreements were assigned to our Mauritian subsidiary as
of October 1, 2003 and have since been subject to an effective tax rate of 3%.
 
  35
 **Corporate
& Other Segment**
 
 *Amounts
      shown in thousands*
    
    **2004**
    
    **2003**
    
    **2002**
    **%
      Change**
      **2004
      v. 2003**
    **%
      Change 2003 v. 2002**Operating
      RevenueOther
    $
    1,428
    $
    114
    $
    170
    1,152.6%
    -32.9%Net
      operating revenue
    
    1,428
    
    114
    
    170
    1,152.6%
    -32.9%Costs
      and ExpensesGeneral
      and administrative
    
    3,085
    
    2,152
    
    2,172
    43.4%
    -0.9%Property
      write-down and other write offsnet of
      (recoveries)
    
    (6)
    
    (35)
    
    746
    -82.9%
    -104.7%Depreciation
    
    28
    
    172
    
    191
    83.7%
    -9.9%3,107
    
    2,289
    
    3,109
    35.7%
    -26.4%Income
      from unconsolidated subsidiary
    
    55
    
    -
    
    -
    100.0%
    -Loss
      from operations
    
    (1,624)
    
    (2,175)
    
    (2,939)
    -25.3%
    -26.0%Interest
      expense
    
    1,258
    
    1,422
    
    1,171
    -11.5%
    21.4%Other
      income, net
    
    939
    
    352
    
    323
    166.8%
    9.0%Non-operating
      items from unconsolidated subsidiary
    
    (5)
    
    -
    
    -
    -100.0%
    -Loss
      before income taxes
    
    (1,948)
    
    (3,245)
    
    (3,787)
    -40.0%
    -14.3%Income
      tax benefit
    
    (1,541)
    
    (1,273)
    
    (2,119)
    21.1%
    -39.9%Loss
      before minority interest****
    
    (407)
    
    (1**,**972)
    
    (1,668)
    -79.4%
    -18.2%Minority
      Interest
    
    (98)
    
    -
    
    -
    100.0%
    -**Net
      Loss**
    **$**
    **(505)**
    **$**
    **(1,972)**
    **$**
    **(1,668)**
    -74.4%
    -18.2%
 
 Net
operating revenue principally consisted of casino technical service fees earned
from operating Casino Millennium in Prague, Czech Republic of $0.10 million
$0.11 million and $0.15 million in 2004, 2003 and 2002, respectively and $1.3
million in fees earned by CRI for services provided to CCA in 2004, which are
eliminated in the consolidated results. In August 2002, Prague experienced a
devastating flood throughout the city. Although the Casino Millennium property
was not damaged, public access to the city in the vicinity of the casino was
severely limited for months following the disaster and negatively affected the
casino operation. Effective September 1, 2002, casino technical service fees and
interest due to us are not being accrued until a certainty of cash flow is
attained for Casino Millennium.  These fees will be recognized when payment
is certain.
 
 Property
write-down and other write-offs, net of (recoveries) in 2004 include $43
thousand in unpaid technical services fees recovered from Casino Millennium,
which was written off in 2002, net of $37 thousand in cost related to the casino
development in Central City. Property write-down and other write-offs, net of
(recoveries) in 2003 include $35 thousand in unpaid casino technical service
fees recovered from Casino Millennium, which was written off in 2002. Property
write-down and other write-offs in 2002 includes a pre-tax charge in the amount
of $0.45 million to reduce the value of a non-operating property held by the
Company in Nevada to its fair value, less costs to sell, based on the current
assessment of the property and a pre-tax charge of $0.30 million to write off
unpaid casino technical service fees and loans related to its operations in
Prague, Czech Republic. An additional $26 thousand in interest income on the
unpaid casino technical service fees and loans was also written off, bringing
the total pre-tax charge for the segment to $0.77 million.
 
 36
 Other
income, net, is primarily derived from interest earned on a $5.7 million note
between our wholly owned subsidiary, WMCK Venture Corp. and CCI and interest
earned by CRL on loans with its South African subsidiary, CCA. The interest
income is eliminated in consolidation.
 
 **Other
Projects Under Development**
 
 CCI,
along with its partner, 746306 Alberta, Ltd., plan to develop the Celebrations
Casino and Hotel in Edmonton, Alberta, Canada. The project is expected to
include a casino with 600 gaming machines, 31 gaming tables, food and beverage
amenities, a dinner theater, a 300 space underground parking facility,
approximately 600 surface parking spaces and a 40-room hotel. The project is
expected to cost approximately $22.8 million ($27.5 million Canadian dollars).
Completion of this project is subject to obtaining acceptable project financing.
Construction is expected to take approximately 14 months from finalization of
funding arrangements. Upon completion of construction Century Resorts Alberta,
Inc. expects to receive its gaming license from the Alberta Gaming and Liquor
Commission. On December 17, 2004 the AGLC granted approval to begin construction
of the casino property. As is customary in Canada, the issuance of the license
does not occur until completion of construction and after all federal and
provincial legislation, regulation and policies, and municipal requirements,
permits, licenses and/or authorizations have been met. We have also entered into
a long-term agreement to manage the facility if a gaming license is
awarded.
 
 On
October 18, 2004, we entered into an agreement with the owners of Landmark
Gaming LC of Franklin County, Iowa, to jointly submit as co-applicant with the
Franklin County Development Association (FCDA) an application to the Iowa Racing
and Gaming Commission (IRGC) to develop and operate a moored barge casino, hotel
and entertainment facility in Franklin County, Iowa. The application was
submitted on November 11, 2004.
 
 If a
license is granted, we will contribute $1.25 million in cash through Century
Casinos Iowa, Inc., our wholly owned subsidiary, to Landmark Gaming LC, in
exchange for a 40% ownership interest. The current owners of Landmark Gaming LC
will contribute the land to be used for the project and certain land options in
return for a 60% ownership interest. Century Casinos Management, Inc. has
entered into a long term agreement to manage the casino once the project is
operational in return for a share in gross revenues plus a share in EBITDA. Our
cash contribution and the beginning of construction are subject to various
conditions and approvals, including, but not limited to awarding of a license by
the IRGC, securing acceptable financing and other due diligence. We will be
notified on May 11, 2005 if a license is granted to us.
 
 If a
casino license is awarded to Landmark Gaming LC, the Landmark Hotel and Casino
is projected to be open within 15 months of license award and finalization of
funding arrangements. The proposal includes a casino with up to 1,200 slot
machines, 34 tables, 120 hotel rooms, 1,500 parking spaces and will employ
approximately 600 people. A study completed by independent casino and lodging
industry consultants Gaming & Resort Development, Inc. estimates total
development costs to be $67 million and projected first year net revenue of $72
million.
 
 **Liquidity
and Capital Resources**
 
 We
generate substantial cash flows from operating activities, as reflected in the
Consolidated Statement of Cash Flows. For 2004, we reported cash flows from
operating activities of $8.5 million compared to $5.8 million in 2003 and $7.4
million in 2002. These cash flows reflect the impact on our consolidated
operations of the success of our marketing programs and on-going cost
containment focus.
 
 37
 We use
the cash flows generated by the Company to fund reinvestment in existing
properties for both refurbishment and expansion projects, and to pursue
additional growth opportunities via new development opportunities. When
necessary, we supplement the cash flows generated by our operations with funds
provided by financing activities to balance our cash requirements.
  Cash and cash equivalents totaled
$8.4 million plus restricted cash of $0.7 million at December 31, 2004. Net
working capital totaled $1.9 million. Additional liquidity may be provided by
our revolving credit facility (“RCF”) with Wells Fargo Bank, under which the
Company had a total commitment of $26 million ($20.94 million net of the
quarterly reduction) and unused borrowing capacity of approximately $5.3 million
at December 31, 2004. The maturity date of the borrowing commitment is August
2007. In
October 2004, an amendment to the RCF changed the aggregate commitment reduction
schedule under the RCF. Effective with the amendment, there will be no quarterly
reduction until July 1, 2005. The available balance will be reduced by $0.3
million for two quarters beginning July 1, 2005, by $0.6 million for two
quarters beginning January 1, 2006, and finally by $0.72 million at the
beginning of each quarter beginning July 1, 2006 until maturity in August 2007.
The change in the scheduled reduction provides us with approximately $2.5
million additional availability over the next one and a half years. We have
the flexibility to use the funds for various business projects and
investments.
  Cash used
in investing activities of $7.1 million for the year ended December 31, 2004
consisted of: $3.5 million capital contribution by us for Century Casinos
Tollgate, Inc., $0.44 million towards the upgrade of the slot accounting system,
$1.9 million towards new slot games, $1.5 million in improvements to the
property in Caledon, South Africa, $0.18 million in expenditures to outfit the
cruise ships and $0.5 million in expenditures for other long-lived assets, less
$0.21 million in proceeds from the disposition of assets and $0.75 million, 4.4
million Rand, in proceeds from the disposition of the common stock of
Verkrans Ontwikkelings Maatskappy (Pty) Ltd.
 
 Cash used
in investing activities of $3.5 million for the year ended December 31, 2003,
consisted of: $0.68 million towards the expansion of the Womacks casino at the
rear of the property that was completed in the second quarter of 2003, providing
a larger, more player friendly gaming space and the ability to increase Womacks’
slot machine capacity; $0.39 million for new slot machines; $0.84 million for
additional improvements to the property in Caledon, South Africa, including $61
thousand for additional capitalized building costs related to the original
construction; $1.26 million towards the purchase of the remaining 35% interest
in Century Casinos Caledon (Pty) Limited, $0.92 million of which was applied
against the minority shareholder liability and $0.34 million of which increased
the carrying value of the land in Caledon; $0.19 million towards outfitting the
two new casinos aboard the luxury cruise ships operated by Oceania and to finish
re-outfitting the Silver Wind; $0.49 million due to expenditures for other
long-lived assets, less $0.31 million in proceeds from the disposition of
assets.
 
 Cash used
in investing activities of $4.4 million for the year ended December 31, 2002,
consisted of: $1.4 million towards the purchase and improvements of the Palace
Hotel in Cripple Creek and property; $1.2 million towards the expansion of the
Womacks casino at the rear of the property; $0.13 million towards the
construction of a restaurant and grill on the first floor of the Womacks casino;
$0.81 million on new gaming equipment; $0.48 million for additional improvements
to the property in Caledon, South Africa; $0.46 million primarily for land
purchased for proposed casino development in Johannesburg, South Africa and
$0.28 million for expenditures of other long-lived assets, less $0.26 million in
proceeds from the disposition of assets and $7 thousand from a decrease in
restricted cash.
  38
 
 Cash provided by financing
activities of $1.9 million for the year ended December 31, 2004 consisted of:
net borrowings of $3.9 million under the RCF with Wells Fargo, primarily for the
$3.5 million capital contribution to the Central City Colorado project, net
repayments of $1.32 million under the loan agreement with ABSA, repayment of a
$0.4 million note payable to a founding shareholder, and other net repayments of
$0.2 million, less net borrowing of $90 thousand from a former director, which
was subsequently repaid in 2004, additional deferred financing and licensing
charges incurred by the Company with a cost of $0.11 million and $31 thousand in
proceeds from the exercise of stock options.
 
 Cash used
in financing activities of $2.6 million for the year ended December 31, 2003
consisted of: net borrowings of $0.26 million under the RCF with Wells Fargo
plus $0.85 million in proceeds from the exercise of stock options and other net
borrowings of $43 thousand, less net repayments of $1.25 million under the loan
agreement with ABSA Bank, $1.26 million to acquire a loan to CCAL held by the
minority shareholder, Caledon Overberg Investments (Proprietary) Limited
(“COIL”); $0.13 million towards the repurchase of the Company’s common stock on
the open market at cost; and $1.11 million towards the purchase of 489,264
shares of common stock from a former director, James Forbes, at a per share
price of $2.26.
 
 Cash used
in financing activities of $1.5 million for the year ended December 31, 2002
consisted of net repayments of $0.30 million under the RCF with Wells Fargo,
plus net repayments of $0.61 million under the loan agreement with ABSA Bank,
additional deferred financing charges incurred by the Caledon Hotel, Spa and
Casino, with a cost of $23 thousand, additional deferred financing charges
incurred by the Company to amend the RCF, with a cost of $92 thousand, the
repurchase of the Company’s common stock on the open market with a cost of $0.39
million and other net repayments of $0.11 million, less $26 thousand in proceeds
from the exercise of stock options.
 
 We
maintain a revolving line of credit facility and one swap agreement, as more
fully described in Note 5, “Long-Term Debt”, to the Consolidated Financial
Statements, with Wells Fargo to fund current operations and future investments. Currently,
the $26 million credit facility matures in August
2007 .
At December 31, 2004, the maximum available under the credit facility was $20.94
million and the unused borrowing capacity was approximately $5.3
million . The Company’s
weighted-average interest rate on the credit facility was 6.30% in 2004, 8.06%
in 2003 and 9.15% in 2002. In an environment of falling interest rates, as we
have seen throughout the majority of the last three years, swap agreements are
disadvantageous. Without the swap agreements the weighted-average
interest rate on the credit
facility would have been 4.06% in 2004, 3.98% in 2003 and 4.68% in 2002. A
portion of the proceeds of borrowings under the credit facility were used for
the development of The Caledon Hotel,
Spa and Casino and for initial development costs on the Central City, Colorado
project. The
credit facility is secured by substantially all of the real and personal
property of Womacks. Under the credit facility, we are required to comply with
certain customary financial covenants, and are subject to certain capital
expenditure and investment restrictions.
 
 We also
have an outstanding loan with ABSA Bank in South Africa as more fully described
in Note 5 to the Consolidated Financial Statements, which provided a principal
loan to fund the development of the Caledon project and a standby facility to
provide working capital. Outstanding borrowings under the principal loan and
standby facility bear interest at 17.05% and 15.1%, respectively. As of December
31, 2004 the entire amount has been advanced against the loan and the standby
facility.
 
 Our
Board of Directors has approved a discretionary program to repurchase up to $5.0
million of our outstanding common stock. During 2004, we did
not repurchase any common stock on the open market. During
2003, we repurchased
59,100 shares of our common stock on the open market at an average cost of $2.24
and 489,264 shares from one of our former directors at a price of $2.26 per
share .
Beginning in 1998 and through 2003, we have repurchased 1,174,004 shares of our
common stock at a
total cost of approximately
$2.3 million.
 
 39
 We
believe that our cash at December 31, 2004, together with expected cash flows
from operations and borrowing capacity under the Wells Fargo credit facility,
will be sufficient to fund our anticipated operating costs, capital expenditures
at existing properties and satisfy our current debt repayment
obligations.
 
 On April
8, 2005, CC Tollgate LLC entered into a loan agreement with Colorado Business
Bank securing $5.0 million to finance the predevelopment construction costs
associated with the development of a casino in Central City, Colorado. Under the
terms of the agreement, the loan will mature on October 4, 2005 at which time
the principal is due with interest calculated at prime plus 0.5%. At the
inception of the loan,  prime is 5.75%. The note is secured by the existing
property and improvements and by commercial guarantees provided by Century
Casinos, Inc. and its partner Tollgate Venture LLC.
 
 The
primary source of our future operating cash flows will be from gaming
operations. We will continue to rely on revolving lines of credit with
commercial banks or other debt instruments to supplement our working capital and
investing requirements. We anticipate that these sources of cash flows are
sufficient to meet our near-term operating cash requirements. We will continue
to evaluate our planned capital expenditures at each of our existing locations
in light of the operating performance of the facilities at such locations. From
time to time the Company expects to have cash needs for the development of new
properties that exceed our current borrowing capacity and we may be required to
seek additional financing in the debt or equity markets. We may be unable to
obtain additional debt or equity financing on acceptable terms. As a result,
limitations on our capital resources could delay or cause us to abandon certain
plans for the development of new properties.
  **Contractual
Obligations and Commercial Commitments**
 
 The
following is a schedule of contractual obligations and commercial commitments as
of December 31, 2004.
 
 Contractual
      Obligations
    Payments
      Due by Period
      *Amounts
      shown in thousands*Total
    Less
      than 1 year
    1-3
      years
    4-5
      years
    More
      than 5 yearsLong-Term
      Debt
    $
    20,272
    $
    2,356
    $
    17,916
    $
    -
    $
    -Capital
      Lease Obligations
    
    278
    
    203
    
    60
    
    15
    
    -Operating
      Leases
    
    924
    
    459
    
    247
    
    180
    
    38Total
      Contractual Cash Obligations
    $
    21,474
    $
    3,018
    $
    18,223
    $
    195
    $
    38
   **Recent
Accounting Pronouncements**
   In
December 2003, FASB revised Interpretation No. 46, “Consolidation of Variable
Interest Entities”. FIN 46(R) addresses consolidation issues by business
enterprises of variable interest entities in which 1) the equity interest at
risk is not sufficient to finance its activities without additional subordinated
financial support, 2) the equity investors lack one
 
 40
 or more
essential characteristics of a controlling financial interest or 3) the equity
investors have voting rights that are not proportionate to their economic
interest. The Company adopted FIN 46(R) on January 1, 2004. The Company has
determined that CM (Note 3) is a variable interest entity as defined by FIN 46
(R). The Company has also determined that it is not the primary beneficiary as
defined by FIN 46 (R) and has, therefore, accounted for the Company’s 50%
interest in CM on the equity basis. A primary beneficiary is the party that
absorbs a majority of the entity’s expected losses, receives a majority of its
expected returns, or both as defined in FIN 46(R). Under the equity method of
accounting, the Company has recognized the difference between the investment and
the underlying cost of the equity as goodwill and reported its percentage of the
earnings in CM as equity in income from unconsolidated
subsidiary.
   In
December 2004, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 123R (SFAS 123R), “Share-Based Payment.”
SFAS 123R requires employee stock options and rights to purchase shares under
stock participation plans to be accounted for under the fair value method, and
eliminates the ability to account for these instruments under the intrinsic
value method prescribed by Accounting Principles Board Opinion No. 25,
“Accounting for Stock Issued to Employees,” which generally resulted in the
recognition of no compensation cost. SFAS 123R requires the use of an option
pricing model for estimating fair value, which is amortized to expense over the
service periods. The requirements of SFAS 123R are effective for fiscal years
beginning after June 15, 2005. We are currently assessing the valuation options
allowed under SFAS 123R. We have not yet determined the impact of applying the
various provisions of SFAS 123R, however, based on our current options
outstanding, we believe the impact on earnings will be significant.
   In
December 2004, the FASB issued SFAS No. 153 (SFAS 153), “Exchanges of
Nonmonetary Assets - an amendment of APB Opinion No. 29.” This eliminates the
exception in APB Opinion No. 29 for nonmonetary exchanges of similar productive
assets and replaces it with a general exception for exchanges of nonmonetary
assets that do not have commercial substance. A nonmonetary exchange has
commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. The provisions of this
statement are effective for fiscal years beginning after June 15, 2005. We are
currently evaluating the impact of this new standard, but do not expect the
adoption of SFAS 153 to have a material impact on its financial position,
results of operations or cash flows.
  **Factors
That May Affect Future Results**
 
 ***Substantially
all of our revenue and operating income are derived from our Cripple Creek,
Colorado and Caledon, South Africa casinos, and any factors that adversely
impact one or both of these facilities may have a significant impact on our
results of operations.***
  Over 96%
of our net operating revenue and approximately 92% of earnings from operations,
excluding operating income reported for CCA in the South African segment and
that reported in the Corporate and Other segment, for the years ended December
31, 2004 and 2003 were derived from our casinos in Cripple Creek and Caledon. We
expect that a substantial portion of our revenue and operating income for the
immediate future will continue to be derived from our operations at these two
facilities. If new competitors enter one of these markets, our effective rate of
taxation is increased, economic conditions in one of these regions deteriorates
or a business interruption to one of these facilities occurs, our operating
revenues and cash flow could decline significantly, which may have a material
adverse effect on the price of our common stock.
  ***We
face significant competition, and if we are not able to compete successfully our
results of operations will be harmed.***
 
 We face
intense competition from other casinos in Cripple Creek, Colorado and in the
Western Cape region of South Africa. Competitors in Cripple Creek include some
casinos of similar size to ours and many other smaller casinos. In South Africa,
we compete with a much larger casino in Cape Town, and to a lesser extent with
two smaller casinos. Construction on a fourth smaller casino, located in
Worcester, is expected to begin in November 2005 with an opening projected by
the second quarter of 2006. We seek to compete in
 41
 the
Colorado market through promotion of our frequent players club called Womacks
Gold Club and other marketing efforts, and in South Africa by emphasizing
Caledon’s destination resort appeal, players’ club programs, and by superior
service. Some or all of these efforts may not be successful, which could hurt
our competitive position. In addition, the primary market served by our Cripple
Creek facility is Colorado Springs, Colorado, which is 45 miles away, and
Cripple Creek is generally not a destination resort. The number of casino and
hotel operations in Cripple Creek may exceed market demand, which could make it
difficult for us to sustain profitability.
 
 The
gaming industry is highly fragmented and characterized by a high degree of
competition among a large number of participants, many of which have financial
and other resources that are greater than our resources. Competitive gaming
activities include casinos, video lottery terminals and other forms of legalized
gaming in the U.S. and other jurisdictions. Legalized gaming is currently
permitted in various forms throughout the U.S. as well as internationally. If
additional gaming opportunities become available near our operating facilities,
such gaming opportunities could have a material adverse effect on our business,
financial condition and results of operations. We are particularly vulnerable to
competition at our Cripple Creek facility. If other gaming operations were to
open closer to Colorado Springs, our operations in Cripple Creek could be
substantially harmed, which would have a material adverse effect on our
operations. **** In
addition, established gaming jurisdictions could award additional gaming
licenses or permit the expansion of existing gaming operations. New or expanded
operations by other entities will increase competition for our gaming operations
and could have a material adverse impact on us.
 
 ***We
face extensive regulation from gaming and other regulatory authorities, which
involves considerable expense and could harm our business.***
 
 *Licensing
requirements:* As
owners and operators of gaming facilities, we are subject to extensive state,
local, and in South Africa, provincial regulation. State, local and provincial
authorities require us and our subsidiaries to demonstrate suitability to obtain
and retain various licenses and require that we have registrations, permits and
approvals to conduct gaming operations. Various regulatory authorities,
including the Colorado Division of Gaming or the Western Cape Gambling and
Racing Board, may for any reason set forth in applicable legislation, rules and
regulations limit, condition, suspend or revoke a license or registration to
conduct gaming operations or prevent us from owning the securities of any of our
gaming subsidiaries. Like all gaming operators in the jurisdictions in which we
operate, we must periodically apply to renew our gaming licenses or
registrations and have the suitability of certain of our directors, officers and
employees approved. We may not be able to obtain such renewals or approvals.
Regulatory authorities may also levy substantial fines against us or seize our
assets or the assets of our subsidiaries or the people involved in violating
gaming laws or regulations. Any of these events could have a material adverse
effect on our business, financial condition and results of operations.
 
 Gaming
authorities in the U.S. generally can require that any beneficial owner of our
securities, including holders of our common stock file an application for a
finding of suitability. If a gaming authority requires a record or beneficial
owner of our securities, to file a suitability application, the owner must apply
for a finding of suitability within 30 days or
 
 42
 at an
earlier time prescribed by the gaming authority. The gaming authority has the
power to investigate an owner's suitability and the owner must pay all costs of
the investigation. If the owner is found unsuitable, then the owner may be
required by law to dispose of our securities. Our certificate of incorporation
also provides us with the right to repurchase shares of our common stock from
certain beneficial owners declared by gaming regulators to be unsuitable holders
of our equity securities, and the price we pay to any such beneficial owner may
be below the price such beneficial owner would otherwise accept for his or her
shares of our common stock.
 
 *Potential
changes in regulatory environment:* From
time to time, legislators and special interest groups have proposed legislation
that would expand, restrict or prevent gaming operations or which may otherwise
adversely impact our operations in the jurisdictions in which we operate. Any
expansion of gaming or restriction on or prohibition of our gaming operations
could have a material adverse effect on our operating results. For instance, in
November 2003, a Colorado ballot issue was proposed that would have permitted
the installation of at least 500 video lottery terminals or “VLTs” at each of
the five racetracks throughout Colorado, two of which are located in Colorado
Springs and Pueblo, the dominant markets for Cripple Creek. If this ballot issue
had passed, our casino operations in Cripple Creek might have suffered from
reduced player visits and declining revenues. There can be no assurance that
future attempts will not be made to pass similar ballot issues in Colorado or
other markets in which we operate.
 
 *Taxation
and fees:* We
believe that the prospect of significant revenue is one of the primary reasons
jurisdictions permit legalized gaming. As a result, gaming companies are
typically subject to significant taxes and fees in addition to normal federal,
state, local and provincial income taxes, and such taxes and fees are subject to
increase at any time. We pay substantial taxes and fees with respect to our
operations. From time to time, federal, state, local and provincial legislators
and officials have proposed changes in tax laws, or in the administration of
such laws, affecting the gaming industry. In addition, worsening economic
conditions could intensify the efforts of state and local governments to raise
revenues through increases in gaming taxes. It is not possible to determine with
certainty the likelihood of changes in tax laws or in the administration of such
laws. Such changes, if adopted, could materially increase our tax expenses and
impair our profitability.
 
 ***We
intend to develop and operate additional casino properties in the future, and if
our development efforts are not successful our business may be
harmed.***
 
 We have
announced plans, jointly with another party, to develop and operate a casino in
Edmonton, Alberta, Canada, have joined with a partner to develop and operate a
casino and hotel in Central City, Colorado, and have filed a gaming application
along with a partner for a casino and hotel in Franklin County, Iowa. Each of
these projects has pending applications for gaming licenses, and we would be
required to obtain a gaming license for any additional facility we attempt to
open. Each licensing process is unique and requires a significant amount of
funds and management time. The licensing process in any particular jurisdiction
can take significant time and expense through licensing fees, background
investigation costs, fees of counsel and other associated preparation costs. In
addition, political factors may make the licensing process more difficult in one
or more jurisdictions. If any of our gaming license applications are denied, we
may have to write off costs, which could be significant.
 
 Even if
we receive licenses to open and operate proposed new facilities, commencing
operations at our proposed new casino projects will require substantial
development to become operational. Development activities involve expenses and
risks, including expenses involved in securing required licenses, permits or
authorizations other than those required from gaming regulators, and the risk of
potential cost over-runs, construction delays, and market deterioration. One or
more of these risks may result in one or more of our currently proposed
properties not being successful. If we are not able to successfully commence
operations at these properties, our results of operations could be
harmed.
 
 43
 ***We
may face disruption in integrating and managing facilities we open or acquire in
the future, which could adversely impact our operations.***
 
 We
continually evaluate opportunities to open new properties, some of which are
potentially significant in relation to our size. For instance, completion of our
planned casino in Edmonton, Alberta, Canada will require capital investments of
up to $22.8 million. For the development in Central City, Colorado, we expect
the capital investments to amount to approximately $40 million, and we estimate
the proposed capital investment in Franklin County, Iowa will be approximately
$67 million. We expect to continue pursuing expansion opportunities, and we
could face significant challenges in managing and integrating expanded or
combined operations resulting from our expansion activities. The integration of
any new properties we open or acquire in the future will require the dedication
of management resources that may temporarily divert attention from the
day-to-day business of our existing operations, which may interrupt the
activities of those operations and could result in deteriorating performance
from those operations. Management of new properties, especially in new
geographic areas, may require that we increase our managerial staff, which would
increase our expenses.
 
 ***Difficulties
in managing our*** ***worldwide*** ***operations may have an adverse impact on our
business.***
 
 We
derive our
revenue from operations
located on three continents and on cruise ships operating around the world. Our
management is located in the United States, South Africa and Continental Europe
(Czech Republic and Austria) . As a
result of long distances, different time zones, culture, management and language
differences, our
worldwide operations pose risks to our business . These
factors make it more challenging to manage and administer a globally-dispersed
business, and increase the resources we must devote to operating under several
different regulatory and legislative regimes. In addition, our results are
affected by changes in the value of certain currencies, particularly the value
of the South African Rand against the U.S. dollar. We do not hedge our exposure
to the Rand, and a declining Rand may adversely affect the revenues we report
from our South African operations. Moreover, economic or political instability
in one or more of our markets could adversely affect our operations in those
markets.
 
 ***A
downturn in general economic conditions may adversely effect our results of
operations.***
 
 Our
business operations are subject to changes in international, national and local
economic conditions, including changes in the economy related to future security
alerts in connection with threatened or actual terrorist attacks, such as those
that occurred on September 11, 2001, and related to the war with Iraq, which may
affect our customers' willingness to travel. A recession or downturn in the
general economy, or in a region constituting a significant source of customers
for our properties, could result in fewer customers visiting our properties,
which would adversely effect our results of operations.
 
 ***The
Cripple Creek, Colorado and Caledon South, Africa markets, which are important
to our business, are subject to seasonal
fluctuations.***
 
 Because
Cripple Creek, Colorado is a mountain tourist town, its gaming market is subject
to seasonal fluctuations. Typically, gaming revenues are greater in the summer
tourist season and are lower from October through April. During the year ended
December 31, 2004, the revenue attributable to our Cripple Creek, Colorado
operations fluctuated from a high of $5.75 million in the third quarter to a low
of $4.1 million in the fourth quarter.
 
 44
 The
gaming market in Caledon, South Africa is also subject to seasonal fluctuations.
Typically, gaming revenues are greater in their summer holiday season and are
lower from February through November. During the year ended December 31, 2004,
the revenue attributable to our Caledon, South Africa operations fluctuated from
a high of $4.4 million in the fourth quarter to a low of $3.3 million in the
first quarter.
 
 If we are
not able to offset seasonal declines in our Cripple Creek, Colorado and Caledon,
South Africa operations with additional revenue from other sources, our
quarterly results may vary considerably from period to period, which could cause
the price of our common stock to be volatile.
 
 ***Inclement
weather and other conditions could seriously disrupt our business, financial
condition and results of operations.***
 
 The
operations of our facilities are subject to disruptions or reduced patronage as
a result of severe weather conditions. For instance, in August 2002, Prague
experienced a devastating flood throughout the city. Public access to the city
in the vicinity of the Casino Millennium, which we operate, was severely limited
for months following the disaster and negatively affected casino operations.
High winds and blizzards limit access to our property in Cripple Creek from time
to time, and hurricanes or other severe storms may impact the operations of our
cruise ship casino facilities. In the event weather conditions limit access to
our casino properties or otherwise adversely impact our ability to operate our
casinos at full capacity, our revenues will suffer, which would harm our
operating results.
 
 ***Fluctuations
in currency exchange rates could adversely affect our
business.***
 
 Our
facility in Caledon, South Africa represents a significant portion of our
business, and the revenue generated and expenses incurred by the Caledon
facility are generally denominated in South African Rand. A decrease in the
value of the Rand in relation to the value of the U.S. dollar would decrease the
revenue and operating profit from our South African operations when translated
into U.S. dollars, which would adversely affect our consolidated results and
could cause the price of our common stock to decrease. In addition, we expect to
expand our operations into other countries and, accordingly, we will face
similar exchange rate risk with respect to the costs of doing business in such
countries as a result of any increases in the value of the U.S. dollar in
relation to the currencies of such countries. We do not currently hedge our
exposure to fluctuations in the Rand, and there is no guarantee that we will be
able to successfully hedge any future foreign currency exposure.
 
 ***The
loss of key personnel could have a material adverse effect on us.***
 
 We are
highly dependent on the services of Erwin Haitzmann, our Chairman and Co-Chief
Executive Officer, Peter Hoetzinger, our Vice Chairman, President and Co-Chief
Executive Officer, and other members of our senior management team. Our ability
to retain key personnel is affected by the competitiveness of our compensation
packages and the other terms and conditions of employment, our continued ability
to compete effectively against other gaming companies and our growth prospects.
The loss of the services of any of these individuals could have a material
adverse effect on our business, financial condition and results of operations.
 
 45
 ***The
availability and cost of financing could have an adverse effect on our business.***

We intend
to finance our current and future expansion and renovation projects primarily
with cash flow from operations, borrowings under our bank credit facility and
equity
or debt
financings. If we are unable to finance our current or future expansion
projects, we will have to adopt one or more alternatives, such as reducing or
delaying planned expansion,
development
and renovation projects as well as capital expenditures, selling assets,
restructuring debt, or obtaining additional equity financing or joint venture
partners, or modifying our bank credit facility. These sources of funds may not
be sufficient to finance our expansion, and other financing may not be available
on acceptable terms, in a timely manner or at all. In addition, our existing
indebtedness contains certain restrictions on our ability to incur additional
indebtedness. If we are unable to secure additional financing, we could be
forced to limit or suspend expansion, development and renovation projects, which
may adversely affect our business, financial condition and results of
operations.
 
 ***Our
indebtedness imposes restrictive covenants on us, which limits our operating
flexibility.***
 
 Our revolving credit facility
requires us, among other obligations, to maintain specified financial ratios and
satisfy certain financial tests, primarily through our Colorado operating
subsidiary, including maximum leverage ratios and total fixed cost coverages. In
addition, our revolving credit facility restricts, among other things, our
ability to incur additional indebtedness, incur guarantee obligations, repay
indebtedness or amend debt instruments, pay dividends, create liens on assets,
make investments, make acquisitions, engage in mergers or consolidations, make
capital expenditures or engage in certain transactions with subsidiaries and
affiliates. If we fail to comply with the restrictions contained in our
revolving credit facility, the resulting event of default could result in our
lender accelerating the indebtedness under the credit facility. These
restrictions limit our operating flexibility and may cause us not to engage in
transactions that we would otherwise consider to be advantageous to our
stockholders.
 
 ***Our
stock price has been volatile and may decline significantly and unexpectedly.***
 
 Our
common stock trades in the United States on the NASDAQ SmallCap Market, which is
characterized by small issuers and a lack of significant trading volumes. These
factors may result in volatility in the price of our common stock. The trading
price of our stock varied from a low of $2.76 to a high of $9.77 during 2004.
 
 ***Our
casino management agreements may be terminated under certain circumstances, and
certain of those agreements expire during 2005.***
 We
conduct our cruise ship business segment and our operations at the Casino
Millennium in Prague pursuant to technical casino services or similar
concessionaire agreements. These contracts generally provide for cancellation
with a limited notice period. In addition, several of our cruise ship agreements
are expiring in 2005. Accordingly, we could lose the revenue stream associated
with these contracts on short notice, which may adversely affect our operating
results.
 
 ***Energy
and fuel price increases may adversely affect our costs of operations and our
revenues.***
 
 Our
casino properties use significant amounts of electricity, natural gas and other
forms of energy. While we have not experienced any shortages of energy that have
hampered our operations, the recent substantial increases in the cost of
electricity in the U.S. may negatively affect our results of operations. The
extent of the impact is subject to the magnitude and duration of the energy and
fuel price increases. Dramatic increases in fuel prices may also adversely
affect customer visits to our casino properties.
 
 
 46
 ***We
may be required in the future to record impairment losses related to the
goodwill we currently carry on our balance sheet.***
 
 We had
$8.8 million of goodwill as of December 31, 2004 and $8.1 million of goodwill as
of December 31, 2003. Accounting rules require that we make certain critical
estimates and assumptions related to our determinations as to the future
recoverability of the goodwill we report on our balance sheet. If we were to
determine that the value of the goodwill carried on our balance sheet is
impaired, we may be required to record an impairment charge to write down the
value of our goodwill, which would adversely effect our results during the
period in which we recorded the impairment charge.
 
 ***Certain
anti-takeover measures we have adopted may limit our ability to consummate
transactions that some of our stockholders might otherwise be in favor
of.***
 
 We have a
fair price business combination provision in our certificate of incorporation,
which requires approval by holders of 80% of our outstanding shares of voting
stock of certain business combinations and other transactions. We also have
adopted a stockholder rights plan that allows certain of our stockholders to
purchase significant amounts of our common stock at a discount in the event any
third party acquires a significant ownership interest in us or attempts to
acquire us. In addition, our certificate of incorporation allows our Board of
Directors to issue shares of preferred stock without stockholder approval. These
provisions generally have the effect of requiring that any party seeking to
acquire us negotiate with our Board of Directors in order to structure a
business combination with us. This may have the effect of depressing the price
of our common stock due to the possibility that certain transactions that our
stockholders might favor could be precluded by these provisions.
 
 ***Certain
provisions in our certificate of incorporation may require one or more
stockholders to sell their stock to us, even if the stockholder would not
otherwise want to divest itself of our common stock.***
 
 Gaming
regulations in various jurisdictions in which we operate impose certain
restrictions on the equity ownership of licensed casino operators. In order to
facilitate compliance with these regulations and to preserve our ability to be
awarded additional gaming licenses in the future, our certificate of
incorporation includes a provision which allows our Board of Directors to redeem
shares of stock held by one or more stockholders to the extent necessary to keep
us in compliance with existing gaming regulations or to allow us to secure
additional gaming licenses. As a result, a stockholder could be required to sell
our stock at a time when such stockholder may consider our stock to be
undervalued or may otherwise not want to sell our stock.
 
 47
 
 **ITEM
7A. Quantitative and Qualitative Disclosures About Market
Risk**

We are
exposed to market risk principally related to changes in interest rates and
foreign currency exchange rates. To mitigate some of these risks, we utilize
derivative financial instruments to hedge these exposures. We do not use
derivative financial instruments for speculative or trading purposes. All of the
potential changes noted below are based on information available at December 31,
2004. Actual results may differ materially.

***Interest
Rate Sensitivity*******

We are
subject to interest rate risk on the outstanding borrowing under the credit
facility with Wells Fargo. Interest on the credit facility is variable based on
the interest rate option selected by us, whereby the interest on the outstanding
debt is subject to fluctuations in the prime interest rate as set by Wells
Fargo, or LIBOR.

In order
to minimize the risk of increases in the prime rate or LIBOR, we entered into
two interest-rate swap agreements on a total of $11.5 million notional amount of
debt. In 1998, we entered into a five-year interest rate swap agreement which
matured on October 1, 2003 on $7.5 million notional amount of debt under the
credit facility, whereby we paid aLIBOR-based
fixed rate of 5.55% and received a LIBOR-based floating rate reset quarterly
based on a three-month rate. In May 2000, we entered into a second five-year
interest rate swap agreement which matures on July 1, 2005 on $4.0 million
notional amount of debt under the credit facility, whereby we pay a LIBOR-based
fixed rate of 7.95% and receive a LIBOR-based floating rate reset quarterly
based on a three-month rate. Generally, the swap arrangement is advantageous to
us to the extent that interest rates increase in the future and disadvantageous
to the extent that they decrease. Therefore, by entering into the interest rate
swap agreements, we have a cash flow risk when interest rates drop. For example,
for each hypothetical 100 basis points decrease in the three month LIBOR rate
below the fixed rate paid by us less the applicable margin, results in an
increased use of $0.12 million in cash on an annual basis. With the expiration
of the swap agreement on the $7.5 million notional amount of debt on October 1,
2003, the same hypothetical 100 basis point increase results in an increased use
of $40 thousand in cash on an annual basis.In
an environment of falling interest rates, as we have seen in the majority of the
last three years, the swap agreements are disadvantageous. Without the swap
agreements the weighted-average interest rate on the credit facility would have
been 4.06% in 2004, 3.98% in 2003, and 4.68% in 2002.We have
not entered into any new swap agreements subsequent to December 31,
2004.
 
 ***Foreign
Currency Exchange Risk*** ****
 
 The
majority of our revenue, expense, and capital purchasing activities are
transacted in U.S. dollars. However, since a portion of our operations are
conducted outside of the U.S., we enter into transactions in other currencies,
primarily the South African Rand.
 
 Fluctuations
in the Rand affect the value of our investment in the Caledon Hotel, Spa and
Casino. A hypothetical devaluation of 10% in the dollar vs. the Rand based on
the exchange rate as of December 31, 2004 would reduce the value of our
investment by approximately $1.2 million.
 
 Foreign
currency fluctuations also have an impact on reported earnings, primarily those
of our South African subsidiaries. We have reported our significant foreign
currency activity, primarily South Africa, in both Rand and in U.S. dollars, in
our discussion and analysis of the South African segment.
 
 **Item
8. Financial Statements and Supplementary Data**
 
 See “Index to Financial Statements” on
page 2 hereof.
  **Item
9A.** **** **Controls
and Procedures**
 
 ***Evaluation
of Disclosure Controls and Procedures -*** Our
management, with the participation of our principal executive officer and
principal financial officer, has evaluated the effectiveness of our disclosure
controls and procedures (as defined in Rules 13a-15(2) and 15d-15(e) under the
Securities Exchange Act of 1937, as amended (the “Exchange Act”), as of the end
of the period covered by this Annual Report on Form 10-K. Based on such
evaluation, our principal executive officer and principal financial officer have
concluded that as of such date, our disclosure controls and procedures were
designed to ensure that information required to be disclosed by us in reports
that we file or submit under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in applicable SEC rules and forms
and were effective, with the exception of the material weakness relating to
internal control over the recording of fixed assets in our South African
operating subsidiary as discussed hereafter.
 48
 ***Changes
in Internal Control Over Financial Reporting -*** There
was no change in our internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the
quarter ended December 31, 2004 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.  However, in conjunction with the 2004 audit, our independent
registered public accounting firm, notified us that they had identified matters
involving internal control over financial reporting and its operation that they
consider to be a material weakness. These matters relate to the controls over
the recording of fixed assets in our South African operating subsidiary. The
failure to detect the weakness can be attributed to a lack of substantive policy
on capitalization of fixed assets and a deficiency in our internal review
process as it relates to the South African operation.
 
 We are in
the process of developing a complete plan to remediate the identified material
weakness in our internal controls over financial reporting. We immediately
instituted a series of policies to improve the control over the capital asset
activity in South Africa and have begun a complete physical inventory of the
same.
 
 ***Risks
Regarding Controls and Procedures -*** In
addition to remedying the identified material weakness in our internal control
over financial reporting discussed above, we are beginning the process of
documenting and testing our internal control procedures in order to satisfy the
requirements of Section 404 of the Sarbanes-Oxley Act, which we expect to be
applicable to us for our fiscal year ending December 31, 2005. We are exposed to
increased costs and risks associated with complying with these requirements, and
we will need to spend management time and internal and external resources to
document and test our internal controls in anticipation of Section 404 reporting
requirements.
 
 Our
management, including our Chief Executive Officers, Senior Vice-President and
Chief Accounting Officer, does not expect that our disclosure controls or our
internal controls will prevent all possible error or fraud. A control system, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further,
the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within our company have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
control. The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions; over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be
detected.
 
 
 
  49
  **PART
III**
  **Item
10.** **** **Directors
and Executive Officers of the Registrant.**
 
 The
information required by this item will be included in our Proxy Statement with
respect to our 2005 Annual Meeting of Stockholders to be filed with the
Commission within 120 days of December 31, 2004, under the captions “Information
Concerning Directors and Executive Officers” and “Compliance with Section 16(a)
of the Securities Exchange Act” and is incorporated herein by
reference.
 
 We have
adopted a Code of Ethics that applies to all directors, officers and employees,
including our Co Chief Executive Officers, our President, our Senior Vice
President and our Principal Accounting Officer. A complete text of this Code of
Ethics is available in Exhibit 14 filed with the Form 10-K for the year ended
December 31, 2003.
 
 **Item
11** **.** **Executive
Compensation** **.**
 
 The
information required by this item will be included in the Company’s Proxy
Statement with respect to its 2005 Annual Meeting of Stockholders to be filed
with the Commission within 120 days of December 31, 2004, under the caption
“Information Concerning Directors and Executive Officers” and is incorporated
herein by reference.
 
 **Item
12** **.** **Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters** **.**
 
 The
information required by this item will be included in the Company’s Proxy
Statement with respect to its 2005 Annual Meeting of Stockholders to be filed
with the Commission within 120 days of December 31, 2004, under the caption
“Voting Securities” and is incorporated herein by
reference.
  Item 13.Certain
Relationships and Related Transactions.
 
 The
information in this item is incorporated by reference from our Definitive Proxy
material with respect to the 2005 Annual Meeting of Stockholders to be filed
with the Commission within 120 days of December 31, 2004, under the caption
“Certain Relationships and Related Transactions” and is incorporated herein by
reference.
 
 **Item
14. Principal Accountant Fees and Services** **.**
 The
information in this item is incorporated by reference from our Definitive Proxy
material with respect to the 2005 Annual Meeting of Stockholders to be filed
with the Commission within 120 days of December 31, 2004, under the caption
“Principal Accountant Fees and Services” and is incorporated herein by
reference.
 
  50
 **PART
IV**
 
 **Item
15** **.** **Exhibits
and Financial Statement Schedules** **.**
 
 (a)
    1.
    Financial
      Statements of the Company (including related notes to consolidated
      financial statements) filed as part of this report are listed
      below:
 
 Consolidated
      Balance Sheets as of December 31, 2004 and
2003.
 
 Consolidated
      Statements of Earnings for the Years Ended December 31, 2004, 2003 and
      2002.
 
 Consolidated
      Statements of Shareholders’ Equity and Comprehensive Income (Loss) for the
      years ended December 31, 2004, 2003 and
2002.
 
 Consolidated
      Statements of Cash Flows for the Years Ended December 31, 2004, 2003 and
      2002.
 
 (a)
    2.
    Financial
      Statement Schedule
 
 None
 
 (a)
    3.
    Exhibits
      Filed Herewith or Incorporated by Reference to Previous Filings with the
      Securities and Exchange Commission:
 
 
 The
following exhibits were filed with the Form 10-KSB for the fiscal year ended
December 31, 1995 and are incorporated herein by reference:
 
 
 Exhibit
      No.
    
    Description
 3.1
    
    Certificate
      of Incorporation (filed with Proxy Statement in respect of 1994 Annual
      Meeting of Stockholders and incorporated herein by
    reference).
 
 3.2
    
    Bylaws
      (filed with Proxy Statement in respect of 1994 Annual Meeting of
      Stockholders and incorporated herein by
reference).
 
 10.51
    
    Asset
      Purchase Agreement dated as of September 27, 1995 by and among Gold Creek
      Associates, L.P., WMCK Acquisition Corp. and Century Casinos, Inc.,
      including Exhibits and Schedules, along with First Amendment
      thereto.
 
 The
      following exhibits were filed with the Form 8-K Current Report dated July
      1, 1996 and are incorporated herein by
reference:
 
  Exhibit
      No.
    
    Description
  10.63
    
    Four
      Party Agreement, Assignment and Assumption of Lease, Consent to Assignment
      of Lease, Confirmation of Option Agreement and Estoppel Statements dated
      as of July 1, 1996, among Harold William Large, Teller Realty, Inc., Gold
      Creek Associates, L.P., and WMCK Acquisition
Corp.
  51
 The
following exhibits were filed with the Form 10-KSB for the fiscal year ended
December 31, 1998 and are incorporated herein by reference:
 
 Exhibit
      No.
    
    Description
 
 10.78
    
    Parking
      Lease - Option to Purchase dated June 1, 1998, between the City of Cripple
      Creek (“Lessor”) and WMCK Venture Corporation
(“Lessee”)
 
 The
following exhibits were filed with the Form 10-QSB for the quarterly period
ended March 31, 1999 and are incorporated herein by reference:
 
 Exhibit
      No.
    
    Description
 10.79
    
    Casino
      Services Agreement dated January 4, 1999 by and between Casino Millennium
      a.s., Century Casinos Management, Inc. and B.H. Centrum
    a.s.
 
 10.80
    
    Option
      to Purchase Real Property dated March 25, 1999, by and between Robert J.
      Elliott (“Optionor”) and WMCK Venture Corp.
  (“Optionee”).
 
 10.81
    
    Letter
      Amendment to Note Agreement dated April 1, 1999, by and between Century
      Casinos, Inc. and Thomas Graf.
 
 The
following exhibit was filed with the Form 10-QSB for the quarterly period ended
June 30, 1999 and is incorporated herein by reference:
 
 Exhibit
      No.
    
    Description
 
 10.82
    
    Master
      Lease Agreement dated January 4, 1999 by and between Casino Millennium
      a.s. and Century Management und Beteiligungs
GmbH.
 
 The
following exhibits were filed with the Form 10-KSB for the fiscal year ended
December 31, 1999 and are incorporated herein by reference:
 
 Exhibit
      No.
    
    Description
 
 10.86
    
    Casino
      Management Agreement, dated December 3, 1999, by and between Caledon
      Casino Bid Company (Pty) Limited and Century Casinos Africa (Pty)
      Ltd.
 
 10.87
    
    Shareholders
      Agreement, dated December 3, 1999, and Addendum to the Agreement, dated
      December 9, 1999, by and between Caledon Casino Bid Company (Pty) Limited,
      Caledon Overberg Investments (Pty) Limited, Century Casinos Africa (Pty)
      Ltd., Century Casinos, Inc. (not as a shareholder or party, but for
      clauses 4.2.3 and 6.7 of this agreement only), Caledon Hotel Spa and
      Casino Resort (Pty) Limited, Fortes King Hospitality (Pty) Limited, The
      Overberger Country Hotel and Spa (Pty) Limited, and Senator
      Trust.
 
 10.88
    
    Memorandum
      of Agreement, dated January 7, 2000, by and between B. H. Centrum a.s (a
      subsidiary of Ilbau and Bau Holding) and Century Casinos,
    Inc.
 
 10.89
    
    Assumption
      and Modification Agreement, dated February 7, 2000, by and between Marcie
      I. Elliott (“Optionor”) and WMCK Venture Corporation
      (“Optionee”)
 
 
 52
 10.92
    
    Amendment
      No. 1 to Parking Lease - Option to Purchase, dated February 17, 2000, by
      and between City of Cripple Creek (“Lessor”) and WMCK Venture Corporation
      (“Lessee”).
 
 The
following exhibits were filed with the Form 10-QSB for the quarterly period
ended March 31, 2000 and are incorporated herein by reference:
 
 Exhibit
      No.
    
    Description
 
 10.93
    
    Amended
      and Restated Credit Agreement, by and among, WMCK Venture Corp., Century
      Casinos Cripple Creek, Inc., and WMCK Acquisition Corp. (collectively, the
      “Borrowers”), Century Casinos, Inc. (the “Guarantor”) and Wells Fargo
      Bank, National Association, dated April 21,
2000.
 
 10.94
    
    Loan
      Agreement between Century Casinos Africa (Proprietary) Limited, Caledon
      Casino Bid Company (Proprietary) Limited, Caledon Overberg Investments
      (Proprietary) Limited, and Century Casinos, Inc. (for purposes of clause
      14.6 only), dated March 31, 2000.
 
 10.95
    
    Subscription
      Agreement between Century Casinos Africa (Proprietary) Limited, Caledon
      Casino Bid Company (Proprietary) Limited, Caledon Overberg Investments
      (Proprietary) Limited, and Century Casinos, Inc. (for purposes of clause
      10.6 only), dated March 31, 2000.
 
 The
following exhibits were filed with the Form 10-QSB for the quarterly period
ended June 30, 2000 and are incorporated herein by reference:
 
 Exhibit
      No.
    
    Description
 
 10.96
    
    Loan
      Agreement, dated April 13, 2000, between PSG Investment Bank Limited and
      Caledon Casino Bid Company (Proprietary)
Limited.
 
 10.97
    
    Subordination,
      Cession and Pledge Agreement, dated April 13, 2000, between PSG Investment
      Bank Limited, Century Casinos Africa (Proprietary) Limited, Caledon
      Overberg Investments (Proprietary) Limited, and Caledon Casino Bid Company
      (Proprietary) Limited.
 
 The
following exhibits were filed with the Form 10-KSB for the fiscal year ended
December 31, 2000 and are incorporated herein by reference:
 
 Exhibit
      No.
    
    Description
 
 10.98
    
    Shareholders
      Agreement, dated November 4, 2000, by and between Caledon Casino Bid
      Company (Pty) Limited, Caledon Overberg Investments (Pty) Limited, Century
      Casinos Africa (Pty) Ltd., Century Casinos, Inc. (not as a shareholder or
      party, but for clauses 8.5, 15.1 and 15.2 of this agreement only),
      Overberg Empowerment Company Limited and The Overberg Community
      Trust.
  53
  The
following exhibit was filed with the Form 10-QSB for the quarterly period ended
March 31, 2001 and is incorporated herein by reference:
 
 Exhibit
      No.
    
    Description
 
 10.100
    
    April
      21, 2001 Addendum to Loan Agreement, dated April 13, 2000, between PSG
      Investment Bank Limited and Caledon Casino Bid Company (Proprietary)
      Limited
 
 The
following exhibit was filed with the Form 10-QSB for the quarterly period ended
September 30, 2001 and is incorporated herein by reference:
 
 Exhibit
      No.
    
    Description
 10.101
    
    First
      Amendment to the Amended and Restated Credit Agreement, by and among, WMCK
      Venture Corp., Century Casinos Cripple Creek, Inc., and WMCK Acquisition
      Corp. (collectively, the “Borrowers”), Century Casinos, Inc. (the
      “Guarantor”) and Wells Fargo Bank, National Association, dated August 22,
      2001.
 
 The
following exhibits were filed with the Form 10-KSB for the fiscal year ended
December 31, 2001 and are incorporated herein by reference:
 
 
 Exhibit
      No.
    
    Description
  10.102
    
    Management
      Agreement by and between Century Casinos, Inc. and Focus Casino Consulting
      A.G. dated March 1, 2001.
 
 10.103
    
    Management
      Agreement by and between Century Casinos, Inc. and Flyfish Casino
      Consulting A.G. dated March 1, 2001.
 
 10.104
    
    Equity
      Subscription Agreement by and between Rhino Resort Limited, Silverstar
      Development Limited and Century Casinos Africa (Pty) Ltd. dated September
      7, 2001.
 
 10.105
    
    Memorandum
      of Agreement by and between Century Casinos Caledon (Pty) Ltd. (previously
      known as Caledon Casino Bid Company (Pty) Ltd.) and Century Casinos Africa
      (Pty) Ltd. and Fortes King Hospitality (Pty) Ltd. (and/or its successor to
      the Hotel Management Agreement - FKH) dated September 20,
      2001.
 
 10.106
    
    Amendment
      to Loan Agreement between Century Casinos Africa (Pty) Limited and Century
      Casinos Caledon (Pty) Ltd. (previously known as Caledon Casino Bid Company
      (Pty) Ltd.), Caledon Overberg Investments (Pty) Limited and Century
      Casinos, Inc. dated September 20, 2001.
 
 10.107
    
    Adjustment/Amendment
      No. 1 to Management Agreement by and between Century Casinos, Inc. and
      Focus Casino Consulting A.G. dated October 11,
2001.
 
 10.108
    
    Adjustment/Amendment
      No. 1 to Management Agreement by and between Century Casinos, Inc. and
      Flyfish Casino Consulting A.G. dated October 11,
2001.
 
 10.109
    
    Employment
      Agreement by and between Century Casinos, Inc. and Erwin Haitzmann dated
      October 12, 2001.
 
 54
 10.110
    
    Employment
      Agreement by and between Century Casinos, Inc. and Peter Hoetzinger dated
      October 12, 2001.
 10.111
    
    Amendment
      Number 1 to the Equity Subscription Agreement entered into on September 7,
      2001 by and between Rhino Resort Limited, Silverstar Development Limited
      and Century Casinos Africa (Pty) Ltd dated March 2,
  2002.
 
 10.112
    
    Second
      Addendum to Loan Agreement dated April 13, 2000, between PSG Investment
      Bank Limited and Caledon Casino Bid Company (Proprietary) Limited
      completed on March 26, 2002.
 
 The
following exhibit was filed with the Form 10-Q for the quarterly period ended
March 31, 2002 and is incorporated herein by reference:
 
 Exhibit
      No.
    
    Description
 10.113
    
    Hotel
      Management Agreement dated December 3, 1999 between Century Casinos
      Caledon (Pty) Ltd. (previously known as Caledon Casino Bid Company (Pty)
      Ltd.) and Fortes King Hospitality (Pty)
Ltd.
 
 The
following exhibits were filed with the Form 10-Q for the quarterly period ended
June 30, 2002 and are incorporated herein by reference:
 
 Exhibit
      No.
    
    Description
 3.2.2
    
    Amended
      and Restated Bylaws of Century Casinos, Inc.
 
 10.114
    
    Second
      Supplement to Rights Agreement dated July 2002, between Century Casinos,
      Inc and Computershare Investor Services, Inc. as rights
    agent.
 
 The
following exhibits were filed with the Form 10-Q for the quarterly period ended
September 30, 2002 and are incorporated herein by reference:
 
 Exhibit
      No.
    
    Description
 10.115
    
    Second
      Amendment to the Amended and Restated Credit Agreement, by and among, WMCK
      Venture Corp., Century Casinos Cripple Creek, Inc., and WMCK Acquisition
      Corp. (collectively, the “Borrowers”), Century Casinos, Inc. (the
      “Guarantor”) and Wells Fargo Bank, National Association, dated August 28,
      2002.
 
 The
following exhibits were filed with the Form 10-K for the fiscal year ended
December 31, 2002 and are incorporated herein by reference:
 
 Exhibit
      No.
    
    Description
  10.116
    
    First
      Amendment to the Employee’s Equity Incentive Plan as Amended and Restated
      dated May 01, 2000.
 
 10.117
    
    Second
      Amendment to the Employee’s Equity Incentive Plan as Amended and Restated
      dated March 12, 2001.
 
 10.118
    
    Third
      Amendment to the Employee’s Equity Incentive Plan as Amended and Restated
      dated June 1, 2001.
 
 55
 10.119
    
    The
      Management Agreement by and between Century Casinos, Inc. and Respond
      Limited, dated January 1, 2002.
 
 10.120
    
    Employment
      Agreement by and between Century Casinos, Inc. and Erwin Haitzmann as
      restated on February 18, 2003.
 
 10.121
    
    Employment
      Agreement by and between Century Casinos, Inc. and Peter Hoetzinger as
      restated on February 18, 2003.
 
 10.122
    
    Adjustment/Amendment
      No. 2 to Management Agreement by and between Century Casinos, Inc. and
      Focus Casino Consulting A.G. dated October 12,
2002.
 
 10.123
    
    Adjustment/Amendment
      No. 2 to Management Agreement by and between Century Casinos, Inc. and
      Flyfish Casino Consulting A.G. dated October 12,
2002.
 
 10.124
    
    Sale
      Agreement between Century Casinos Africa (Pty) Limited and Caledon
      Overberg Investments (Pty) Limited dated January 7,
  2003.
 
 10.125
    
    Cancellation
      Agreement between NEX Management (Pty) Ltd. and Century Casinos Caledon
      (Pty) Ltd. dated January 10, 2003.
 
 10.126
    
    Fourth
      Amendment to the Employee’s Equity Incentive Plan as Amended and Restated
      dated March 10, 2003.
 
 The
following exhibits were filed with the Form 10-Q for the quarterly period ended
March 31, 2003 and are incorporated herein by reference:
 
 Exhibit
      No.
    
    Description
  10.127
    
    Waiver
      and Release Agreement by and between Century Casinos, Inc. and James D.
      Forbes (director) dated May 01, 2003.
 
 10.128
    
    Agreement
      of Termination of Management Agreement Incorporating New Consulting
      Agreement by and between Century Casinos Inc and Respond Limited dated May
      01, 2003.
 
 The
following exhibits were filed with the Form 10-Q for the quarterly period ended
June 30, 2003 and are incorporated herein by reference:
 
 Exhibit
      No.
    
    Description
 10.129
    
    Fifth
      Amendment to Restated Employees’ Equity Incentive Plan, dated June 4,
      2003.
 
 10.130
    
    Brokerage
      Agreement between Novomatic AG and Century Casinos, Inc. dated January 4,
      2000 and Amendment No. 1 to Brokerage Agreement dated July 24,
      2003.
  56
  The
following exhibits were filed with the Form 10-K for the year ended December 31,
2004 and are incorporated herin by reference:
 
 Exhibit
      No.
    
    Description
 14   Code of
Ethics
 
 The
following exhibit was filed with the Form 10-Q for the quarterly period ended
March 31, 2004 and is incorporated herein by reference:
 
 Exhibit
      No.
    
    Description
 10.131
    
    Adjustment/Amendment
      No. 3 to Management Agreement by and between Century Casinos, Inc. and
      Flyfish Casino Consulting A.G. dated March 29,
2004.
 
 The
following exhibits were filed with the Form 10-Q for the quarterly period ended
September 30, 2004 and are incorporated herein by reference:
  Exhibit
      No.
    
    Description
 10.132
    
    Contribution
      agreement dated as of October 12, 2004 among Century Casinos Tollgate
      Inc., Tollgate Venture, LLC, KJE Investments, LLC, Central City Venture,
      LLC, and CC Tollgate LLC.
 
 10.133
    
    Limited
      Liability Company Agreement of CC Tollgate LLC dated as of October 12,
      2004.
 
 10.134
    
    Casino
      Services Agreement by and between CC Tollgate LLC and Century Resorts
      International Limited dated October 12,
2004.
 
 10.135
    
    Memorandum
      of Understanding by and between Gayle Burnett, Roger Burnett, B. Michael
      Dunn and Century Casinos, Inc. dated October 13,
2004.
 
 10.136
    
    Third
      Amendment to Restated Credit Agreement dated October 27, 2004 among WMCK
      Venture Corp., Century Casinos Cripple Creek, WMCK Acquisition Corp.,
      Century Casinos, Inc. and Wells Fargo Bank,
N.A.
 
 10.137
    
    Amended
      and Restated Brokerage Agreement between Novomatic AG and Century Resort
      Limited (rights transferred from Century Casinos, Inc.) dated October 1,
      2004.
 
 10.138
    
    Employment
      agreement by and between Century Casinos, Inc. and Mr. Richard S. Rabin,
      Chief Operating Officer, North America dated July 19,
  2004.
 
 The
following exhibits were filed on Form 8-K during the quarterly period ended
December 31, 2004 and are incorporate herein by reference:
  Exhibit
      No.
    
    Description
 10.139
    
    Settlement
      of Loans Agreement between Century Resorts Limited, Century Casinos Africa
      (Proprietary) Limited, Silverstar Development Limited and Jose De Silva,
      effective December 1, 2004.
 
 57
 10.140
    
    Verkrans
      Sale Agreement between Silverstar Development Limited and Century Casinos
      Africa (Proprietary) Limited, effective December 1,
  2004.
 
 10.141
    
    Option
      Agreement between Akani Leisure Investments (Proprietary) Limited
      (“Akani”) and Century Resorts Limited, transfer all rights to Akani,
      effective December 1, 2004.
 
 10.142
    
    Option
      Agreement between Akani Leisure Investments (Proprietary) Limited
      (“Akani”) and Century Casinos West Rand (Proprietary) Limited, transfer
      all rights to Akani, effective December 1, 2004.
 
 10.148
    
    Promissory
      Note and Business Loan Agreement between Tollgate LLC and Colorado
      Business Bank dated April 8, 2005, and associated Commercial Guarantee
      provided by Century Casinos, Inc..
 
 The
following exhibits are filed herewith:
 
  Exhibit
      No.
    
    Description
  21
    
    Subsidiaries
      of the Registrant
 
 23.1
    
    Consent
      of Independent Auditors
 
 23.2
    
    Consent
      of Independent Auditors
 
 31.1
    
    Certification
      Pursuant to Securities Exchange Act Rule 13a-15(f) and 15d-15(f), Chairman
      of the Board and Co-Chief Executive
Officer.
 
 31.2
    
    Certification
      Pursuant to Securities Exchange Act Rule 13a-15(f) and 15d-15(f),
      Vice-Chairman and President, and Co-Chief Executive
    Officer.
 
 31.3
    
    Certification
      Pursuant to Securities Exchange Act Rule 13a-15(f) and 15d-15(f), Senior
      Vice-President.
 
 31.4
    
    Certification
      Pursuant to Securities Exchange Act Rule 13a-15(f) and 15d-15(f), Chief
      Accounting Officer.
 
 32.1
    
    Certification
      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Chairman of the
      Board and Co-Chief Executive Officer.
 
 32.2
    
    Certification
      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Vice-Chairman
      and President, and Co-Chief Executive
Officer.
 
 32.3
    
    Certification
      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Senior
      Vice-President.
 
 32.4
    
    Certification
      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Chief
      Accounting Officer.
 58
  
 **SIGNATURES**
 
 Pursuant
to the requirements of Section 13 or 15(d) 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.By:/s/
      Erwin Haitzmann
    By:/s/
      Peter HoetzingerErwin
      Haitzmann, Chairman of the Board and Co-Chief Executive Officer
      (Co-Principal Executive Officer)
    Peter
      Hoetzinger, Vice-Chairman of the Board, Co-Chief Executive Officer and
      President (Co-Principal Executive Officer)By:/s/
      Larry Hannappel
    By:/s/
      Ray SienkoLarry
      Hannappel, Senior Vice-President
      (Principal
      Financial Officer)
    Ray
      Sienko, Chief Accounting Officer
      (Principal
      Accounting Officer)Date:
      April 15, 2005
 
 **POWER
OF ATTORNEY**
 
 KNOW ALL
MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Erwin
Haitzmann and/or Peter Hoetzinger , his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Form 10-K, and to file the
same, with all exhibits thereto, and other documentation in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the Registrant and in the
capacities indicated on April
15, 2005 .
 
 
 Signature
    Title
    Signature
    Title/s/
      Erwin Haitzmann
    Chairman
      of the Board and
    /s/
      Gottfried Schellmann
    DirectorErwin
      Haitzmann
    Co
      Chief Executive Officer
    Gottfried
      Schellmann/s/
      Peter Hoetzinger
    Vice
      Chairman of the Board,
      Co
      Chief Executive Officer
    /s/
      Robert S. Eichberg
    DirectorPeter
      Hoetzinger
    and
      President
    Robert
      S. Eichberg/s/
      Dinah Corbaci
    DirectorDinah
      Corbaci
 
   59
  **REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
  To the
Board of Directors and Shareholders
 of
Century Casinos, Inc.
 
 
 We have
audited the accompanying consolidated balance sheets of Century Casinos, Inc. (a
Delaware corporation) and subsidiaries as of December 31, 2004 and 2003, and the
related consolidated statements of earnings, shareholders’ equity and
comprehensive income and cash flows for each of the three years in the period
ended December 31, 2004. These financial statements are the responsibility of
the Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the consolidated
financial statements of Century Casinos Africa (Proprietary) Limited (CCA), a
96.5% owned subsidiary, as of December 31, 2003 and for the years ended December
31, 2003 and 2002, which statements reflect total assets of 36 percent as of
December 31, 2003, and total revenues of 36 percent and 24 percent,
respectively, for the years ended December 31, 2003 and 2002, respectively.
Those statements were audited by other auditors, whose report thereon has been
furnished to us, and our opinion, insofar as it relates to the amounts included
for CCA for 2003 and 2002, is based solely on the report of the other
auditors.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and the report of
the other auditors provide a reasonable basis for our opinion.
 
 In our
opinion, based on our audits and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Century Casinos, Inc. and
subsidiaries as of December 31, 2004 and 2003, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2004 in conformity with accounting principles generally accepted in
the United States of America.
 
 
 
 /s/ GRANT
THORNTON LLP
 
 Colorado
Springs, Colorado
 April 8,
2005
  F1
  **REPORT
OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF CENTURY CASINOS AFRICA
(PROPRIETARY) LIMITED**
 
 We have
audited the consolidated balance sheets of Century Casinos Africa (Proprietary)
Limited and subsidiaries as at December 31, 2003 and 2002 and related
consolidated income statements, cash flow statements and statements of changes
in shareholders’ equity for the years then ended (not presented herein). These
financial statements are the responsibility of the directors of the Company. Our
responsibility is to express an opinion on these financial statements based on
our audit.
 
 **Scope**
 We
conducted our audit in accordance with auditing standards generally accepted in
South Africa and in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements (not presented herein) are free of material
misstatement. An audit includes:
 -  examining,
on a test basis, evidence supporting the amounts and disclosures included in the
financial statements,
 -  assessing
the accounting principles used and significant estimates made by management,
and
 -  evaluating
the overall financial statement presentation.
 We
believe that our audit provides a reasonable basis for our opinion.
 
 **Audit
Opinion**
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Century Casinos
Africa (Proprietary) Limited and its subsidiaries at December 31, 2003 and 2002
and the consolidated results of their operations, cash flow and changes in
shareholders’ equity for the years then ended in conformity with South African
Statements of Generally Accepted Accounting Practice, and in the manner required
by the South African Companies Act, 1973.
 
 Accounting
principles generally accepted in South Africa differ in certain significant
respects from accounting principles generally accepted in the United States of
America and as allowed by Item 17 to Form 20-F. The application of the latter
would have affected the determination of consolidated net income expressed in
South African Rand for the years ended 31 December 2003 and 2002 and the
determination of consolidated shareholders’ equity expressed in South African
Rand at 31 December 2003 and 2002 to the extent summarised in Note 28 (not
presented herein) to the financial statements.
 
 /s/
PricewaterhouseCoopers Inc.
 PRICEWATERHOUSECOOPERS
INC.
 Chartered
Accountants (SA)
 Registered
Accountants and Auditors
 
 Cape
Town
 1 March
2004
 
   F2
 CENTURY CASINOS, INC. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
   
 *Amounts
      shown in thousands, except for share information*
    
    **December
      31, 2004**
    
    **December
      31, 2003****ASSETS****Current
      Assets:**Cash
      and cash equivalents
    
    $
    8,411
    
    $
    4,729Restricted
      cash
    
    
    706
    
    
    598Receivables
    
    
    193
    
    
    269Prepaid
      expenses
    
    
    437
    
    
    441Inventories
    
    
    215
    
    
    131Other
      current assets
    
    
    28
    
    
    28Deferred
      income taxes - domestic
    
    
    97
    
    
    56-
      foreign
    
    
    88
    
    
    55Total
      current assets
    
    
    10,175
    
    
    6,307**Property
      and Equipment, net**
    
    
    48,629
    
    
    36,796**Goodwill,
      net**
    
    
    8,845
    
    
    8,088**Casino
      License****s**
    
    
    2,157
    
    
    1,760**Deferred
      Income Taxes - domestic**
    
    
    -
    
    
    594**-
      foreign**
    
    
    207
    
    
    72**Equity
      Investment in Unconsolidated Subsidiary**
    
    
    116
    
    
    -**Other
      Assets**
    
    
    1,075
    
    
    1,200**Total**
    
    $
    71,204
    
    $
    54,817
 
 **LIABILITIES
      AND SHAREHOLDERS’ EQUITY****Current
      Liabilities:**Current
      portion of long-term debt
    
    $
    2,534
    
    $
    2,136Accounts
      payable and accrued liabilities
    
    
    3,548
    
    
    1,979Accrued
      payroll
    
    
    1,372
    
    
    1,268Taxes
      payable
    
    
    711
    
    
    1,088Other
    
    
    102
    
    
    -Total current
      liabilities
    
    
    8,267
    
    
    6,471**Long-Term
      Debt, less current portion**
    
    
    17,970
    
    
    14,913**Deferred
      Tax Liabi****lity
      - domestic**
    
    
    234
    
    
    -**Other
      Non-current Liabilities**
    
    
    -
    
    
    371**Minority
      Interest**
    
    
    4,354
    
    
    14**Commitments
      and Contingencies**
    
    
    -
    
    
    -**Shareholders’
      Equity:**Preferred
      stock; $.01 par value; 20,000,000 sharesauthorized;
      no shares issued and outstanding
    
    
    -
    
    
    -Common
      stock; $.01 par value; 50,000,000 shares authorized;14,485,776
      shares issued; 13,694,900 and 13,680,500 shares outstanding,
      respectively
    
    
    145
    
    
    145Additional
      paid-in capital
    
    
    21,528
    
    
    21,529Accumulated
      other comprehensive income
    
    
    4,597
    
    
    2,034Retained
      earnings
    
    
    15,910
    
    
    11,17242,180
    
    
    34,880Treasury
      stock - 790,876 and 805,276 shares at cost,
      respectively
    
    
    (1,801
    )
    
    (1,832
    )Total
      shareholders’ equity
    
    
    40,379
    
    
    33,048**Total**
    
    $
    71,204
    
    $
    54,817
 See notes
to consolidated financial statements
   F3
 CENTURY CASINOS, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF EARNINGS
  
 
 *Amounts
      shown in thousands, except share information*
    
    **For the Year Ended December 31,****2004**
    
    
    **2003**
    
    
    **2002****Operating
      Revenue:**Casino
    
    
    
    
    $
    34,641
    
    $
    31,869
    
    $
    30,607Hotel,
      food and beverage
    
    
    
    
    
    4,322
    
    
    3,568
    
    
    2,630Other
    
    
    
    
    
    1,092
    
    
    622
    
    
    52440,055
    
    
    36,059
    
    
    33,761Less
      promotional allowances
    
    
    
    
    
    (4,290
    )
    
    (4,657
    )
    
    (4,424
    )Net
      operating revenue
    
    
    
    
    
    35,765
    
    
    31,402
    
    
    29,337**Operating
      Costs and Expenses:**Casino
    
    
    
    
    
    13,760
    
    
    11,667
    
    
    9,897Hotel,
      food and beverage
    
    
    
    
    
    3,134
    
    
    2,553
    
    
    1,509General
      and administrative
    
    
    
    
    
    9,103
    
    
    7,745
    
    
    7,191Property
      write-down and other write offs, net of (recoveries)
    
    
    
    
    
    (178
    )
    
    (35
    )
    
    1,145Depreciation
    
    
    
    
    
    2,993
    
    
    2,668
    
    
    2,304Total
      operating costs and expenses
    
    
    
    
    
    28,812
    
    
    24,598
    
    
    22,046**Equity
      in income from unconsolidated subsidiary**
    
    
    
    
    
    55
    
    
    -
    
    
    -**Earnings
      from Operations**
    
    
    
    
    
    7,008
    
    
    6,804
    
    
    7,291**Non-operating
      income (expense)**Interest
      expense
    
    
    
    
    
    (1,587
    )
    
    (2,011
    )
    
    (1,903
    )Other
      income, net
    
    
    
    
    
    169
    
    
    252
    
    
    176Equity
      in non-operating items from unconsolidated subsidiary
    
    
    
    
    
    (5
    )
    
    -
    
    
    -Non-operating
      expense, net
    
    
    
    
    
    (1,423
    )
    
    (1,759
    )
    
    (1,727
    )**Earnings
      before****Income Taxes and Minority Interest**
    
    
    
    
    
    5,585
    
    
    5,045
    
    
    5,564Provision
      for income taxes
    
    
    
    
    
    749
    
    
    1,777
    
    
    2,454**Earnings
      before Minority Interest**
    
    
    
    
    
    4,836
    
    
    3,268
    
    
    3,110Minority
      interest in subsidiary earnings
    
    
    
    
    
    (98
    )
    
    (22
    )
    
    (31
    )**Net
      Earnings**
    
    
    
    
    $
    4,738
    
    $
    3,246
    
    $
    3,079**Earnings
      Per Share, Basic**
    
    
    
    
    $
    0.35
    
    $
    0.24
    
    $
    0.23**Earnings
      Per Share, Diluted**
    
    
    
    
    $
    0.30
    
    $
    0.22
    
    $
    0.20
 
 See notes
to consolidated financial statements
   F4
 
 CENTURY CASINOS, INC. AND SUBSIDIARIES
  FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 and 2002
  ****
 AccumulatedAdditional
    
    OtherCommon
      Stock
    
    Paid-in
    
    Comprehensive
    
    Retained
    Treasury
      Stock
    
    
    
    ComprehensiveShares
    
    Amt
    
    Capital
    
    Income
      (Loss)
    
    Earnings
    Shares
    
    Amount
    
    Total
    
    IncomeBALANCE
      AT JANUARY 1, 2002
    14,485,776
    $
    145
    $
    21,901
    $
    (3,291)
    $
    4,847
    756,992
    $
    (1,424)
    $
    22,178Purchases
      of treasury stock
    -
    
    -
    
    -
    
    -
    
    -
    177,920
    
    (419)
    
    (419)Options
      exercised
    -
    
    -
    
    (27)
    
    -
    
    -
    (30,000)
    
    53
    
    26Foreign
      currency translation adjustment
    -
    
    -
    
    -
    
    2,179
    
    -
    -
    
    -
    
    2,179
    $
    2,179Change
      in fair value of interest rate swap, net of
      income tax expense
    -
    
    -
    
    -
    
    580
    
    -
    -
    
    -
    
    580
    
    580Reclassification
      of interest expense on interest
      rate swap
    -
    
    -
    
    -
    
    (520)
    
    -
    -
    
    -
    
    (520)
    
    (520)Net
      earnings
    -
    
    -
    
    -
    
    -
    
    3,079
    -
    
    -
    
    3,079
    
    3,079BALANCE
      AT DECEMBER 31, 2002
    14,485,776
    $
    145
    $
    21,874
    $
    (1,052)
    $
    7,926
    904,912
    $
    (1,790)
    $
    27,103
    $
    5,318Purchases
      of treasury stock
    -
    
    -
    
    -
    
    -
    
    -
    59,100
    
    (131)
    
    (131)Purchase
      of treasury stock from former director
    -
    
    -
    
    -
    
    -
    
    -
    489,264
    
    (1,106)
    
    (1,106)Options
      exercised
    -
    
    -
    
    (345)
    
    -
    
    -
    (648,000)
    
    1,195
    
    850Foreign
      currency translation adjustment
    -
    
    -
    
    -
    
    2,824
    
    -
    -
    
    -
    
    2,824
    $
    2,824Change
      in fair value of interest rate swap, net of
      income tax expense
    -
    
    -
    
    -
    
    782
    
    -
    -
    
    -
    
    782
    
    782Reclassification
      of interest expense on interest
      rate swap
    -
    
    -
    
    -
    
    (520)
    
    -
    -
    
    -
    
    (520)
    
    (520)Net
      earnings
    -
    
    -
    
    -
    
    -
    
    3,246
    -
    
    -
    
    3,246
    
    3,246BALANCE
      AT DECEMBER 31, 2003
    14,485,776
    $
    145
    $
    21,529
    $
    2,034
    $
    11,172
    805,276
    $
    (1,832)
    $
    33,048
    $
    6,332Options
      exercised
    -
    
    -
    
    (1)
    
    -
    
    -
    (14,400)
    
    31
    
    30Foreign
      currency translation adjustment
    -
    
    -
    
    -
    
    2,775
    
    -
    -
    
    -
    
    2,775
    $
    2,775Reclassification
      of the amount of accumulated foreign
      currency translation adjustment from other
      comprehensive income to earnings attributable to the
      sale of Verkrans
    -
    
    -
    
    -
    
    (380)
    
    -
    -
    
    -
    
    (380)
    
    (380)Change
      in fair value of interest rate swap, net of
      income tax expense
    -
    
    -
    
    -
    
    428
    
    -
    -
    
    -
    
    428
    
    428Reclassification of interest expense on
      interestrate swap
    -
    
    -
    
    -
    
    (260)
    
    -
    -
    
    -
    
    (260)
    
    (260)Net
      earnings
    -
    
    -
    
    -
    
    -
    
    4,738
    -
    
    -
    
    4,738
    
    4,738BALANCE
      AT DECEMBER 31, 2004
    14,485,776
    $
    145
    $
    21,528
    $
    4,597
    $
    15,910
    790,876
    $
    (1,801)
    $
    40,379
    $
    7,301
 See notes
to consolidated financial statements
  F5
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 *Amounts
      shown in thousands*
    
    **For
      the Year Ended December 31,****2004**
    
    **2003**
    
    **2002****Cash
      Flows from Operating Activities:**Net
      earnings
    $
    4,738
    $
    3,246
    $
    3,079Adjustments
      to reconcile net earnings to net cash provided by operating
      activitiesDepreciation
    
    2,993
    
    2,668
    
    2,304Amortization
      of deferred financing costs
    
    75
    
    113
    
    94Gain
      on disposition of assets and real estate option
    
    (20)
    
    (28)
    
    (34)Deferred
      income tax expense
    
    554
    
    199
    
    78Minority
      interest in subsidiary earnings
    
    98
    
    22
    
    31Equity
      in income from unconsolidated subsidiary
    
    (55)
    
    -
    
    -Reclassification
      of accumulated foreign currency translation adjustment
      attributable
      to the sale of Verkrans
    
    (380)
    
    -
    
    -Write
      down asset value
    
    -
    
    -
    
    447Write
      off receivables and advances, net of (recoveries)
    
    -
    
    -
    
    698Other
    
    -
    
    20
    
    (81)Changes
      in operating assets and liabilitiesReceivables
    
    110
    
    (118)
    
    (341)Prepaid
      expenses and other assets
    
    (357)
    
    (236)
    
    94Accounts
      payable and accrued liabilities
    
    1,282
    
    (394)
    
    362Accrued
      payroll
    
    43
    
    110
    
    96Taxes
      payable
    
    (609)
    
    219
    
    569Net
      cash provided by operating activities
    
    8,472
    
    5,821
    
    7,396**Cash
      Flows from Investing Activities:**Purchases
      of property and equipment
    
    (4,508)
    
    (2,585)
    
    (4,482)Acquisition
      of remaining interest in subsidiary
    
    -
    
    (1,259)
    
    -Capital
      contribution of interest in subsidiary
    
    (3,500)
    
    -
    
    -Proceeds
      from disposition of subsidiary
    
    753
    
    -
    
    -Expenditures
      for deposits and other assets
    
    -
    
    -
    
    (236)Restricted
      cash decrease
    
    -
    
    64
    
    7Proceeds
      received from disposition of assets
    
    205
    
    308
    
    263Net
      cash used in investing activities
    
    (7,050)
    
    (3,472)
    
    (4,448)
 
 
 -Continued
on following page-
 
   
 F6
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 CONSOLIDATED
STATEMENTS OF CASH FLOWS (CONTINUED)
  
 *Amounts
      shown in thousands*
    
    **For the Year Ended December
      31,****2004**
    
    **2003**
    
    **2002****Cash
      Flows from Financing Activities:**Proceeds
      from borrowings
    
    
    
    
    $
    31,462
    
    $
    27,269
    
    $
    15,556Principal
      repayments
    
    
    
    
    
    (29,479
    )
    
    (29,478
    )
    
    (16,575
    )Deferred
      financing costs
    
    
    
    
    
    (113
    )
    
    -
    
    
    (115
    )Proceeds
      from exercise of options
    
    
    
    
    
    31
    
    
    850
    
    
    26Purchases
      of treasury stock
    
    
    
    
    
    -
    
    
    (1,237
    )
    
    (392
    )Equity
      in non-operating items from unconsolidated subsidiary
    
    
    
    
    
    5
    
    
    -
    
    
    -Net
      cash provided by (used in) financing activities
    
    
    
    
    
    1,906
    
    
    (2,596
    )
    
    (1,500
    )Effect
      of exchange rate changes on cash
    
    
    
    
    
    354
    
    
    394
    
    
    103**Increase
      in Cash and Cash Equivalents**
    
    
    
    
    
    3,682
    
    
    147
    
    
    1,551**Cash
      and Cash Equivalents at Beginning of Year**
    
    
    
    
    
    4,729
    
    
    4,582
    
    
    3,031**Cash
      and Cash Equivalents at End of Year**
    
    
    
    
    $
    8,411
    
    $
    4,729
    
    $
    4,582
 
 **Supplemental
Disclosure of Noncash Investing and Financing Activities:**
 
 In
January 2004, the Company, through its wholly owned subsidiary CMB, purchased an
additional 40% interest in Casino Millennium (“CM”), bringing its total interest
to 50%, by contributing gaming equipment with a net book value of $0.60 million.
The contribution of the gaming equipment, along with a cash contribution made in
December 2002 which was accounted for by CMB on a cost basis in Euro and had a
value of $0.29 million on January 3, 2004, brought the Company’s total
investment in CM to $0.89 million, of which $0.26 million was allocated to a
shareholder loan acquired as part of the transaction. The difference between the
cost and the equity of CM, of $0.57 million, has been recorded as
goodwill.
 
 In
December 2004, the Company, through its wholly owned subsidiary CTI, purchased a
65% interest in CC Tollgate LLC.  In conjunction with the acquisition,
liabilities were assumed as follows:
 
 Fair
      value of assets acquired
    
    $
    9,205Cash
      paid
    
    
    (3,500
    )Liabilities
      assumed
    
    $
    5,705
 
 The
assets acquired and liabilities assumed are reported in the consolidated balance
sheet.
 
 In
January 2003, we, through CCA, purchased the remaining 35% interest in CCAL for
a total of $2.6 million, of which $1.3 million was used to purchase a loan from
the previous minority shareholder, Caledon Overberg Investments (Proprietary)
Limited (“COIL”), and is included in principal repayments above, $1.0 million
was applied to the minority shareholder liability and $0.3 million increased the
carrying value of the land in Caledon.
 
 In the
second quarter of 2003, James Forbes, a director of the Company at the time, in
accordance with our Employee’s Equity Incentive Plan (“EEIP”), exercised all
618,000 of his outstanding options, carrying an average strike price of $1.306.
The shares were issued out of treasury stock and payment for the options was
made by transferring 357,080 shares of common stock that the director had owned
since 1994 to the Company at a per share price of $2.26 established at the close
of market on April 16, 2003.
 
 **Supplemental
Disclosure of Cash Flow Information:**
 
 Amounts
      shown in thousands
    
    2004
    
    2003
    
    2002Interest
      paid, net of capitalized interest of $0 in 2004, $46 in 2003 and $63 in
      2002
    
    $
    1,504
    
    $
    2,057
    
    $
    1,899Income
      taxes paid
    
    $
    614
    
    $
    1,090
    
    $
    1,865
 
 See notes
to consolidated financial statements
   F7
 CENTURY CASINOS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
   
 **1.**
    **DESCRIPTION
      OF BUSINESS**
 
 Century
Casinos, Inc. (“CCI” or the “Company”) is an international gaming company. We
own and/or manage casino operations in the United States, South Africa, the
Czech Republic and international waters through various entities that are wholly
owned or in which we have a majority ownership position.
 
 **Parent/Subsidiary
      Relationship**
    **Abbreviation**
    **Parent**
    **Ownership
      Percentage****Century
      Casinos, Inc.**
    **CCI**
    **n/a**
    **n/a****WMCK
      Venture Corp.**
    **WMCK**
    **CCI**
    **100%**WMCK-Acquisition
      Corp.
    ACQ
    WMCK
    100%Century
      Casinos Cripple Creek, Inc.
    CCC
    WMCK
    100%**Century
      Resorts Limited**
    **CRL**
    **CCI**
    **96.5%**Century
      Casinos Africa (Pty) Limited
    CCA
    CRL
    100%Century
      Casinos Caledon (Pty) Limited
    CCAL
    CCA
    100%Century
      Casinos West Rand (Pty) Limited
    CCWR
    CCA
    55%Rhino
      Resort Ltd.
    RRL
    CCA
    50%**Century
      Resorts International Limited**
    **CRI**
    **CCI**
    **100%**Century
      Resorts Alberta, Inc.
    CRA
    CRI
    56.4%**Century
      Casinos Tollgate, Inc**
    **CTI**
    **CCI**
    **100%**CC
      Tollgate LLC
    CTL
    CTI
    65%**Century
      Casinos Iowa, Inc.**
    **CIA**
    **CCI**
    **100%****Century
      Casinos Management, Inc.**
    **CCM**
    **CCI**
    **100%****Century
      Casinos Nevada, Inc.**
    **CCN**
    **CCI**
    **100%****Century
      Management u. Beteiligungs GmbH**
    **CMB**
    **CCI**
    **100%**
 
 **CCI** serves
as a holding company, providing corporate and administrative services to its
subsidiaries.
 
 **WMCK** owns and
operates Womacks Casino and Hotel (“Womacks”), a limited-stakes gaming casino in
Cripple Creek, Colorado. Womacks is one of the largest gaming facilities in
Cripple Creek.
  **CRL** was
formed to own our South African interests and to provide technical casino
services to some of our foreign and offshore operations. In July 2004 certain
officers of the Company exchanged their 3.5% minority ownership in CCA for a
3.5% minority ownership in CRL of equal value. CCI now owns 96.5% of CRL and CRL
owns 100% of CCA. **** CCA owns
CCAL which owns and operates The Caledon Hotel, Spa and Casino near Cape Town,
South Africa.
 
 F8
 
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
NOTES
TO CONSOLIDATED FINANCIAL STATMENTS
 **CRI** serves
as concessionaire of small casinos on eight luxury cruise vessels and provides
technical casino services to Casino Millennium. **** Effective
February 24, 2005, CRI owns 56.4% of CRA which was formed in conjunction with an
application for a gaming license in Edmonton, Alberta, Canada. We had subscribed
to 55% of the shares of CRA in September 2003, but subsequently increased our
participation in the project. On October 12, 2004 CRI entered into a casino
services agreement with CC Tollgate LLC to manage the proposed casino in Central
City, Colorado. CRI has entered into an agreement with CCA in which it earns a
fee for the services provided by executive management contracted to
CRI.
 
 **CTI** entered
into an agreement with Tollgate Venture LLC on October 13, 2004 to develop and
operate a casino and hotel in Central City, Colorado. Completion of the project
is subject to various conditions and approvals, including, but not limited to
securing acceptable financing, satisfactory environmental studies, licensing by
the Colorado Division of Gaming, and other due diligence. Casino licenses in
Colorado are not limited in number by state gaming laws and are primarily
subject to successful background investigations by the Colorado Division of
Gaming. Century currently is licensed in Colorado for gaming at Womacks Casino
and Hotel in Cripple Creek. On December 30, 2004, the transaction closed with
Century Casinos Tollgate, Inc. making a cash contribution of $3.5 million in
return for a controlling 65% interest and Tollgate Venture LLC having
contributed three existing non-operating casino buildings, land and land options
for a 35% interest.
 
 **CCM** provided
technical casino services to some of our operations. The technical services
agreements were re-assigned to CRI in October 2003, but CCM is still collecting
fees that were earned prior to that time, which remain unpaid. CCM has entered
into a casino services agreement to manage the proposed project in Iowa as
discussed below.
 
 **CCN** is a
dormant subsidiary which owns non-operating casino property and land held for
sale in Nevada.
 
 **CMB** acquired
a 10% equity interest in Casino Millennium located within a five-star hotel in
Prague, Czech Republic through a $0.24 million cash contribution in December
2002. In January 2004, CMB acquired an additional 40% of Casino Millennium,
bringing its total ownership to 50%. The current period earnings are reported as
equity in income from unconsolidated subsidiary in our consolidated statements
of earnings and cash flows. The investment by us for the incremental 40% stake
totaled $0.60 million and was paid by contributing gaming
equipment.
 
 **We
regularly pursue additional gaming opportunities internationally and in the
United States, and are currently pursuing the following opportunities:**
 
 **Edmonton** - On
February 24, 2005, through our wholly owned subsidiary, Century Resorts
International, we acquired a 56.4% interest in Century Resorts Alberta, Inc.
(“CRA”) for approximately, $2.4 million ($3.0 million Canadian dollars.) We had
subscribed to 55% of the shares of CRA in September 2003 but subsequently
increased our participation in the project. The Company’s local partner, 746306
Alberta, Ltd. contributed a 7.25 acre parcel of land and an existing 40 room
hotel for the remaining 43.6% interest. Century Resorts Alberta, Inc. plans to
develop the Celebrations Casino and Hotel in Edmonton, Alberta, Canada.
Completion of this project is subject to obtaining acceptable project financing.
On December 17, 2004 the AGLC granted approval to begin construction of the
casino property. As is customary, the issuance of
 
 F9
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 the
license does not occur until completion of construction and after all federal
and provincial legislation, regulation and policies, and municipal requirements,
permits, licenses and/or authorizations have been met. We have also entered into
a long-term agreement to manage the facility if a gaming license is
awarded.
 
 **Franklin
County, Iowa -** On
October 18, 2004, CCI entered into an agreement with the owners of Landmark
Gaming LC of Franklin County, Iowa, to jointly submit as co-applicant with the
Franklin County Development Association (FCDA) an application to the Iowa Racing
and Gaming Commission (IRGC) to develop and operate a moored barge casino, hotel
and entertainment facility in Franklin County, Iowa. On November 11, 2004, CCI
through Landmark Gaming LC, jointly submitted as co-applicant with the FCDA a
casino facility license application to the IRGC for a casino in Franklin County,
Iowa. The proposed project, The Landmark Hotel and Casino, is a moored barge
casino, hotel and entertainment facility in the Mississippi riverboat style.
Landmark Gaming LC will be 40% owned by Century Casinos Iowa, Inc (“CIA”), a
wholly owned subsidiary of CCI, if a license is granted. The other 60% will be
owned by Gayle Burnett, Roger Burnett and Michael Dunn, the Iowa residents who
own the land and land options which will be developed into the Landmark project.
Century Casinos Management, Inc. has entered into a long term agreement to
manage the casino in return for a share in gross revenues plus a share in
EBITDA. Our contribution to the project at closing will include an initial cash
capital contribution of $1.25 million in return for a 40% interest. The current
owners of Landmark Gaming LC will contribute the land and land options in return
for 60% ownership. Our cash contribution and the beginning of construction are
subject to various conditions and approvals, including, but not limited to
awarding of a license by the IRGC, securing acceptable financing and other due
diligence.
 
 **Johannesburg** - On
October 20, 2003, we announced that judgment had been handed down in the High
Court of South Africa compelling the Gauteng Gambling Board (“GGB”) to award a
casino license to Silverstar Development Limited (“Silverstar”) for the western
periphery of metropolitan Johannesburg in terms of its original 1997
application.  On
November 11, 2003, the Company announced that the GGB’s subsequent application
for leave to appeal the October 20 judgment had been denied by the High Court.
On December 3, 2003, the Company announced that the GGB served notice that it
had petitioned the South African Supreme Court of Appeal requesting a further
appeal against the judgment of the High Court. On February 5, 2004, the Supreme
Court of Appeal of South Africa overturned the ruling of the High Court and
granted the GGB’s request for leave to appeal. Silverstar informed the Company
that the Supreme Court of Appeal met on February 28, 2005 to review Silverstar’s
petition against the leave to appeal granted to the GGB, at which time the court
reserved judgment. On March 29, 2005, Silverstar reported that the Supreme Court
of Appeal dismissd the appeal of the GGB and upheld the earlier High Court
decision to award the license to Silverstar.
 
 On
December 1, 2004, CCI agreed to sell its interest in the Gauteng, South Africa
license application which included the sale of Verkrans Ontwikkelings Maatskappy
(Pty) Ltd., the owner of the land and a wholly owned subsidiary of CRL (Note 8).
The Akani Group has agreed to provide the funds necessary for Silverstar to
complete the project and to acquire the entire shareholding of Silverstar as
well as all assets, rights and obligations of CCI in the project.
 
 **2.**
    **SIGNIFICANT
      ACCOUNTING POLICIES**
 
  ***Principles
of Consolidation*** - The
accompanying consolidated financial statements include the accounts of CCI and
its majority-owned subsidiaries. Investments in unconsolidated affiliates which
are 20% to 50% owned, are accounted for under the equity method. All significant
intercompany transactions and balances have been eliminated.
 
 F10
 CENTURY CASINOS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Our 65%
ownership interest in CC Tollgate LLC is carried at our capital account balance
based on provisions in the LLC agreement that required liquidation to be
proportionate to each unitholder's positive capital account which results in a
minority interest liability related to the project of $4.2 million as of
December 31, 2004.  Future profits and losses will be allocated and
recognized in such a manner as to ultimately bring each unitholder's capital
account into proportion of their respective unitholdings.
 ***Use
of Estimates -*******The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
 ***Cash
and Cash Equivalents*** - All
highly liquid investments with an original maturity of three months or less are
considered to be cash equivalents. Minimum deposits required in connection with
CCAL’s lending facility (Note 5) are designated as restricted cash on the
consolidated balance sheets.
 
 ***Fair
Value of Financial Instruments*** ** - We
calculate the fair value of financial instruments and include this additional
information in the notes to our financial statements when the fair value does
not approximate the carrying value of those financial instruments. Our financial
instruments include cash and cash equivalents, long-term debt and interest rate
swap agreements. Fair value is determined using quoted market prices whenever
available. When quoted market prices are not available, we use alternative
valuation techniques such as calculating the present value of estimated future
cash flows utilizing risk-adjusted discount rates. Our carrying value of
financial instruments approximates fair value at December 31, 2004 and
2003.
 
 ***Property
and Equipment*** -
Property and equipment are stated at cost. Depreciation of assets in service is
provided using the straight-line method over the estimated useful lives of the
assets. Leased property and equipment under capital leases is amortized over the
lives of the respective leases or over the service lives of the assets,
whichever is shorter. The interest cost associated with major development and
construction projects is capitalized and included in the cost of the project.
When no debt is incurred specifically for a project, interest is capitalized on
amounts expended on the project using the weighted-average cost of our
outstanding borrowings. Capitalization of interest ceases when the project is
substantially complete or development activity is suspended for more than a
brief period.
 
 Assets
are depreciated over their respective service lives as follows:
 
 Buildings and improvements
    7 - 39 yrsGaming equipment
    3 - 7 yrsFurniture and office equipment
    5 - 7 yrsOther equipment
    3 - 7 yrs
 F11
 
  **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 **
 ***Goodwill
and Other Intangibles***- Goodwill represents the excess of the
purchase price over the fair value of the net identifiable assets acquired in a
business combination. SFAS No. 142 “Goodwill and Other Intangible Assets*”*(see Note 10) addresses the methods used to capitalize, amortize and to
assess impairment of intangible assets, including goodwill resulting from
business combinations accounted for under the purchase method. Effective with
the adoption of SFAS No. 142, we no longer amortize goodwill and other
intangible assets with indefinite useful lives, principally casino licenses
which are recorded at acquired cost. We instead review goodwill and
indefinite-lived intangible assets for impairment at least annually and between
annual test dates in certain circumstances.
 
 We
completed the necessary transition impairment reviews for goodwill and
indefinite-lived intangible assets in 2002, and no impairments were indicated.
We perform our annual impairment test for goodwill and indefinite-lived
intangible assets in the fourth quarter of each fiscal year. No impairments were
indicated as a result of the annual impairment reviews for goodwill and
indefinite-lived intangible assets in 2004, 2003 or 2002.
 
 ***Impairment
of Long-Lived Assets*** - We
review long-lived assets for possible impairment whenever events or
circumstances indicate that the carrying amount of an asset may not be
recoverable. If there is an indication of impairment, determined by the excess
of the carrying value in relation to anticipated undiscounted future cash flows,
the carrying amount of the asset is written down to its estimated fair value by
a charge to operations. Fair value is estimated based on the present value of
estimated future cash flows using a discount rate commensurate with the risk
involved. Estimates of future cash flows are inherently subjective and are based
on management’s best assessment of expected future conditions.
 
 ***Revenue
Recognition*** - Casino
revenue is the net win from gaming activities, which is the difference between
gaming wins and losses. Management and consulting fees are recognized as revenue
as services are provided.  The
incremental amount of unpaid progressive jackpot is recorded as a liability and
a reduction of casino revenue in the period during which the progressive jackpot
increases.
 
 ***Promotional
Allowances*** - Food
and beverage furnished without charge to customers is included in gross revenue
at a value which approximates retail and is then deducted as complimentary
services to arrive at net revenue.
 
 As part
of its promotional activities, we offer “free plays” or coupons to our customers
for gaming activity and our players clubs allow customers to earn certain
complimentary services and/or cash rebates based on the volume of a customer’s
gaming activity. These promotional activities were reported as a reduction of
revenue for 2004, 2003 and 2002, respectively.
 ******
 ***Foreign
Currency Translation*** -
Adjustments resulting from the translation of the accounts of our foreign
subsidiaries from the local functional currency to U.S. dollars are recorded as
other comprehensive income or loss in the consolidated statements of
shareholders’ equity and comprehensive income. Foreign currency transaction
gains or losses resulting from the translation of other casino operations and
other transactions which are denominated in a currency other than U.S. dollars
are recognized in the statements of earnings. Gains and losses from intercompany
foreign currency transactions that are of a long-term investment nature and are
between entities of the consolidated group are not included in determining net
earnings, but rather are reported as translation adjustments within other
comprehensive income or loss in the consolidated statements of shareholders’
equity and comprehensive income.
 
 F12
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Historical
transactions that are denominated in a foreign currency are translated and
presented at the United States exchange rate in effect on the date of the
transaction. Commitments that are denominated in a foreign currency and all
balance sheet accounts other than shareholders’ equity are translated and
presented based on the exchange rate at the end of the reported periods. Current
period transactions affecting the profit and loss of operations conducted in
foreign currencies are valued at the average exchange rate for the period in
which they are incurred. The exchange rates used to translate balances at the
end of the reported periods are as follows:
 
 December
      31, 2004
    December
      31, 2003
    December
      31, 2002South
      African Rand
    5.6640
    6.6858
    8.5755Euros
    0.7388
    0.7938
    0.9536Czech
      Koruna
    22.4640
    25.6634
    n/aCanadian
      Dollars
    1.2036
    1.2924
    n/a
 
 Source:
Pacific Exchange Rate Service
 
 ***Income
Taxes*** - We
account for income taxes using the liability method, which provides that
deferred tax assets and liabilities are recorded based on the difference between
the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes, at a rate expected to be in effect when the differences
become deductible or payable.
 
 ***Stock-Based
Compensation*** - In
2002 we adopted Statement of Financial Accounting Standards No. 148 (SFAS 148),
“Accounting for Stock-Based Compensation-Transition and Disclosure” which amends
the disclosure requirements of Statement of Financial Accounting Standards No.
123 (SFAS 123), “Accounting for Stock-Based Compensation” to require prominent
disclosure in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. SFAS 148 also provides alternative methods of
transition for a voluntary change to fair value based methods of accounting
which have not been adopted by us at this time. SFAS 123 encourages, but does
not require companies to record compensation cost for stock-based employee
compensation plans at fair value. We have chosen to account for stock-based
compensation for employees using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25 (APB 25), “Accounting for Stock
Issued to Employees”, and related Interpretations. Accordingly, compensation
cost for stock options is measured as the excess, if any, of the quoted market
price of our stock at the date of the grant over the amount an employee must pay
to acquire that stock. We value stock-based compensation granted to
non-employees at fair value.
 
  F13
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  In April
2004, our stock-based employee compensation plan expired (see Note 6). The
Company accounted for this plan under the recognition and measurement principles
of Accounting Principles Board Opinion No. 25, “ *Accounting
for Stock Issued to Employees”* , and
related interpretations. No stock-based compensation cost is reflected in net
earnings, as all options granted under the plan had an exercise price equal to
the market value of the underlying common stock on the date of the grant. The
following table illustrates the effect on net earnings and earnings per share if
we had applied the fair value recognition provisions of FASB Statement No. 123,
“ *Accounting
for Stock Based Compensation”* , to
stock-based employee compensation.
 
 *Amounts
      shown in thousands. except share data*
    
    **2004**
    
    **2003**
    
    **2002**Net
      earnings, as reported
    
    
    
    $
    4,738
    
    $
    3,246
    
    $
    3,079Deduct:
      Total stock-based employee compensation expense
      determined
      under fair value basedmethod
      for all awards, net of
      related
      tax effects
    
    
    
    
    1,114
    
    
    4
    
    
    9Pro
      forma net earnings
    
    
    
    $
    3,624
    
    $
    3,242
    
    $
    3,070Earnings
      per share,Basic
    
    
    As
      reported
    
    
    
    
    $
    0.35
    
    $
    0.24
    
    $
    0.23Pro
      forma
    
    
    
    
    $
    0.27
    
    $
    0.24
    
    $
    0.22Diluted
    
    
    As
      reported
    
    
    
    
    $
    0.30
    
    $
    0.22
    
    $
    0.20Pro
      forma
    
    
    
    
    $
    0.23
    
    $
    0.22
    
    $
    0.20
 The fair
value of options granted under the Plan was estimated on the date of grant using
the Black-Scholes option pricing model with the following
assumptions:
 
 **2004**
    **2003**
    **2002**Weighted-average
      risk-free interest rate
    4.00%
    -
    5.32%Weighted-average
      expected life
    9.5
      yrs
    -
    10
      yrsWeighted-average
      expected volatility
    55.1%
    -
    26.8%Weighted-average
      expected dividends
    $
      0
    -
    $
      0
 
 
 The
weighted-average fair value of options granted was $1.97 dollars in 2004 and
$1.16 dollars in 2002. A total of 1,352,710 and 10,000 options were issued in
2004 and 2002, respectively. No options were granted to employees under the Plan
in 2003.
 
 Additionaly,
60,000 options were issued to directors in 2004
 
 ***Earnings
Per Share*** - Basic
earnings per share considers only weighted-average outstanding common shares in
the computation. Diluted earnings per share give effect to all potentially
dilutive securities. 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
and the assumed conversion of other convertible securities (using the “if
converted” method) at the beginning of the year, or for the period outstanding
during the year for current year issuances.
 
 F14
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 ******
 ***Comprehensive
Income*** -
Comprehensive income for us includes the effect of fluctuations in foreign
currency rates on value of our foreign investments and the interest rate swap
agreements we maintain to hedge against increases in the interest rate on our
RCF.
 
 ***Operating
Segments*** - We are
managed in five segments; Cripple Creek, Colorado (formerly Colorado), Central
City, Colorado, South Africa, Cruise Ships, and Corporate and Other operations.
The operating results of the Cripple Creek, Colorado segment are those of WMCK
Venture Corp. and subsidiaries which own Womacks Casino and Hotel (“Womacks”) in
Cripple Creek, Colorado. The operating results of the Central City, Colorado
segment are those of CC Tollgate, Inc. which has not yet begun casino
operations. The operating results of the South African segment are those of
Century Casinos Africa (Pty) Limited and its subsidiaries, primarily Century
Casinos Caledon (Pty) Limited which owns the Caledon Hotel, Spa and Casino.
Cruise Ship operations include the revenue and expense of the eight combined
shipboard operations for which we have casino concession agreements. Corporate
and Other operations include, among other items, the revenue and expense of
corporate gaming projects for which we have secured long-term service contracts.
 
 ***Hedging
Activities*** -
Companies are required to recognize all of their derivative instruments as
either assets or liabilities in the balance sheet at fair value. The accounting
for changes in the fair value (i.e. gains or losses) of a derivative instrument
depends on whether it has been designated and qualifies as part of a hedging
relationship and further, on the type of hedging relationship. For those
derivative instruments that are designated and qualify as hedging instruments, a
company must designate the hedging instrument, based upon the exposure being
hedged, as either a fair value hedge, cash flow hedge or a hedge of a net
investment in a foreign operation.
 
 For
derivative instruments that are designated and qualify as a cash flow hedge
(i.e. hedging the exposure to variability in expected future cash flows that is
attributable to a particular risk), the effective portion of the gain or loss on
the derivative instrument is reported as a component of other comprehensive
income and reclassified into earnings in the same period or periods during which
the hedged transaction affects earnings. The remaining gain or loss on the
derivative instrument in excess of the cumulative change in the present value of
future cash flows of the hedged item, if any, is recognized in current earnings
during the period of change. We currently do not have fair value hedges or
hedges of a net investment in a foreign operation. For derivative instruments
not designated as hedging instruments, the gain or loss is recognized in current
earnings during the period of change.
 
 At
December 31, 2004, our interest rate swap agreements decreased shareholders’
equity (accumulated other comprehensive income) by $64 thousand, net of federal
and state income tax benefits of $38 thousand. At December 31, 2003 the interest
rate swap agreements decreased shareholders’ equity (accumulated other
comprehensive income) by $0.23 million, net of federal and state income tax
benefits of $0.14 million. At December 31, 2002, the interest rate swap
agreements decreased shareholders’ equity (accumulated other comprehensive
income) by $0.49 million, net of federal and state income tax benefits of $0.29
million.
 
 ***Advertising
Costs*** - Costs
incurred for producing and communicating advertising are expensed when incurred.
Advertising expense was $0.77 million, $0.56 million and $0.41 million for the
years ended December 31, 2004, 2003 and 2002, respectively.
 
 ***Preopening
Expense*** -
Preopening, pre-operating and organization activities are expensed as
incurred.
 
 F15
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 ******
 ***Reclassifications*** ** - Certain
reclassifications have been made to the 2003 and 2002 financial information in
order to conform to the 2004 presentation.
  ***Recent
Accounting Pronouncements*** **-** In
December 2004, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 123R (SFAS 123R), “Share-Based Payment.”
SFAS 123R requires employee stock options and rights to purchase shares under
stock participation plans to be accounted for under the fair value method, and
eliminates the ability to account for these instruments under the intrinsic
value method prescribed by Accounting Principles Board Opinion No. 25,
“Accounting for Stock Issued to Employees,” which generally resulted in the
recognition of no compensation cost. SFAS 123R requires the use of an option
pricing model for estimating fair value, which is amortized to expense over the
service periods. The requirements of SFAS 123R are effective for fiscal years
beginning after June 15, 2005. We are currently assessing the valuation options
allowed under SFAS 123R.  We have not yet determined the impact of applying
its various provisions, however based on our current outstanding options, we
believe the impact on earnings will be significant.
   In
December 2004, the FASB issued SFAS No. 153 (SFAS 153), “Exchanges of
Nonmonetary Assets - an amendment of APB Opinion No. 29.” This eliminates the
exception in APB Opinion No. 29 for nonmonetary exchanges of similar productive
assets and replaces it with a general exception for exchanges of nonmonetary
assets that do not have commercial substance. A nonmonetary exchange has
commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. The provisions of this
statement will be effective for fiscal periods beginning after June 15, 2005. We
are currently evaluating the impact of this new standard, but do not expect the
adoption of SFAS 153 to have a material impact on our financial position,
results of operations or cash flows.
  **3.**
    **EQUITY
      INVESTMENT IN UNCONSOLIDATED SUBSIDIAR**Y
 
 We have a 50% ownership
in Casino Millennium (“CM”) and we account for this investment under the equity
method.
  Following
is the summarized financial information of Casino Millennium as of and for the
year ended December 31, 2004:
  **Casino Millennium**
    
    Unaudited (1)*Amounts shown in thousands***Balance Sheet:**Current Assets
    $
    841Noncurrent Assets
    $
    935Current Liabilities
    $
    104Noncurrent liabilities
    $
    1,191**Operating Results:**Net operating revenue
    $
    2,489Net earnings (2)
    $
    95
  
 F16
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 (1)
Prior to 2004, we accounted for our 10% investment in Casino Millennium on the
cost method.
 (2) After expensing casino
services fees paid to the Company.
  FIN
46(R), “Consolidation of Variable Interest Entities”, addresses consolidation
issues by business enterprises of variable interest entities in which 1) the
equity interest at risk is not sufficient to finance its activities without
additional subordinated financial support, 2) the equity investors lack one or
more essential characteristics of a controlling financial interest or 3) the
equity investors have voting rights that are not proportionate to their economic
interest. We adopted FIN 46(R) on January 1, 2004. We determined that CM is a
variable interest entity as defined by FIN 46(R). We also determined that we are
not the primary beneficiary as defined by FIN 46(R) and have, therefore,
accounted for our 50% interest in CM on the equity basis. A primary beneficiary
is the party that absorbs a majority of the entity’s expected losses, receives a
majority of its expected returns, or both as defined in FIN 46(R). Under the
equity method of accounting, we have recognized the difference between the
investment and the underlying cost of the equity as goodwill and reported our
percentage of the earnings in CM as equity in income from unconsolidated
subsidiary.
  The
Company’s estimated maximum exposure to losses at December 31, 2004 consists of
the following ( *Amounts
in thousands* ):
 
 Equity
      investment in Casino Millennium
    
    $
    116Goodwill
    
    
    604Note
      receivable
    
    
    276Other
      receivables
    
    
    199Total
    
    $
    1,195
 
  Casino
services fee income for the years ended December 31, 2004, 2003 and 2002 was
$0.10 million, $0.11 million and $0.15 million, respectively.
   
   F17
   **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 **4.**
    **PROPERTY
      AND EQUIPMENT**
 
 Property
and equipment at December 31, 2004 and 2003 consist of the
following:
  
 *Amounts
      shown in thousands*
    
    
    
    
    
    EstimatedService
      Life**2004**
    
    **2003**
    
    in
      YearsBuildings
      and improvements
    
    $
    29,009
    
    $
    22,648
    
    
    7 -
      39Gaming
      equipment
    
    
    12,725
    
    
    10,731
    
    
    3 -
      7Furniture
      and office equipment
    
    
    4,992
    
    
    3,599
    
    
    5 -
      7Other
      equipment
    
    
    2,238
    
    
    1,881
    
    
    3 -
      7Capital
      projects in process
    
    
    55
    
    
    57549,019
    
    
    39,434Less
      accumulated depreciation
    
    
    (19,611
    )
    
    (16,639
    )29,408
    
    
    22,795Land
    
    
    18,800
    
    
    13,580Non-operating
      casino and land held for sale
    
    
    421
    
    
    421Property
      and equipment, net
    
    $
    48,629
    
    $
    36,796
 
 The
non-operating casino and land is located in Nevada and is carried at estimated
net realizable value.
 
 CCAL has
entered into a series of lease agreements for the purchase of capital equipment.
The average effective interest rate is 13.8% on the lease obligations which are
repayable over a term of 60 months (see Note 5).
 
 Assets
under lease included in property and equipment as of December 31, 2004 and 2003
are as follows:
 
 *Amounts
      shown in thousands*
    Original
      Book Value
    Accumulated
      Depreciation**2004**
    
    **2003**
    
    **2004**
    
    **2003**Gaming
      & security equipment
    $
    736
    
    $
    623
    
    $
    657
    
    $
    411Furniture
      and office equipment
    
    334
    
    
    283
    
    
    208
    
    
    130Total
    $
    1,070
    
    $
    906
    
    $
    865
    
    $
    541
 
 Depreciation
expense for the years ended December 31, 2004, 2003 and 2002 was $2.99 million,
$2.67 million and $2.30 million, respectively.
  F18
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  **5.**  **LONG-TERM
DEBT**
 Long-term
debt at December 31, 2004 and 2003 consists of the following:
 *Amounts
shown in thousands:*
 
 **2004**
    
    
    **2003**Borrowings
      under revolving line of credit facility with Wells Fargo
    Bank
    
    $
    15,656
    
    $
    11,757Borrowings
      under loan agreement with ABSA Bank
    
    
    3,493
    
    
    4,550Notes
      payable to minority interest holder
    
    
    1,121
    
    
    -Capital
      leases for various equipment
    
    
    232
    
    
    355Note
      payable to founding shareholder, unsecured
    
    
    -
    
    
    380Other
      unsecured notes payable
    
    
    2
    
    
    7Total long-term
      debt
    
    
    20,504
    
    
    17,049Less
      current portion
    
    
    (2,534
    )
    
    (2,136
    )Long-term
      portion
    
    $
    17,970
    
    $
    14,913
 On
April 26, 2000, the Company and Wells Fargo Bank (the “Bank”) entered into an
Amended and Restated Credit Agreement (the “Agreement”) which increased our
aggregate borrowing commitment from the Bank under a Revolving Line of Credit
Facility (“RCF”) to $26 million and extended the maturity date to April 2004.
The Agreement was further amended on August 22, 2001 to give greater flexibility
to the ability to use the borrowed funds for projects for the Company. On August
28, 2002, the RCF was further amended to increase the facility to its original
amount of $26 million, an increase of $5.8 million, revise the quarterly
reduction schedule and extend the maturity date to August 2007.The
aggregate commitment available to the Company is reduced quarterly by $0.72
million beginning January 2003 through the maturity date. On October 27, 2004,
the RCF was further amended to modify the aggregate commitment reduction
schedule. The aggregate commitment available to the Company is reduced by $0.3
million for two quarters beginning July 1, 2005, by $0.60 million for two
quarters beginning January 1, 2006 and finally by $0.72 million at the beginning
of each quarter beginning July 1, 2006 through the maturity date. The commitment
available as of December 31, 2004, net of quarterly reductions, is $20.94
million and unused borrowing capacity is $5.28 million. Interest on the
Agreement is variable based on the interest rate option selected by the Company,
plus an applicable margin based on the Company’s leverage ratio. The Agreement
also requires a nonusage fee based on the Company’s leverage ratio on the unused
portion of the commitment. The principal balance outstanding under the loan
agreement as of December 31, 2004 and 2003 was $15.66 million and $11.76
million, respectively. The loan agreement includes certain restrictive covenants
on financial ratios of WMCK. The most significant covenants include i) a maximum
leverage ratio no greater than 2.5 to 1.00, ii) a minimum interest coverage
ratio no less than 2.00 to 1.00, and iii) a TFCC ratio (a derivative of EBITDA,
as defined in the agreement) of no less than 1.10 to 1.00. The Company is in
compliance with the restrictive covenants on the financial ratios of WMCK
contained in the RCF as of December 31, 2004. The loan is collateralized by a
deed of trust and a security agreement with assignments of lease, rents and
furniture, fixtures and equipment of all Colorado property. The interest rate at
December 31, 2004 ranged from approximately 4.24% to approximately 4.31% for
$10.5 million outstanding under LIBOR based provisions of the loan agreement.
The remaining balance of the outstanding debt is subject to interest under the
PRIME based provisions of the loan agreement at a rate of 5.25%.
 In 1998,
we entered into a five-year interest rate swap agreement on $7.5 million
notional amount of debt under the RCF, whereby we pay a LIBOR-based fixed rate
of 5.55% and receive a LIBOR-based floating rate reset quarterly based on a
three-month rate. The swap agreement expired October 1, 2003. In May 2000, we
entered into a
 
 F19
 
 
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 second
five-year interest rate swap agreement on $4.0 million notional amount of debt
under the RCF, whereby we pay a LIBOR-based fixed rate of 7.95% and receive a
LIBOR-based floating rate reset quarterly based on a three-month rate.
Generally, the swap arrangement is advantageous to us to the extent that
interest rates increase in the future and disadvantageous to the extent that
they decrease. The net amount paid or received by us on a quarterly basis
results in an increase or decrease to interest expense. The fair value of the
derivatives as of December 31, 2004 and 2003 of $0.1 million and $0.4 million,
respectively, is reported as a liability in the consolidated balance sheet. Our
objective for entering into the interest rate swap agreements, derivative
instruments designated as cash flow hedging instruments, was to eliminate the
variability of cash flows in the interest payments for a portion of the RCF. We
have determined that the cash flow hedges were highly effective. Accordingly no
net gain or loss has been recognized in earnings during 2004, 2003 or 2002 for
hedge inneffectness. The effective portion on the interest rate swaps of
$0.43 million, $0.78 million and $0.58 million, net of income tax expense of
$0.10 million, $0.16 million and $36 thousand has been reported in comprehensive
income on the statement of shareholders’ equity and comprehensive income for
2004, 2003 and 2002, respectively. If the interest rate swap’s critical terms
(notional amount, interest rate reset dates, maturity/expiration date or
underlying index) change significantly, such event would result in reclassifying
the losses that are reported in accumulated other comprehensive income. We
estimate that during 2005 we will recognize additional interest expense of
approximately $64 thousand in connection with the remaining interest rate swap
agreement. Net additional interest expense to us under the swap agreement was
$0.26 million, $0.52 million and $0.52 million in 2004, 2003 and 2002,
respectively.
 
 In April
2000, CCAL entered into a loan agreement with PSG Investment Bank Limited
(“PSGIB”), which provides for a principal loan of approximately $6.2 million
(based on an exchange rate of 7.6613 rand per dollar at the time the funds were
advanced) to fund development of the Caledon project. The outstanding balance as
of December 31, 2004 and 2003 was $3.2 million and $4.2 million, respectively,
and the interest rate was 17.05% in both years. The shareholders of CCAL have
pledged all of the common shares held by them in CCAL to PSGIB as collateral.
The loan is also collateralized by a first mortgage bond over land and buildings
and a general notorial bond over all equipment. In April 2001, CCAL entered into
an addendum to the loan agreement in which PSGIB provided CCAL with a standby
facility in the amount of approximately $0.6 million, based on an exchange rate
of 8.0315 rand per dollar at the time. The outstanding balance as of December
31, 2004 and 2003 was $0.3 million and $0.4 million, respectively, and the
interest rate was 15.1% in both years. Under the original terms of the agreement
CCAL made its first principal payment in December 2001, based on a repayment
schedule that required semi-annual installments continuing over a five-year
period. On March 26, 2002, CCAL and PSGIB entered into an amended agreement that
changed the repayment schedule to require quarterly installments beginning on
March 31, 2002 and continuing over the remaining term of the original five-year
agreement. The amendment also changed the requirements for the sinking fund. The
original agreement required CCAL to have on deposit a “sinking fund” in the
amount equal to the next semi-annual principal and interest payment. The amended
agreement changes the periodic payments from semi-annual to quarterly and
requires a minimum deposit in the sinking fund equal to four million Rand
(approximately $0.71 million at the exchange rate as of December 31, 2004). In
addition, one third of the next quarterly principal and interest payment must be
deposited on the last day of each month into the fund and used for the next
quarterly installment. PSGIB was acquired by ABSA Bank (ABSA) in March 2003.
There have been no changes in the terms or conditions of the current loan, as
amended, with PSGIB. The loan agreement includes certain restrictive covenants
for CCAL, including the maintenance of the following ratios; i) debt/equity
ratio of 45:55 after the first twelve months of operations and a 40:60
debt/equity
 F20
 
 
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 ratio
after two years of operations, ii) interest coverage ratio of at least 2.0 after
the first twelve months of operations, iii) debt service coverage ratio of at
least 1.34 for the principal loan and 1.7 for the standby facility after
the first twelve months of operations, and iv) loan life coverage ratio of 1.5
for the principal loan and a loan life coverage ratio of 2.5 for the standby
facility. As of December 31, 2004, the Company was in compliance with the loan
covenants specified by ABSA.
 
 An unsecured note payable, in the
amount of $0.38 million, to a founding shareholder bears interest at 6%, payable
quarterly. The entire outstanding principal was paid on April 1,
2004.
 Unsecured
notes payable, in the amount of $1.1 million, as of December 31, 2004, to a
minority interest holder in Tollgate, are payable contingent upon the opening
date of the casino. $1.0 million is payable based on opening date of the casino,
the note bears interest at 8% rate and is considered long-term in the
accompanying consolidated balance sheets. Two notes are payable based upon first
construction draw, $80 thousand bears interest at 6% rate and $41 thousand bears
interest at 13% rate. Both are considered current in the accompanying
consolidated balance sheets.
 
 The
consolidated weighted average interest rate on all borrowings was 9.05%, 10.35%
and 10.12% for the years ended December 31, 2004, 2003 and 2002, respectively,
excluding the write-off of deferred financing charges.
 
 As of
December 31, 2004, scheduled maturities of all long-term debt are as follows:
 Future
      minimum
      lease
      payment
      of
      capital leases
    Other
      debt2005
      -
    $
      203
    $
      2,3562006
      -
    41
    1,2592007
      -
    19
    16,6572008
      -
    15
    -2009
      -
    -
    -Thereafter
    -
    -278
    20,272Less
      amounts representing interest
    46
    -Total
    $
      232
    $
      20,272
    TotalCurrent
    $
      178
    $
      2,356
    $
      2,534Long-Term
    $
      54
    $
      17,916
    $
      17,970
 **6.**
    **SHAREHOLDERS’
      EQUITY**
 The
Company’s Board of Directors had approved a discretionary program to repurchase
up to $5 million of the Company’s outstanding common stock. Through December 31,
2004, the Company had repurchased 2,559,004 shares of its common stock at an
average cost per share of $1.49, of which 1,385,000 shares, with an average cost
of $1.06 per share, were retired in 2000.
 
 In
2004, a total of 14,400 shares were re-issued to satisfy option exercises,
10,000 shares of which were to satisfy a director’s options.
 
 In
2003, 30,000 shares were re-issued to satisfy outside directors’ option
exercises.
 
 F21
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
 On April
16, 2003, in accordance with our Employees’ Equity Incentive Plan (“EEIP”),
then-director, James Forbes, elected to exercise all 618,000 of his outstanding
options, carrying an average strike price of $1.306. The shares were issued out
of treasury and payment for the options was made by transferring 357,080 shares
of common stock that the director has owned since 1994 to us at a per share
price of $2.26 established at the close of the market on April 16, 2003.
Additionally, on June 9, 2003 we repurchased 132,184 shares from the director at
the per share price of $2.26, established at the close of market on April 16,
2003. The net effect of these transactions reduced treasury shares by 128,736
and increased the outstanding shares by 128,736.
 
 There
were 790,876 shares remaining in treasury as of December 31, 2004, at an average
cost per share of $2.28. Subsequent
to December 31, 2004, we have not purchased any additional shares of our common
stock on the open market but have re-issued 60,000 shares to satisfy officers
and directors’ option exercises.
 
 In June
2003, our EEIP was amended to permit the exchange of non-statutory options for
restricted stock awards (“RSA’s”) at the rate of one RSA for one non-statutory
option. As of December 31, 2004, no RSA’s have been issued.
 
 In July
2002, we amended the Rights Agreement between Century Casinos, Inc. and
Computershare Investor Services, Inc., adopted in April 1999, as amended and
approved by the Shareholders in 2000, to increase the defined purchase price
from $4 to $10 per share and increased the redemption period, the time during
which we may elect to redeem all of the outstanding rights, from 20 to 90 days.
The purchase price is the exercise amount at which a registered holder is
entitled to purchase a given amount of shares of non-redeemable Series A
Preferred Stock of the Company, subject to certain adjustments.
 
 The Board
of Directors of the Company adopted an Employees’ Equity Incentive Plan (the
“Plan”) in April 1994. The Plan as subsequently amended provided for the grant
of awards to eligible employees in the form of stock, restricted stock, stock
options, stock appreciation rights, performance shares or performance units, all
as defined in the Plan. The Plan expired in April 2004. The Plan provided for
the issuance of up to 4,500,000 shares of common stock to eligible employees
through the various forms of awards permitted. Through December 31, 2004, only
incentive stock option awards, for which the option price may not be less than
fair market value at the date of grant, or non-statutory options, which may be
granted at any option price, have been granted under the Plan. All options must
have an exercise period not to exceed ten years. Options granted to date have
one-year, two-year or four-year vesting periods. The Company’s Incentive Plan
Committee has the power and discretion to, among other things, prescribe the
terms and conditions for the exercise of, or modification of, any outstanding
awards in the event of merger, acquisition or any other form of acquisition
other than a reorganization of the Company under United States Bankruptcy Code
or liquidation of the Company. The Plan also allowed limited transferability of
any non-statutory stock options to legal entities that are 100% - owned or
controlled by the optionee or to the optionee’s family trust. As of December 31,
2004 there were 3,464,210 options outstanding under the Plan.
 
 As of
December 31, 2004 there were an additional 120,000 options outstanding to
directors of the Company of which 60,000 were issued in January 2004. These
options have a weighted average exercise price of $2.32.
 
  F22
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  Transactions
regarding the Plan are as follows:
 
 **2004**
    
    **2003**
    
    **2002**Weighted-
    
    
    
    Weighted-
    
    
    
    Weighted-Average
    
    
    
    Average
    
    
    
    AverageExercise
    
    
    
    Exercise
    
    
    
    ExerciseShares
    
    Price
    
    Shares
    
    Price
    
    Shares
    
    PriceEmployee
      Stock Options:Outstanding
      at January 1
    
    
    2,160,300
    
    $
    1.29
    
    
    2,790,700
    
    $
    1.30
    
    
    2,784,800
    
    $
    1.30Granted
    
    
    1,352,710
    
    
    2.93
    
    
    -
    
    
    -
    
    
    10,000
    
    
    2.28Exercised
    
    
    (8,000
    )
    
    1.75
    
    
    (618,000
    )
    
    1.31
    
    
    -
    
    
    -Cancelled
      or forfeited
    
    
    (40,800
    )
    
    2.60
    
    
    (12,400
    )
    
    1.98
    
    
    (4,100
    )
    
    1.41Outstanding
      at December 31
    
    
    3,464,210
    
    
    1.92
    
    
    2,160,300
    
    
    1.29
    
    
    2,790,700
    
    
    1.30Options
      exercisable at December 31
    
    
    2,136,500
    
    $
    1.29
    
    
    2,144,300
    
    $
    1.29
    
    
    2,762,700
    
    $
    1.29
 
 Summarized
information regarding all employee options outstanding at December 31, 2004, is
as follows:
 
 Weighted-Number
    
    Average
    
    NumberExercise
    
    Outstanding
    
    Remaining
    
    ExercisablePrice
    
    
    At
      Year End
    
    
    Term
      in Years
    
    
    At
      Year End$0.75
    
    
    610,000
    
    
    3.8
    
    
    610,000$1.50
    
    
    1,515,500
    
    
    0.7
    
    
    1,515,500$1.75
    
    
    10,000
    
    
    6.3
    
    
    6,000$2.25
    
    
    5,000
    
    
    0.5
    
    
    5,000$2.93
    
    
    1,323,710
    
    
    8.9
    
    
    -0-3,464,210
    
    
    4.4
    
    
    2,136,500
 
 
 ***Subsidiary
Preference Shares -*** **** In
connection with the granting of a gaming license to CCAL by the Western Cape
Gambling and Racing Board in April 2000, CCAL issued a total of 200 preference
shares, 100 shares each to two minority shareholders. The preference shares are
not cumulative, nor are they redeemable. The preference shareholders are
entitled to receive annual dividends of 20% of the after-tax profits directly
attributable to the CCAL casino business subject to working capital and capital
expenditure requirements and CCAL loan obligations and liabilities as determined
by the directors of CCAL. Should the CCAL casino business be sold or otherwise
dissolved, the preference shareholders are entitled to 20% of any surplus
directly attributable to the CCAL casino business, net of all liabilities
attributable to the CCAL casino business. No preference dividends were paid or
are payable in the year 2004, 2003 or 2002.
  F23
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  ***Accumulated
Other Comprehensive Income*** - As of
December 31, 2004 and 2003, accumulated other comprehensive income is comprised
of the following:
 
 *Amounts
      shown in thousands*
    
    **2004**
    
    **2003**Interest
      rate swap hedge
    $
    (64)
    $
    (232)Foreign
      currency translation adjustment
    
    4,661
    
    2,266**Accumulated
      other comprehensive income**
    **$**
    **4,597**
    **$**
    **2,034**
 
 **7.**
    **SEGMENT
      INFORMATION**
 
 We are
managed in five segments; Cripple Creek, Colorado (formerly Colorado), Central
City, Colorado, South Africa, Cruise Ships, and Corporate and Other operations.
 
 The
operating results of the Cripple Creek, Colorado segment are those of WMCK
Venture Corp. and subsidiaries which own Womacks Casino and Hotel (“Womacks”) in
Cripple Creek, Colorado.
 
 The
operating results of the Central City, Colorado segment are those of Century
Casinos Tollgate, Inc. and subsidiaries which are developing a proposed casino
and hotel.
 
 The
operating results of the South African segment are those of Century Casinos
Africa (Pty) Limited and its subsidiaries, primarily Century Casinos Caledon
(Pty) Limited which owns the Caledon Hotel, Spa and Casino.
 
 Cruise
Ship operations include the revenue and expense of the eight combined shipboard
operations for which we have casino concession agreements.
 
 Corporate
and Other operations include, among other items, the revenue and expense of
corporate gaming projects for which we have secured long-term service contracts.
 
 Earnings
before interest, taxes, depreciation and amortization (EBITDA) is not considered
a measure of performance recognized as an accounting principle generally
accepted in the United States of America. Management believes that EBITDA is a
valuable measure of the relative performance amongst its operating segments. The
gaming industry commonly uses EBITDA as a method of arriving at the economic
value of a casino operation. It is also used by our lending institutions to
gauge operating performance. Management uses EBITDA to compare the relative
operating performance of separate operating units by eliminating the interest
income, interest expense, income tax expense, and depreciation and amortization
expense associated with the varying levels of capital expenditures for
infrastructure required to generate revenue, and the oftentimes high cost of
acquiring existing operations.
 
 
  F24
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  Segment
information as of and for the years ended December 31, 2004, 2003 and 2002 are
presented below.
 
 *Amounts
      shown in thousands*
    **Cripple
      Creek**
    **Central
      City****As
      of and for the Year Ended December 31,**
    **2004**
    **2003**
    **2002**
    **2004**
    **2003**
    **2002****Property
      and equipment, net**
    $
    22,985
    $
    21,392
    $
    21,816
    $
    9,200
    $
    -
    $
    -**Total
      assets**
    $
    33,101
    $
    32,200
    $
    33,047
    $
    9,268
    $
    -
    $
    -**Net
      operating revenue**
    $
    17,561
    $
    18,402
    $
    21,260
    $
    -
    $
    -
    $
    -**Operating
      expenses (excluding property write-**
      **down, other write offs and depreciation)**
    $
    11,052
    $
    10,745
    $
    10,836
    $
    8
    $
    -
    $
    -**Property
      write-down and other write-offs**
    $
    3
    $
    -
    $
    -
    $
    -
    $
    -
    $
    -**Depreciation**
    $
    1,512
    $
    1,349
    $
    1,334
    $
    -
    $
    -
    $
    -**Equity
      in income from unconsolidated**
      **subsidiary**
    $
    -
    $
    -
    $
    -
    $
    -
    $
    -
    $
    -**Earnings
      (loss) from operations**
    $
    4,994
    $
    6,308
    $
    9,090
    $
    (8)
    $
    -
    $
    -**Interest
      income**
    $
    12
    $
    12
    $
    16
    $
    -
    $
    -
    $
    -**Interest
      expense, net, including debt issuance**
      **cost**
    $
    (123)
    $
    1
    $
    269
    $
    -
    $
    -
    $
    -**Other
      income (expense), net**
    $
    -
    $
    30
    $
    9
    $
    -
    $
    -
    $
    -**Equity
      in non-operating items from**
      **unconsolidated subsidiary**
    $
    -
    $
    -
    $
    -
    $
    -
    $
    -
    $
    -**Earnings
      (loss) before income taxes and minority**
      **interest**
    $
    5,129
    $
    6,349
    $
    8,846
    $
    (8)
    $
    -
    $
    -**Income
      tax expense (benefit)**
    $
    1,949
    $
    2,413
    $
    4,069
    $
    -
    $
    -
    $
    -**Minority
      interest in subsidiary (earnings) losses**
    $
    -
    $
    -
    $
    -
    $
    -
    $
    -
    $
    -**Net
      Earnings (loss)**
    $
    3,180
    $
    3,936
    $
    4,777
    $
    (8)
    $
    -
    $
    -**Reconciliation
      to EBITDA:****Net
      earnings (loss)**
    $
    3,180
    $
    3,936
    $
    4,777
    $
    (8)
    $
    -
    $
    -**Interest
      income**
    $
    (12)
    $
    (12)
    $
    (16)
    $
    -
    $
    -
    $
    -**Interest
      expense**
    $
    (123)
    $
    1
    $
    269
    $
    -
    $
    -
    $
    -**Income
      taxes**
    $
    1,949
    $
    2,413
    $
    4,069
    $
    -
    $
    -
    $
    -**Depreciation**
    $
    1,512
    $
    1,349
    $
    1,334
    $
    -
    $
    -
    $
    -**EBITDA**
    $
    6,506
    $
    7,687
    $
    10,433
    $
    (8)
    $
    -
    $
    -
  F25
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  
 *Amounts
      shown in thousands*
    **South
      Africa**
    **Cruise
      Ships****As
      of and for the Year Ended December 31,**
    **2004**
    **2003**
    **2002**
    **2004**
    **2003**
    **2002****Property
      and equipment, net**
    $
    15,592
    $
    14,020
    $
    10,807
    $
    386
    $
    327
    $
    213**Total
      assets**
    $
    24,975
    $
    19,771
    $
    15,004
    $
    1,028
    $
    731
    $
    472**Net
      operating revenue**
    $
    15,334
    $
    11,149
    $
    7,083
    $
    2,769
    $
    1,737
    $
    824**Operating
      expenses (excluding property write-**
      **down, other write offs and depreciation)**
    $
    11,343
    $
    7,893
    $
    5,051
    $
    1,836
    $
    1,175
    $
    538**Property
      write-down and other write-offs net of**
      **(recoveries)**
    $
    (175)
    $
    -
    $
    399
    $
    -
    $
    -
    $
    -**Depreciation**
    $
    1,343
    $
    1,073
    $
    734
    $
    110
    $
    74
    $
    45**Equity
      in income from unconsolidated subsidiary**
    $
    -
    $
    -
    $
    -
    $
    -
    $
    -
    $
    -**Earnings
      (loss) from operations**
    $
    2,823
    $
    2,183
    $
    899
    $
    823
    $
    488
    $
    241**Interest
      income**
    $
    150
    $
    189
    $
    126
    $
    -
    $
    1
    $
    -**Interest
      expense, net, including debt issuance cost**
    $
    1,385
    $
    929
    $
    804
    $
    -
    $
    -
    $
    -**Other
      income (expense), net**
    $
    1
    $
    (7)
    $
    43
    $
    -
    $
    16
    $
    -**Equity
      in non-operating items from**
      **unconsolidated subsidiary**
    $
    -
    $
    -
    $
    -
    $
    -
    $
    -
    $
    -**Earnings
      (loss) before income taxes and minority**
      **interest**
    $
    1,589
    $
    1,436
    $
    264
    $
    823
    $
    505
    $
    241**Income
      tax expense (benefit)**
    $
    316
    $
    487
    $
    416
    $
    25
    $
    150
    $
    88**Minority
      interest in subsidiary (earnings) losses**
    $
    -
    $
    (22)
    $
    (31)
    $
    -
    $
    -
    $
    -**Net
      Earnings (loss)**
    $
    1,273
    $
    927
    $
    (183)
    $
    798
    $
    355
    $
    153**Reconciliation
      to EBITDA:****Net
      earnings (loss)**
    $
    1,273
    $
    927
    $
    (183)
    $
    798
    $
    355
    $
    153**Interest
      income**
    $
    (150)
    $
    (189)
    $
    (126)
    $
    -
    $
    (1)
    $
    -**Interest
      expense**
    $
    1,385
    $
    929
    $
    804
    $
    -
    $
    -
    $
    -**Income
      taxes**
    $
    316
    $
    487
    $
    416
    $
    25
    $
    150
    $
    88**Depreciation**
    $
    1,343
    $
    1,073
    $
    734
    $
    110
    $
    74
    $
    45**EBITDA**
    $
    4,167
    $
    3,227
    $
    1,645
    $
    933
    $
    578
    $
    286
 
 
 
 
 
  F26
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  
 *Amounts
      shown in thousands*
    **Corporate
      & Other**
    **Intersegment
      Elimination****As
      of and for the Year Ended December 31,**
    **2004**
    **2003**
    **2002**
    **2004**
    **2003**
    **2002****Property
      and equipment, net**
    $
    466
    $
    1,057
    $
    1,129
    $
    -
    $
    -
    $
    -**Total
      assets**
    $
    2,832
    $
    2,115
    $
    2,620
    $
    -
    $
    -
    $
    -**Net
      operating revenue**
    $
    1,428
    $
    114
    $
    170
    $
    (1,327)
    $
    -
    $
    -**Operating
      expenses (excluding property write-**
      **down, other write offs and depreciation)**
    $
    3,085
    $
    2,152
    $
    2,172
    $
    (1,327)
    $
    -
    $
    -**Property
      write-down and other write-offs net of**
      **(recoveries)**
    $
    (6)
    $
    (35)
    $
    746
    $
    -
    $
    -
    $
    -**Depreciation**
    $
    28
    $
    172
    $
    191
    $
    -
    $
    -
    $
    -**Equity
      in income from unconsolidated subsidiary**
    $
    55
    $
    -
    $
    -
    $
    -
    $
    -
    $
    -**Earnings
      (loss) from operations**
    $
    (1,624)
    $
    (2,175)
    $
    (2,939)
    $
    -
    $
    -
    $
    -**Interest
      income**
    $
    939
    $
    343
    $
    324
    $
    (933)
    $
    (341)
    $
    (341)**Interest
      expense, net, including debt issuance cost**
    $
    1,258
    $
    1,422
    $
    1,171
    $
    (933)
    $
    (341)
    $
    (341)**Other
      income (expense), net**
    $
    -
    $
    9
    $
    (1)
    $
    -
    $
    -
    $
    -**Equity
      in non-operating items from**
      **unconsolidated subsidiary**
    $
    (5)
    $
    -
    $
    -
    $
    -
    $
    -
    $
    -**Earnings
      (loss) before income taxes and minority**
      **interest**
    $
    (1,948)
    $
    (3,245)
    $
    (3,787)
    $
    -
    $
    -
    $
    -**Income
      tax expense (benefit)**
    $
    (1,541)
    $
    (1,273)
    $
    (2,119)
    $
    -
    $
    -
    $
    -**Minority
      interest in subsidiary (earnings) losses**
    $
    (98)
    $
    -
    $
    -
    $
    -
    $
    -
    $
    -**Net
      Earnings (loss)**
    $
    (505)
    $
    (1,972)
    $
    (1,668)
    $
    -
    $
    -
    $
    -**Reconciliation
      to EBITDA:****Net
      earnings (loss)**
    $
    (505)
    $
    (1,972)
    $
    (1,668)
    $
    -
    $
    -
    $
    -**Interest
      income**
    $
    (939)
    $
    (343)
    $
    (324)
    $
    933
    $
    341
    $
    341**Interest
      expense**
    $
    1,258
    $
    1,422
    $
    1,171
    $
    (933)
    $
    (341)
    $
    (341)**Income
      taxes**
    $
    (1,541)
    $
    (1,273)
    $
    (2,119)
    $
    -
    $
    -
    $
    -**Depreciation**
    $
    28
    $
    172
    $
    191
    $
    -
    $
    -
    $
    -**EBITDA**
    $
    (1,699)
    $
    (1,994)
    $
    (2,749)
    $
    -
    $
    -
    $
    -
 
 
  F27
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 *Amounts
      shown in thousands*
    **Consolidated****As
      of and for the Year Ended December 31,**
    **2004**
    **2003**
    **2002****Property
      and equipment, net**
    $
    48,629
    $
    36,796
    $
    33,965**Total
      assets**
    $
    71,204
    $
    54,817
    $
    51,143**Net
      operating revenue**
    $
    35,765
    $
    31,402
    $
    29,337**Operating
      expenses (excluding property write-**
      **down, other write offs and depreciation)**
    $
    25,997
    $
    21,965
    $
    18,597**Property
      write-down and other write-offs net of**
      **(recoveries)**
    $
    (178)
    $
    (35)
    $
    1,145**Depreciation**
    $
    2,993
    $
    2,668
    $
    2,304**Equity
      in income from unconsolidated subsidiary**
    $
    55
    $
    -
    $
    -**Earnings
      (loss) from operations**
    $
    7,008
    $
    6,804
    $
    7,291**Interest
      income**
    $
    168
    $
    204
    $
    125**Interest
      expense, net, including debt issuance cost**
    $
    1,587
    $
    2,011
    $
    1,903**Other
      income (expense), net**
    $
    1
    $
    48
    $
    51**Equity
      in non-operating items from**
      **unconsolidated subsidiary**
    $
    (5)
    $
    -
    $
    -**Earnings
      (loss) before income taxes and minority**
      **interest**
    $
    5,585
    $
    5,045
    $
    5,564**Income
      tax expense (benefit)**
    $
    749
    $
    1,777
    $
    2,454**Minority
      interest in subsidiary (earnings) losses**
    $
    (98)
    $
    (22)
    $
    (31)**Net
      Earnings (loss)**
    $
    4,738
    $
    3,246
    $
    3,079**Reconciliation
      to EBITDA:****Net
      earnings (loss)**
    $
    4,738
    $
    3,246
    $
    3,079**Interest
      income**
    $
    (168)
    $
    (204)
    $
    (125)**Interest
      expense**
    $
    1,587
    $
    2,011
    $
    1,903**Income
      taxes**
    $
    749
    $
    1,777
    $
    2,454**Depreciation**
    $
    2,993
    $
    2,668
    $
    2,304**EBITDA**
    $
    9,899
    $
    9,498
    $
    9,615
  
 F28
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 **8.**
    **COMMITMENTS,
      CONTINGENCIES AND OTHER MATTERS**
 
 ***Prague,
Czech Republic*** - In
August 2002, Prague, Czech Republic experienced a devastating flood throughout
the city. Although the Casino Millennium property was not damaged, public access
to the city in the vicinity of the casino is severely limited and has negatively
affected and will likely continue to negatively affect the casino operation. As
a result, we, in September 2002, wrote off unpaid technical casino service fees
and loans from Casino Millennium, which resulted in a pre-tax charge of $0.33
million. $0.30 million of the write-off is reported in property write-down and
other write-offs (Note 12) and $26 thousand is reported as a reduction of other
(expense), net. Effective September 1, 2002, technical casino service fees and
interest due to us have not been and will not be accrued until a certainty of
cash flow is attained for Casino Millennium. In 2004, we recovered $43 thousand
of the unpaid technical casino service fees earned prior to the write-off in
September 2002 as reported in Note 12 in addition to the $35 thousand recovered
in 2003.
 
 ***Central
City, Colorado*** **-** On
December 30, 2004 Century Casinos Tollgate Inc. made its cash contribution and
Tollgate Venture Corporation, an unrelated minority partner, contributed assets
to the proposed development of a casino and hotel in Central City, Colorado.
Architectural and engineering agreements, totaling $0.9 million have been signed
in conjunction with the project.
 
 ***Edmonton,
Canada*** - On
February 24, 2005, through our wholly owned subsidiary, Century Resorts
International, we acquired a 56.4% interest in Century Resorts Alberta, Inc. for
approximately, $2.4 million ($3.0 million Canadian dollars.) We had subscribed
to 55% of the shares of CRA in September 2003 but subsequently increased our
participation in the project. The Company’s local partner, 746306 Alberta, Ltd.
contributed a 7.25 acre parcel of land and an existing 40 room hotel for the
remaining 43.6% interest. Century Resorts Alberta, Inc. plans to develop the
Celebrations Casino and Hotel in Edmonton, Alberta, Canada. Completion of this
project is subject to obtaining acceptable project financing. On December 17,
2004 the AGLC granted approval to begin construction of the casino property. As
is customary, the issuance of the license does not occur until completion of
construction and after all federal and provincial legislation, regulation and
policies, and municipal requirements, permits, licenses and/or authorizations
have been met. CRI entered into a long-term agreement to manage the
facility.
 
 ***South
Africa - Gauteng*** - During
September 2001, our subsidiary, Century Casinos Africa entered into an agreement
to secure a 50% ownership interest in Rhino Resort Ltd (Rhino), a consortium
which includes Silverstar Development Ltd. (Silverstar). Rhino submitted an
application for a proposed hotel/casino resort development in that region of the
greater Johannesburg area of South Africa known as the West Rand at a cost of
approximately 400 million Rand ($59.8 million). In November 2001, Rhino was
awarded the sixth and final casino license serving the Gauteng province in South
Africa. In February 2002, Tsogo Sun Holdings (Pty) Ltd (Tsogo), a competing
casino, filed a Review Application seeking to overturn the license award by the
Gauteng Gambling Board (GGB). In September 2002, the High Court of South Africa
overturned the license award. As a result of these developments, in 2002 the
Company recorded a $399 write-off for all advances made, and pre-construction
cost incurred, in conjunction with the Johannesburg project. In November 2002,
and upon the advice of legal counsel, Silverstar, with the support and agreement
of all other parties to the original two applications for the West Rand license,
including our subsidiary, Century Casinos Africa, made representation to the GGB
requesting that the sole remaining license for the
 
 F29
 
 
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 province
of Gauteng be awarded to Silverstar pursuant to its original 1997 application.
The GGB in December 2002 denied Silverstar’s request. As a result, Silverstar on
March 4, 2003 initiated legal action against the GGB in the High Court of South
Africa seeking, inter alia, that the court compel the authorities to award the
license to Silverstar. In October 2003 a judgment was handed down from the High
Court of South Africa compelling the GGB to award a casino license to Silverstar
for the western periphery of metropolitan Johannesburg upon the terms of its
original 1997 application. In November 2003 the GGB’s subsequent application for
leave to appeal the October 2003 judgment was denied by the High Court. In
December 2003, the GGB served notice to petition the South African Supreme Court
of Appeal requesting a further appeal against the judgment of the High Court. In
February 2004, the Supreme Court of Appeal of South Africa granted the GGB’s
request for leave to appeal. Silverstar has informed the Company that the
Supreme Court of Appeal met on February 28, 2005 to review Silverstar’s petition
against the leave to appeal granted to the GGB, at which time the court reserved
judgment. On March 29, 2005, Silverstar reported that the Supreme Court of
Appeal dismissd the appeal of the GGB and upheld the earlier High Court decision
to award the license to Silverstar.
 On
December 1, 2004, CCI announced it agreed to sell its interest, including the
call option with Novomatic AG discussed below, in the Gauteng, South Africa
license application to the Akani Group. The Akani Group has agreed to provide
the funds necessary for Silverstar to complete the project and to acquire all of
the outstanding shares of Silverstar as well as all assets, rights and
obligations of CCI in the project.
 The total
selling price was approximately $8.5 million, or 50.3 million Rand, including a
portion contingent upon future events. An initial payment of approximately $1.7
million, or 10.0 million Rand, was received for both the sale of 100% of the
outstanding common stock of Verkrans Ontwikkelings Maatskappy (Pty) Ltd., a
wholly owned subsidiary of CCA, whose only asset was land, carried at 4.4
million Rand, and previously advanced funds to Silverstar. Also in conjunction
with the agreements, we loaned Silverstar 3.0 million Rand, repayable in six
equal installments with interest. We have, therefore, only recognized net
proceeds of 7.0 million Rand in the transaction. The shares were sold for book
value, less the cost of disposition. We recognized a foreign currency
translation gain of $0.38 million on the disposition of Verkrans, resulting from
the difference between the exchange rate at the time of purchase in March 2002
and the exchange rate at the time of sale in December 2004. The foreign currency
translation gain, less the cost of disposition, or $0.36 million is included in
other operating revenue for 2004. The excess amount was first applied to
receivables which had not been written off, totaling 1.6 million Rand and the
remaining 1.0 million Rand or $0.2 million was applied to advances written off
in 2002 and the recovery is reported in property write-down and other write-offs
for 2004. The balance of the selling price of approximately $6.8 million, or
40.3 million Rand, is contingent on certain approvals being secured by
Silverstar and the Akani Group and has not been recorded by the Company.
 
 In
January 2000, CCI entered into a brokerage agreement with Novomatic AG in which
CCI received an option to purchase seven eighths of the shares that Novomatic AG
purchased in Silverstar. The agreement has subsequently been amended two times,
most recently in October 2004 eliminating the put option held by Novomatic AG,
transferring the rights under the agreement from CCI to our subsidiary, Century
Resorts Ltd. and amending the call option under which we can require Novomatic
AG to sell seven eighths of its shares in Silverstar to Century Resorts Ltd. The
call option can be exercised at any time within three years of the amended and
restated agreement. The right to the equity option was transferred to the Akani
Group in conjunction with the sale in December 2004.
 ******
 ***Other
Properties*** - We are
currently holding non-operating casino property and land for sale in Wells,
Nevada. The property and land was acquired in 1994 from an unaffiliated party at
a cost of $0.92 million. Included in property write-down and other write-offs
for 2002, is a pre-tax charge in the amount of $0.45 million, to reduce the
value
 
 F30
 **CENTURY CASINOS, INC. AND SUBSIDIARIES**
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 ******
 of the
property to its fair value, less costs to sell, based on an assessment of the
property (Note 12).  The carrying value of the property and land as of
December 31, 2004 and 2003 is based on the appraised value of the land less the
cost to sell.
 
 ***Employee
Benefit Plan*** - In
March 1998, we adopted a 401(k) Savings and Retirement Plan (the “Plan”). The
Plan allows eligible employees to make tax-deferred contributions that are
matched by the Company up to a specified level. The Company contributed $14
thousand, $17 thousand and $21 thousand to the Plan in 2004, 2003 and 2002,
respectively.
 
 ***Operating
Lease Commitments and Purchase Options*** **-** We have
entered into certain noncancelable operating leases for real property and
equipment. Rental expense was $0.43 million in 2004, $0.40 million in 2003 and
$0.35 million in 2002.
 
 In June
1998, we began leasing parking spaces from the City of Cripple Creek under a
five-year agreement which requires annual lease payments of $90 thousand. We may
purchase the property for $3.25 million, less cumulative lease payments ($0.59
million through December 31, 2004), at any time during the lease term. In
February 2000, the agreement was amended to extend the term to
2010.
 
 I n
March 1999, we entered into a purchase option agreement for a property in
Cripple Creek, Colorado, situated across the street from its Womacks/Legends
Casino on Bennett Avenue. The agreement, as amended on February 7, 2000,
provides for an option period through March 31, 2004 and an exercise price of
$1.50 million, less 50% of cumulative monthly option payments. In January 2004,
we sold the option to an unrelated party for a sum of $0.20 million. As a result
of the transaction, we recognized a pre-tax gain of $35 thousand in
2004.
 
 We hold a
subleasehold interest in the real property and improvements located at 220 East
Bennett Avenue. The sublease, as assigned to WMCK-Acquisition Corp., provides
for monthly rental payments of $16 thousand, and expires on June 20, 2005. We
gave notice that we intend to exercise the option to acquire the property at the
expiration of the sublease at an exercise price of $1.50 million.
 
 Following
is a summary of operating lease commitments as of December 31,
2004.
 *Amounts
shown in thousands.*
 Year ending December
      31,
    **Amount**2005
    $4592006
    
    1562007
    
    922008
    
    902009
    
    90Thereafter
    
    37Total
    $
    924
 
 ***Stock
Redemption Requirement*** -
Colorado gaming regulations require the disqualification of any shareholder who
may be determined by the Colorado Division of Gaming to be unsuitable as an
owner of a Colorado casino. Unless a sale of such common stock to an acceptable
party could be arranged, we would repurchase the common stock of any shareholder
found to be unsuitable under the regulations. We could effect the repurchase
with cash, Redemption Securities, as such term is defined in our Certificate of
Incorporation and
having terms and conditions as shall be approved by the Board of
Directors , or a
combination thereof.
 
 
 ***South
African Tax Audit*** - The
Company’s Return of Income: Company and Close Corporation filed for South Africa
for 2000 and 2001 is being audited by the South African Revenue Service. We do
not expect any settlement that might result from the audit to be materially in
excess of amounts accrued.
  F31
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 **9.**
    **INCOME
      TAXES**
 
 The
provision for income tax expense (benefit) consists of the
following:
 
 *Amounts
      shown in thousands*
    
    **2004**
    
    **2003**
    
    **2002**Federal
      - Current
    
    $
    (308
    )
    $
    948
    
    $
    1,740Federal
      - Deferred
    
    
    604
    
    
    203
    
    
    55Provision
      for federal income taxes
    
    
    296
    
    
    1,151
    
    
    1,795State
      - Current
    
    
    (45
    )
    
    128
    
    
    235State
      - Deferred
    
    
    82
    
    
    28
    
    
    8Provision
      for state income taxes
    
    
    37
    
    
    156
    
    
    243Foreign
      - Current
    
    
    548
    
    
    502
    
    
    401Foreign
      - Deferred
    
    
    (132
    )
    
    (32
    )
    
    15Provision
      for foreign income taxes
    
    
    416
    
    
    470
    
    
    416Total
      Provision for income taxes
    
    $
    749
    
    $
    1,777
    
    $
    2,454
 
 Reconciliation
of federal income tax statutory rate and our effective tax rate is as
follows:
 
 **2004**
    
    **2003**
    
    **2002**Federal
      income tax statutory rate
    
    34.0%
    
    34.0%
    
    34.0%State
      income tax (net of federal benefit)
    
    0.6%
    
    2.3%
    
    2.9%Non-deductible
      write-offs (recoveries) and expenses
    
    (0.9%)
    
    -
    
    2.7%Effect
      of foreign currency translation adjustment for sale of
      Verkrans
    
    (2.0%)
    
    -
    
    -Foreign
      income taxes
    
    (16.1%)
    
    -
    
    1.7%Permanent
      and other items
    
    (2.2%)
    
    (1.1%)
    
    2.8%Total
      Provision for income taxes
    
    13.4%
    
    35.2%
    
    44.1%
 
  F32
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  The
provision for income taxes differs from the expected amount of income tax
calculated by applying the statutory rate to pretax income as follows:
 
 *Amounts
      shown in thousands*
    
    **2004**
    
    **2003**
    
    **2002**Expected
      income tax provision at statutory rate of 34%
    
    $
    1,899
    
    $
    1,715
    
    $
    1,891Increase
      (decrease) due to:Effect
      of foreign operations taxed at different rates
    
    
    (900
    )
    
    1
    
    
    92State
      income taxes, net of federal benefit
    
    
    35
    
    
    117
    
    
    160Effect
      of non-deductible write offs (recoveries) & expenses
    
    
    (52
    )
    
    -
    
    
    152Effect
      of foreign currency translation adjustment for sale of
      Verkrans
    
    
    (114
    )
    
    -
    
    
    -Other,
      net
    
    
    (119
    )
    
    (56
    )
    
    159Provision
      for income taxes
    
    $
    749
    
    $
    1,777
    
    $
    2,454
 
 Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. Deferred tax assets and liabilities at
December 31, 2004 and 2003, consist of the following:
 
 *Amounts
      shown in thousands*
    
    
    **2004**
    
    
    **2003**Deferred
      tax assets (liabilities) -U.S.
      federal and state:Property
      and equipment
    
    $
    214
    
    $
    642Amortization
      of goodwill for tax
    
    
    (667
    )
    
    (440
    )Write-down
      of non-operating casino property
    
    
    169
    
    
    169Swap
      agreements not deducted for tax
    
    
    -
    
    
    138Other
      non-current tax assets (liabilities)
    
    
    50
    
    
    85Tax
      assets (liabilities) - non-current
    
    
    (234
    )
    
    594Accrued
      liabilities and other - current
    
    
    97
    
    
    56(137
    )
    
    650Deferred
      tax assets and (liabilities) - foreign:Property
      and equipment - non-current
    
    
    207
    
    
    72Accrued
      liabilities and other
    
    
    108
    
    
    83Prepaid
      expenses
    
    
    (20
    )
    
    (28
    )Tax
      assets and (liabilities) - current
    
    
    88
    
    
    55295
    
    
    127Net
      deferred tax assets
    
    $
    158
    
    $
    777
 
  F33
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  **10.**
    **GOODWILL
      AND OTHER INTANGIBLE ASSETS**
  Changes
in the carrying amount of goodwill for the years ended December 31, 2004 and
2003 are as follows by segment:
 *Amounts
      shown in thousands*
    
    
    Cripple
      Creek, CO
    
    
    South
      Africa
    
    
    Corp
      & Other
    
    
    TotalBalance
      as of January 1, 2003
    
    $
    7,232
    
    $
    667
    
    $
    -
    
    $
    7,899Effect
      of foreign currency translation
    
    
    -
    
    
    189
    
    
    -
    
    
    189Balance
      as of December 31, 2003
    
    
    7,232
    
    
    856
    
    
    -
    
    
    8,088Goodwill
      recorded in equity investment in Casino Millennium
    
    
    -
    
    
    -
    
    
    565
    
    
    565Effect
      of foreign currency translation
    
    
    -
    
    
    153
    
    
    39
    
    
    192Balance
      as of December 31, 2004
    
    $
    7,232
    
    $
    1,009
    
    $
    604
    
    $
    8,845
 
 Intangible
assets, not subject to amortization, include casino licenses as follows as of
December 31:
 
 *Amounts
      shown in thousands*
    
    **2004**
    
    **2003**Century
      Casinos Caledon (Pty) Ltd. - South Africa
    
    $
    2,036
    
    $
    1,665The
      Celebrations Casino and Hotel - Canada
    
    
    108
    
    
    95Tollgate
      - Central City, Colorado
    
    
    13
    
    
    -**Total
      casino licenses**
    
    $
    2,157
    
    $
    1,760
  **11.**
    **OTHER
      INCOME, NET**
 
 Other
income, net, consists of the following:
 **For
      the Year Ended December 31,***Amounts
      shown in thousands:*
    
    **2004**
    
    **2003**
    
    **2002**Interest
      income
    $
    168
    $
    204
    $
    125Foreign
      currency exchange gains
    
    1
    
    20
    
    -Gain
      on disposal of assets
    
    -
    
    28
    
    34Other
    
    -
    
    -
    
    17$
    **169**
    **$**
    **252**
    **$**
    **176**
 
 
  F34
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  **12.**
    **PROPERTY
      WRITE-DOWN AND OTHER WRITE-OFFS**
 
 Property
      write-down and other write-offs consist of the
  following:
 
 *Amounts
      shown in thousands*
    **For
      the Year Ended December 31,****2004**
    
    **2003**
    
    **2002**Write
      down non-operating casino property and land held for sale in Nevada (Note
      8)
    $
    -
    $
    -
    $
    447Pre-opening
      cost related to the casino development in Central City,
      Colorado
    
    37
    
    -
    
    -Write
      off, (recoveries) of receivables and advances related to a casino
      acquisition project and
      casino properties under management (Note 8) (1)
    
    (218)
    
    (35)
    
    698Other
    
    3
    
    -
    
    -**$**
    **(178)**
    **$**
    **(35)**
    **$**
    **1,145**
 
 (1)
    Recovery
      in 2004 is primarily $0.2 million against write off of advances for
      Johannesburg. Primarily $0.4 million for Johannesburg (Note 1) and $0.3
      million for Prague (Note 8) for 2002.
 
 **13.**  **EARNINGS
PER SHARE**
 Basic and
diluted earnings per share for the years ended December 31, 2004, 2003 and 2002
were computed as follows:
 
 *Amounts
      shown in thousands, except for share data*
    
    **2004**
    
    **2003**
    
    **2002**Basic
      Earnings Per Share:Net
      earnings
    $
    4,738
    $
    3,246
    $
    3,079Weighted
      average common shares
    
    13,683,016
    
    13,633,092
    
    13,680,884Basic
      earnings per share
    $
    0.35
    $
    0.24
    $
    0.23Diluted
      Earnings Per Share:Net
      earnings available to common shareholders
    $
    4,738
    $
    3,246
    $
    3,079
 
 Weighted
      average common shares
    
    13,683,016
    
    13,633,092
    
    13,680,884Effect
      of dilutive securities:Stock
      options and warrants
    
    2,158,207
    
    1,154,905
    
    1,430,823Dilutive
      potential common shares
    
    15,841,223
    
    14,787,997
    
    15,111,707Diluted
      earnings per share (*)
    $
    0.30
    $
    0.22
    $
    0.20
 
 * There
were no options or warrants excluded from the computation of the dilutive
earnings per share.
 
 ****
 F35
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  **14.**  **PROMOTIONAL
ALLOWANCES**
 
 Promotional
allowances presented in the consolidated statement of earnings for 2004, 2003
and 2002 include the following:
 
 *Amounts
      shown in thousands*
    
    **2004**
    
    **2003**
    
    **2002**Food
      & Beverage and Hotel Comps, at retail (1)
    $
    1,452
    $
    1,369
    $
    1,314Free
      Plays or Coupons
    
    1,569
    
    1,882
    
    1,648Player
      Points
    
    1,269
    
    1,406
    
    1,462**Total
      Promotional Allowances**
    **$**
    **4,290**
    **$**
    **4,657**
    **$**
    **4,424**
 
 (1) The
estimated cost of such complimentary services is charged to casino operations,
and was $1.08 million, $0.91 million and $0.95 million in 2004, 2003 and 2002,
respectively.
 
 **15.**
    **UNAUDITED
      SUMMARIZED QUARTERLY DATA**
      ****
 Summarized
quarterly financial data for 2004, 2003 and 2002 is as follows:
 
 *Amounts
      shown in thousands except share information:*
    1st
      Quarter
    2nd
      Quarter
    3rd
      Quarter
    4th
      QuarterYear
      ended December 31, 2004Net
      operating revenue (3) (4)
    $
      8,164
    $
      8,853
    $
      9,671
    $
      9,077Earnings
      from operations (3) (4)
    $
      1,743
    $
      1,858
    $
      2,102
    $
      1,305Net
      earnings (3)
    $
      904
    $
      1,147
    $
      1,233
    $
      1,454Basic
      earnings per share (2)
    $
      0.07
    $
      0.08
    $
      0.09
    $
      0.11Diluted
      earnings per share (2)
    $
      0.06
    $
      0.07
    $
      0.08
    $
      0.09
 
 Year
      ended December 31, 2003Net
      operating revenue
    $
      7,381
    $
      7,553
    $
      8,278
    $
      8,190Earnings
      from operations
    $
      1,698
    $
      1,667
    $
      1,776
    $
      1,663Net
      earnings
    $
      755
    $
      751
    $
      914
    $
      826Basic
      earnings per share (2)
    $
      0.06
    $
      0.06
    $
      0.07
    $
      0.06Diluted
      earnings per share (2)
    $
      0.05
    $
      0.05
    $
      0.06
    $
      0.06Year
      ended December 31, 2002Net
      operating revenue
    $
      6,892
    $
      7,429
    $
      7,885
    $
      7,131Earnings
      from operations
    $
      1,973
    $
      2,155
    $
      1,281
    $
      1,882Net
      earnings (1)
    $
      925
    $
      1,103
    $
      453
    $
      598Basic
      earnings per share (2)
    $
      0.07
    $
      0.08
    $
      0.03
    $
      0.04Diluted
      earnings per share (2)
    $
      0.06
    $
      0.07
    $
      0.03
    $
      0.04
 
 (1)
    We
      are currently holding non-operating casino property and land for sale in
      Wells, Nevada. In the 3rdquarter of 2002 the Company reduced the value of the property to its fair
      value by $0.45 million. See Note 8, Commitments, Contingencies and Other
      Matters, to the Consolidated Financial Statements for complete
      disclosure.
 
 In the
3 rd quarter
of 2002, we recorded a $0.30 million write-off for unpaid technical casino
service fees and loans related to its operations in Prague, Czech Republic, as
devastating floods in Prague, Czech Republic in August 2002 had an adverse
impact on casino operation. See Note 8, Commitments, Contingencies and Other
Matters, to the Consolidated Financial Statements for complete disclosure.
 
 F36
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 In the
3 rd quarter
of 2002, the Company recorded a $0.38 million write-off for all advances made,
and pre-construction cost incurred, in conjunction with the Johannesburg
project. See Note 8, Commitments, Contingencies and Other Matters, to the
Consolidated Financial Statements for complete disclosure. $22 thousand in
additional expenses related to the Johannesburg project were written off in the
4 th quarter
of 2002, bringing the total to $0.40 million.
 
 (2)
    Sum
      of quarterly results may differ from annual results presented in Note 13,
      Earnings per Share, to the Consolidated Financial Statements, and the
      Statement of Earnings because of rounding.
  (3)
    In
      the 4thquarter of 2004 we recognized a $0.36 million gain from the sale of
      Verkrans which is more fully described in Note 8 and reported in net
      operating revenue. We also recovered approximately $0.2 million in
      receivables previously written off in 2002 which is reported in earnings
      from operations.
  (4)
    For
      the 1st, 2nd, and 3rd quarters of 2004, certain reclassifications have
      been made to net operating revenue and earnings from operations to conform
      to the 4th quarter presentation.
  **16.**
    **TRANSACTIONS
      WITH RELATED PARTIES**
 
 At
December 31, 2003, we had an unsecured note payable that matured and was paid on
April 1, 2004, in the principal amount of $0.38 million to Thomas Graf, a
founding stockholder of the Company (Note 5).
 
 We have
entered into compensation agreements with certain members of the Board of
Directors. Specifically, we have entered into separate management agreements
with Flyfish Casino Consulting AG, a management company controlled by Erwin
Haitzmann and with Focus Casino Consulting AG, a management company controlled
by Peter Hoetzinger, to secure the services of each director, respectively.
Included in the consolidated statements of earnings for the years ended December
31, 2004, 2003 and 2002 are payments to Flyfish Casino Consulting in the amounts
of $0.46 million, $0.41 million and $0.39 million, respectively, and payments to
Focus Casino Consulting in the amounts of $0.46 million, $0.37 million, $0.36
million, respectively.
 
 Erwin
Haitzmann, Peter Hoetzinger and their respective family trusts own a minority
interest in CRL. Collectively they own approximately 3.5% of the outstanding
shares of common stock .
 
 Effective
May 1, 2003, James Forbes, resigned as a member of the Company’s Board of
Directors, but will continue as a member of the Board of Directors of Century
Casinos Caledon Proprietary Limited, and will focus his attention on the project
in Johannesburg, in the Gauteng province of South Africa, pursuant to the terms
of a consulting agreement between Century Casinos, Inc. and Respond Limited, a
management company controlled by James Forbes. Under the terms of the Agreement
of Termination of Management Agreement Incorporating New Consulting Agreement
(“Agreement”) dated May 1, 2003, the Company’s obligation to make monthly
payments of $10 thousand to Respond Limited ceased on December 31, 2003. In
addition, the Company and James Forbes completed a series of stock transactions
which are fully described in Note 6. During 2004, James Forbes loaned $90
thousand to the Company to secure a note to Silverstar. The Company repaid the
loan in December 2004.
 
 There
have been no transactions with management, except as otherwise disclosed
herein.
  F36
 **CENTURY
CASINOS, INC. AND SUBSIDIARIES**
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 **17.**
    **SUBSEQUENT
      EVENTS**
 
 On April 8, 2005, CC Tollgate LLC
entered into a loan agreement with Colorado Business Bank securing $5.0 million
to finance the predevelopment construction costs associated with the development
of a casino in Central City, Colorado. Under the terms of the agreement, the
loan will mature on October 4, 2005 at which time the principal is due with
interest calculated at prime plus 0.5%. At the inception of the loan prime is
5.75%. The note is secured by the existing property and improvements and by
commercial guarantees provided by Century Casinos, Inc. and its partner Tollgate
Venture LLC.