UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K





þ           ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934


For the
fiscal year ended December 31,
2008





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.)


2860 South Circle Drive,
Suite 350, 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:


Title of Each Class
              Name of Each Exchange on Which
      RegisteredCommon
      Stock, $0.01 Per Share Par Value
              NASDAQ
      Stock Market, Inc.





Securities
Registered Pursuant to Section 12(g) of the Act:


None





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes  ̈  No
þ





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes
 ̈  No
þ





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





Indicate
by check mark 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. þ





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


Large
      accelerated filer  ̈
            
            Accelerated
      filer þ
            
            Non-accelerated
      filer  ̈
            
            Smaller
      reporting company  ̈(Do
      not check if a smaller reporting company)





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





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant as of June 30, 2008, based upon the closing
price of $3.28 for the Common Stock on the NASDAQ Capital Market on that date,
was $69,018,964. For purposes of this calculation only, officers and directors
of the registrant are considered affiliates.





As of
February 28, 2009, the registrant had 23,884,067 shares of Common Stock
outstanding.





DOCUMENTS
INCORPORATED BY REFERENCE: PartIIIincorporates by referencetotheregistrant’sdefinitive Proxy
Statement for its
2009Annual Meeting of Stockholders to
be filed with the Commission within 120 days of December 31,
2008.


INDEX


Part
      I
            
            PageItem 1.
            Business
            3Item 1A.
            Risk
      Factors
            14Item 1B.
            Unresolved
      Staff Comments
            22Item 2.
            Properties
            23Item 3.
            Legal
      Proceedings
            24Item 4.
            Submission
      of Matters to a Vote of Security Holders
            24Part
      IIItem 5.
            Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
            25Item 6.
            Selected
      Financial Data
            27Item 7.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            28Item 7A.
            Quantitative
      and Qualitative Disclosures About Market Risk
            49Item 8.
            Financial
      Statements and Supplementary Data
            50Item 9.
            Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure
            50Item 9A.
            Controls
      and Procedures
            50Item 9B.
            Other
      Information
            51





Part
      IIIItem 10.
            Directors,
      Executive Officers and Corporate Governance
            52Item 11.
            Executive
      Compensation
            52Item 12.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
            52Item 13.
            Certain
      Relationships and Related Transactions, and Director
      Independence
            53Item 14.
            Principal
      Accounting Fees and Services
            53Part
      IVItem 15.
            Exhibits,
      Financial Statement Schedules
            54SIGNATURES
            60


-2-


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 Exchange Act of 1934, as amended (“the Exchange Act”), and
Section 27A of the Securities Act of 1933, as amended (“the Securities Act”),
and, as such, may involve risks and uncertainties. All statements included or
incorporated by reference in this report, 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 this report are subject to additional risks and
uncertainties further discussed under Item 1A. “Risk Factors” 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 report. 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.





PART
I





As used
in this report, the terms “Company,” “CCI,” “we,” “our,” or “us” refer to
Century Casinos, Inc. and its consolidated subsidiaries, taken as a whole,
unless the context otherwise indicates.





This
report includes amounts translated into U.S. dollars from certain foreign
currencies. For a description of the currency conversion methodology and
exchange rates used for certain transactions, see Note 2 to the Consolidated
Financial Statements included elsewhere in this report. The following
information should be read in conjunction with the Consolidated Financial
Statements and notes thereto included in Part II, Item 8, “Financial Statements
and Supplementary Data” of this Annual Report on Form 10-K.





Item
1.  Business.





General





Century
Casinos, Inc. (“CCI”), founded in 1992, is an international casino entertainment
company that develops and operates gaming establishments and related lodging and
restaurant facilities around the world.





Our main
goal is to increase the Company’s profitability. Our strategy for obtaining this
goal focuses on the development and operation of mid-size regional casinos
(i.e., in the context of the U.S. casino market, up to 1,500 gaming positions)
that cater mostly to the local population. We believe that mid-size regional
casinos offer attractive opportunities for the following reasons:





-
            Due
      to the focus on local customers from the surrounding region, most of our
      casinos generate a high proportion of repeat
  business;


-
            Mid-size
      regional casinos are less affected by trends in international travel;
      and


-
            Mid-size
      regional casinos have smaller capital expenditure requirements than larger
      casinos.





-3-


From time
to time, we may sell existing businesses in order to raise capital for future
acquisitions or to improve other locations. On December 5, 2008, we entered into
an agreement to sell the Century Casino Millennium, for approximately $2.3
million (CZK 22.0 million plus $1.2 million).  Approximately $1.5
million (CZK 22.0 million plus $0.4 million) was paid to us at closing on
February 11, 2009, with the balance payable over the next 12
months.





On
December 19, 2008, a subsidiary of ours entered into an agreement to sell all of
the outstanding shares of Century Casinos Africa (Pty) Limited (“CCA”) for a
gross selling price of ZAR 460.0 million (approximately $49.2 million) less the
balance of third party South African debt and other agreed to amounts. Net
proceeds from the transaction are expected to be approximately ZAR 357.3 million
(approximately $38.3 million) and are payable at closing, which is expected to
occur in the first half of 2009. CCA owns the Caledon Hotel, Spa & Casino
and 60% of the Century Casino & Hotel in Newcastle, Africa. The closing of
the transaction is subject to customary conditions including, but not limited
to, approvals by the Western Cape Gambling and Racing Board, the KwaZulu-Natal
Gambling Board and other regulatory approvals.





The
Century Casino Millennium and the operations of CCA are reported as discontinued
operations throughout this report.





Overview of Continuing
Operations





As of
December 31, 2008, through various subsidiaries of ours, we own, operate or
manage the following properties:





Century
Casino & Hotel – Edmonton, Alberta, Canada





In
November 2006, we opened the casino portion of the Century Casino & Hotel in
Edmonton, Alberta, Canada. The 26-room hotel opened in March 2007. Edmonton is
the capital of the Canadian province of Alberta and is the second largest city
in Alberta, serving a metropolitan area of over one million people. The facility
has 658 slot machines, 35 table games (which includes a 24-hour poker room), 26
hotel rooms, a 400 seat showroom, 4 food/beverage outlets and a lounge with live
music.





Womacks
Casino & Hotel – Cripple Creek, Colorado





Since
1996, we have owned and operated Womacks Casino & Hotel (“Womacks”) in
Cripple Creek, Colorado, located approximately 45 miles southwest of Colorado
Springs. Womacks has 437 slot machines (all of which are Ticket In/Ticket out
(“TITO”) machines), 4 limited stakes gaming tables, 21 hotel rooms, 2 bars and a
restaurant. In addition, we also presently own or lease 400 parking spaces near
the casino. Womacks has 150 feet of frontage on Bennett Avenue, the main gaming
thoroughfare in Cripple Creek.





During 2008, we completed
a$1.8million renovationofthe casino, which management believes
hasupgraded the
gaming floor and dining area.





Century Casino & Hotel – Central
City, Colorado





In July
2006, as part of a joint venture, we opened the Century Casino & Hotel in
Central City, Colorado, located approximately 35 miles west of Denver. The
facility has 525 TITO slot machines, 9 table games (three of which are
player-banked poker tables), 26 hotel rooms, 2 bars, 2 restaurants and a
500-space on-site covered parking garage. The Century Casino & Hotel is
located in Central City at the end of the Central City Parkway, a four lane
highway connecting I-70, the main east/west interstate in Colorado, to Central
City. On December 31, 2007, we acquired the remaining 35% interest in the joint
venture for approximately $3.3 million, which included $1.2 million towards the
assumption of an outstanding loan and accrued interest.





-4-


Casinos
Poland





In March
2007, we acquired 33.3% of the outstanding shares issued by Casinos Poland Ltd
(“CPL”). CPL owns and operates seven full casinos and one slot casino in Poland.
CPL has been operating since 1989.  We account for this investment
under the equity method.





Cruise
Ships





In
addition to our land-based casinos, we also operate four cruise ship-based
casinos aboardthe
Silver Cloud (a Silversea Cruise vessel) and the vessels of Oceania Cruises
(“Oceania”). We operate these casinos pursuant to casino concessionaire
agreements that give us the exclusive right to install and operate casinos
aboard these vessels. The agreements with Oceania and Silversea also give us the
right of first refusal to install casinos aboard any new ships built or acquired
by these companies. The agreements with the cruise ship operators provide for
cancellation by the operators with a limited notice period in the event of our
default under the respective agreements. We have a total of 123 slots machines
and 18 table games aboard the 4 cruise ships.




On
November 24, 2008, we entered into an exclusive, long-term agreement with TUI
Cruises GmbH (“TUI Cruises”), a joint venture between Royal Caribbean Cruise
Line and German tour operator TUI Reisen, whereby we have agreed to operate
casinos on all cruise ships that TUI Cruises will put into service before
December 31, 2012. The first vessel is anticipated to go into service in May
2009.




Overview of Discontinued
Operations





The
Caledon Hotel, Spa & Casino – Caledon, South Africa





The
Caledon Hotel, Spa & Casino is located in Caledon, South Africa. The town of
Caledon lies on the N2 highway – the main thoroughfare between Cape Town and
Durban – and is known for its wildflower shows, wineries and the natural
historic hot springs located on the Caledon Hotel, Spa & Casino site. The
Caledon Hotel, Spa & Casino has 370 slot machines, 8 table games, 81 hotel
rooms and 3 restaurants.





Century Casino Newcastle – Newcastle,
South Africa





In
December 2006, as part of a joint venture of which we own 60%, we opened the
Century Casino & Hotel in Newcastle, South Africa. The greater Newcastle
area, with approximately 500,000 people, is situated halfway between
Johannesburg and Durban in the northwestern portion of KwaZulu-Natal, which is
South Africa’s most populated province with over ten million people. The
facility has 250 slot machines, 7 table games, 40 hotel rooms, 1 restaurant and
1 bar.





Pursuant
to a casino services agreement, we currently manage the properties for a payment
based on a percentage of the facility’s total revenues and a percentage of
EBITDA (earnings before interest, tax, depreciation and amortization). The
casino services agreement has been sold in connection with the sale of
CCA.





Century
Casino Millennium – Prague, Czech Republic





The
Century Casino Millennium, located in the 293-room Marriott Hotel in Prague,
Czech Republic, opened in July 1999. The casino operates with 30 slot machines
and 13 table games.




-5-


Additional
Company Projects and Other Developments





In
addition to the operations described above, we have a number of potential gaming
projects that we are currently researching. Along with the capital needs of
these potential projects, there are various other risks which, if they
materialize, could affect our ability to complete a proposed project or
eliminate its feasibility altogether. For more information on these and other
risks related to our business, see Item 1A, “Risk Factors”.





Marketing
and Competition





Our
marketing focuses on local facts and circumstances of the respective market
areas in which we operate. Our primary marketing strategy centers on attracting
new customers and rewarding repeat customers through our player’s 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. Those who qualify for VIP status receive additional
benefits compared to regular club membership, such as invitations to exclusive
VIP events. Our player’s club cards allow us to update our database and track
member gaming preferences, maximum, minimum, and total amounts wagered and
frequency of visits. All visitors to our properties are offered the opportunity
to join our player’s club.





Edmonton, Canada – The
Century Casino & Hotel in Edmonton, Canada has seven competitors (six
casinos and one combined racetrack/casino) in the Edmonton market. Our casino is
one of two casinos in Edmonton that has both a hotel and showroom. Aside from
another casino that is part of a shopping mall, our casino is the only casino
with a heated parking garage. Our main marketing activity focuses on branding
the casino, through various forms of media, as the ultimate entertainment
destination and a provider of sophisticated, interactive and intimate gaming
experience. The casino is located in a densely populated area with the closest
competing casino approximately ten minutes away. With the exception of an Indian
gaming operation, smoking has been banned in all Edmonton casinos.





Colorado – Cripple Creek,
Central City and Black Hawk are the only three Colorado cities, exclusive of two
Indian gaming operations in southwestern Colorado, where casino gaming is legal.
As of December 31, 2008, there were 16 active casino licensees operating in
Cripple Creek, 6 active casino licensees operating in Central City and 18 active
casino licensees operating in Black Hawk. Cripple Creek, located approximately
45 miles southwest of Colorado Springs, and Central City and Black Hawk, located
approximately 35 miles west of Denver, are historic mining towns dating back to
the late 1800’s that have developed into tourist stops.





The
cities of Black Hawk and Central City are adjoining small mountain tourist
towns. Black Hawk, which we believe does not maintain the same rigorous
historical preservation standards as Central City, has been able to successfully
attract major casino industry leaders with the ability to offer larger hotels,
upscale dining facilities, performance centers and spa facilities.The casino operations in
Black Hawk constitute a large portion of the overall casino gaming market in
Colorado (exclusive of the Indian gaming operations), with 58% of the total
gaming devices and generating approximately 71% of the total gaming revenues
from non-Indian casinos in 2008.  We believe that our casino in Central
City, which is located at the end of the Central City Parkway and close to the
entrance of Black Hawk, can potentially attract additional customers from the
city of Black Hawk.




-6-


Unlike
other regions in which we operate, gaming in Colorado is “limited stakes,” which
restricts any single wager to a current maximum of five dollars. On November 4,
2008, Amendment 50 was approved by Colorado voters, giving
the electorate in Black Hawk, Central City and Cripple Creek the option to
approve raising the maximum wager limit up to $100, add the games of craps and
roulette, and allow 24-hour gaming effective July 2, 2009. Voters in all three
towns have approved the changes for casinos in their communities.





Our
marketing objective is to create public awareness by positioning our casinos as
the premier provider of personal service, convenient parking, the latest gaming
products and superior food quality.





Management
believes that an integral component in attracting gaming patrons to our Colorado
casinos is the availability of adequate, nearby parking and lodging. At Womacks,
we presently own or lease a total of 400 parking spaces. We believe we have
sufficient close proximity parking. However, covered parking garages provided by
three of our competitors in Cripple Creek impact our casino, particularly during
inclement weather. Three of our competitors also have a larger number of hotel
rooms, providing them with an advantage during inclement weather and the peak
tourist season. Our casino in Central City has a 500-space covered parking
garage offering free public parking.





During
2008, we completeda
$1.8 million renovation of Womacks to upgrade the gaming floor and dining
area.Future
renovations, which will be dependent on market development, may include
upgrading existing hotel rooms, increasing the number of hotel rooms, expanding
the gaming floor space to the rear of the property and adding a covered parking
garage.





As
competition in Colorado is intense, we allocate between 20% to 35% of each
casino’s gaming revenues to marketing measures. In addition to our player’s
clubs, we also have various cash and prize promotions and market our casinos
through a variety of media outlets including radio, print and billboard
advertising.





In 2008,
a large casino opened in Cripple Creek with approximately 625 slot machines, 14
table games and 67 offsite hotel rooms, further diluting the Cripple Creek
market. We believe that the opening of this casino has had an adverse impact on
our casino revenue in Cripple Creek.





Casinos Poland – Casinos
Poland competes with 20 casinos and 200 slot casinos located throughout Poland.
The Polish government generally forbids the marketing of gaming activities
outside of a casino, but the marketing of entertainment is permissible.
Therefore, Casino Poland’s marketing effort focuses on billboard advertising
that focuses on the entertainment possibilities at the casinos, such as concerts
and parties. Casinos Poland also relies on the locations of its casinos, which
are in major cities throughout Poland, to attract customers.





Cruise Ships –Market data is not
available for the cruise ships. We rely on each cruise ship’s marketing efforts
to attract on board customers to our casino.





South Africa (discontinued
operation)–The
Caledon Hotel, Spa & Casino is one of five casinos currently operating in
the Western Cape province, which has a population of approximately four million.
The Western Cape Gambling and Racing Act, as amended, only permits five casinos
in the Western Cape. Although the competition is limited by the number of
available casino licenses, and the casinos are geographically distributed,
management believes that the Caledon Hotel, Spa & Casino faces its most
intense competition from one larger casino located in Cape Town and from a
casino in Worcester (both towns are approximately a one hour drive from the
Caledon).




-7-


Our
marketing strategy at the Caledon, in addition to a player’s club, focuses on an
array of amenities provided at the resort to our guests as a complement to the
gaming experience. These currently include an 81-room hotel, a variety of dining
experiences and the historic mineral hot spring and spa.





The
Century Casino & Hotel in Newcastle, South Africa is situated halfway
between Johannesburg and Durban in the northwestern province of KwaZulu-Natal,
which is South Africa’s most populated province with over ten million people.
The casino is one of only five casinos in the entire province and enjoys a
regional exclusivity of approximately 130 miles. As a result, the casino is
primarily sustained by the local population. Our marketing strategy focuses on
catering to the local citizenship by offering various retail and other amenities
not available in other local venues.





On
January 14, 2009, we completed the sale of a parcel of land adjacent to the
Newcastle casino to a company partially owned by the Chairman of the
Board of Century Casino Newcastle for approximately $0.1 million (ZAR 1.3
million). Pursuant to the terms of the sales agreement, the purchaser
proposes to develop a shopping mall attached to the casino. We believe that an
adjacent shopping mall development will attract more customers to our Newcastle
casino.





Seasonality




Edmonton –Our casino in Edmonton,
Alberta, Canada attracts the most customers from October through
April.  We expect the remainder of the year to remain constant due to
the local population.




Colorado –Our casinos in Colorado
attract the most customers during the warmer months (i.e., from May through
September). We expect to attract fewer customers from October through April but
expect our customer base to remain fairly constant, although weather conditions
during this period could have a significant impact on business
levels.





South Africa –Our casino in Caledon,
South Africa attracts the most customers during the holiday season, which occurs
during the South African summer months of November to March. Our casino in
Newcastle, South Africa primarily serves the local population. As a result, we
do not expect significant fluctuations in our customer base in Newcastle
throughout the year.





Cruise Ships –Our businesses aboard
the cruise ships generally are not impacted by the time of year. Our revenues
for these operations fluctuate significantly with the quality of the players. In
addition, the cruise ships on which we conduct operations may be out of service
from time to time for periodic maintenance or based on the operating schedule of
the cruise line, which may impact our revenues from operations of our cruise
ship casinos.





Governmental
Regulation and Licensing





The
ownership and operation of casino gaming facilities are subject to extensive
state, local and, for our foreign operations, provincial regulations. We are
required to obtain and maintain gaming licenses in each of the jurisdictions in
which we conduct gaming operations. 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.





-8-


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, including shutdowns or the
loss of our ability to operate gaming facilities in a particular jurisdiction,
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 or local gaming statutes or regulations. Such laws and regulations
apply in all jurisdictionsin which we may do business. Management believes that
we are in compliance with all applicable gaming and non-gaming regulations as
described below.





Alberta,
Canada





Gaming in
Alberta is governed by the provincial government. The Alberta Gaming and Liquor
Commission (“AGLC”) administers and regulates the gaming industry in Alberta.
The AGLC operates in accordance with the Gaming and Liquor Act, the Gaming and
Liquor Regulation and the Criminal Code of Canada. Generally, the criminal code
prohibits all gaming in Canada except forms of gaming that it specifically
allows.





The AGLC
requires all gaming operations to be licensed. All available licenses have
currently been granted. If the AGLC increases the number of licenses available,
applicants for a gaming license must submit an application and run through an
eight-step approval process. Following the approval of the board of the AGLC,
the applicant may operate the casino applied for in accordance with federal and
provincial legislation, regulation, and policies as well as the municipal
requirements, permits, licenses and authorization relating to the casino. The
AGLC will monitor the casino operator and his/her compliance with all
requirements. In the event of a violation of such requirements, civil and
criminal charges can be assessed.





The AGLC
provides casinos with slot machines, slot technicians and personnel to
administer table game counts. In return, casino licensees, such as Century
Resorts Alberta, Inc. (“CRA”), our wholly owned subsidiary, market the casinos,
provide table game dealers and provide the AGLC with a place to operate slot
machines. Casino licensees do not incur lease expenditures with the AGLC. In
lieu of these lease expenses and other expenses associated with the operating of
slot machines (i.e. equipment and personnel), casino licensees retain only a
portion of net sales. Net sales, as defined by the AGLC, are calculated as cash
played, less cash won, less the cost to lease the equipment, if
applicable.





The AGLC
retains 85% of slot machine net sales. For all table games, excluding poker and
craps, we are required to allocate 50% of our net win to a charity designated by
the AGLC. For poker and craps, 25% of our net win is allocated to the charity.
In accordance with the Emerging Issues Task Force Issue 99-19, “Reporting
Revenue Gross as a Principal versus Net as an Agent,” we record our revenues net
of the amounts retained by the AGLC.





The AGLC
also requires that its casino facility licensees maintain an effective debt to
equity ratio of less than 2.5 and a Minimum Continuing Net Working Capital
Position (defined by the AGLC to be, at a minimum, the sum of necessary cash
floats, one month’s operating expenses and one month’s interest expense). We are
in compliance with these requirements as of December 31, 2008.




-9-


Colorado,
United States





The
ownership and operation of gaming facilities in Colorado are subject to
extensive state and local regulations. Licenses must be obtained from the
Colorado Limited Gaming Control Commission (the “Gaming Commission”) prior to
offering limited gaming to the public in the state of Colorado. In addition, the
State of Colorado created the Division of Gaming (the “DOG”) within its
Department of Revenue to license, implement, regulate, and supervise the conduct
of limited stakes gaming. The Director of the DOG (“DOG Director”), under the
supervision of the Gaming Commission, has been granted broad powers to ensure
compliance with the laws and regulations. The Gaming Commission, DOG and DOG
Director are collectively referred to as the “Colorado Gaming
Authorities.”





The laws,
regulations, and internal control minimum procedures of the Colorado Gaming
Authorities seek to maintain public confidence and trust that licensed limited
gaming is conducted honestly and competitively, that the rights of the creditors
of licensees are protected, and that gaming is free from criminal and corruptive
elements. The Colorado Gaming Authorities’ stated policy is that public
confidence and trust can be maintained only by strict regulation of all persons,
locations, practices, associations, and activities related to the operation of
the licensed gaming establishments and the manufacture and distribution of
gaming devices and equipment.





The
Gaming Commission is empowered to issue five types of gaming and related
licenses. In order to operate a casino, an operator is required to obtain a
retail gaming license. Further, under Colorado gaming regulations, no person or
entity can have an ownership interest in more than three retail licenses. We
currently operate under the maximum of three retail gaming licenses in Colorado,
which must be renewed each year (Womacks operates under two gaming licenses). In
addition, the Gaming Commission has broad discretion to revoke, suspend,
condition, limit or restrict the licensee at any time. The failure or inability
of Womacks or the Century Casino & Hotel in Central City, or the failure or
inability of others associated with these casinos to maintain necessary gaming
licenses or approvals would have a material adverse effect on our
operations.





Our
Colorado casinos must meet specified architectural requirements and must not
exceed specified gaming square footage limits as a total of each floor and the
full building.





Currently,
each Colorado casino may operate only between 8:00 a.m. and 2:00 a.m., and may
permit only individuals 21 or older to gamble in the casino. It may permit slot
machines, blackjack and poker, with a maximum single bet of $5.00. No Colorado
casino may provide credit to its gaming patrons. On November 4, 2008, Amendment
50 was approved by Colorado voters, giving the electorate in Black
Hawk, Central City and Cripple Creek the option to approve raising the maximum
wager limit to $100, add the games of craps and roulette, and allow 24-hour
gaming effective July 2, 2009. Voters in all three towns have approved the
changes for casinos in their communities. The amendment earmarks additional
State revenues generated by the changes to community colleges and to the gaming
towns and counties.





Amendment
50 also requires voter approval for any increase in gaming tax rates from rates
in effect as of July 1, 2008. The Colorado Constitution currently permits a
gaming tax of up to 40% on adjusted gross gaming proceeds, and authorizes the
Gaming Commission to change the rate annually. The current gaming tax is a
graduated rate of 0.25% to 20% on adjusted gross gaming proceeds.





-10-


Colorado
law requires that every officer, director or stockholder holding a 5% or greater
interest or controlling interest of a publicly traded corporation, or owner of
an applicant or licensee, shall be a person of good moral character and submit
to and pay the cost of a full background investigation conducted by the Gaming
Commission. Persons found unsuitable by the Gaming Commission may be required to
immediately terminate any interest in, association or agreement with, or
relationship to, a gaming licensee. A finding of unsuitability with respect to
any officer, director, employee, associate, lender or beneficial owner of a
licensee or applicant may also jeopardize the licensee’s retail license or
applicant’s license application. Licenses may, however, be conditioned upon
termination of any relationship with unsuitable persons.





Colorado
law imposes certain additional restrictions and reporting and filing
requirements on publicly traded entities holding gaming licenses in Colorado. A
licensee or affiliated company, or any controlling person of a licensee or
affiliated company, which commences a public offering of voting securities, must
notify the Gaming Commission with regard to a public offering to be registered
with the Securities and Exchange Commission (“SEC”), no later than ten business
days after the initial filing of a registration statement with the SEC, or, with
regard to any other type of public offering, no later than ten business days
prior to the public use or distribution of any offering document, if: 1) the
licensee, affiliated company or a controlling person thereof, intending to issue
the voting securities is not a publicly traded corporation; or 2) if the
licensee, affiliated company or controlling person thereof, intending to issue
the voting securities is a publicly traded corporation, and if the proceeds of
the offering, in whole or in part, are intended to be used: a) to pay for
construction of gaming facilities in Colorado to be owned and operated by the
licensee; b) to acquire any direct or indirect interest in gaming facilities in
Colorado; c) to finance the operation by the licensee of gaming facilities in
Colorado; or d) to retire or extend obligations incurred for one or more of the
purposes set forth in subsections a, b, or c above.





We may
not issue any voting securities except in accordance with the provisions of the
Colorado Limited Gaming Act (the “Act”) and the regulations promulgated
thereunder. The issuance of any voting securities in violation of the Act will
be void, and the voting securities will be deemed not to be issued and
outstanding. No voting securities may be transferred, except in accordance with
the provisions of the Act and the regulations promulgated thereunder. Any
transfer in violation of these provisions will be void. If the Gaming Commission
at any time determines that a holder of our voting securities is unsuitable to
hold the securities, then we may, within sixty (60) days after the finding of
unsuitability, purchase the voting securities of the unsuitable person at the
lesser of (a) the cash equivalent of such person’s investment, or (b) the
current market price as of the date of the finding of unsuitability, unless such
voting securities are transferred to a suitable person within sixty (60) days
after the finding of unsuitability. Until our voting securities are owned by
persons found by the Gaming Commission to be suitable to own them, (a) we are
not permitted to pay any dividends or interest with regard to the voting
securities, (b) the holder of such voting securities will not be entitled to
vote, and the voting securities will not for any purposes be included in the
voting securities entitled to vote, and (c) we may not pay any remuneration in
any form to the holder of the voting securities, except in exchange for the
voting securities.





South
Africa





The
gambling industry in South Africa is governed by the National Gambling Act of
2004 (the “2004 Act”) and legislation enacted by each of the nine South African
provinces. The provincial license authorities exercise a range of statutory
functions to control the conduct of gambling and racing, where applicable, in
their respective provinces. The National Gambling Board has an oversight
function and a range of other responsibilities aimed at meeting the objectives
of the 2004 Act.





-11-


Our
gaming operations in South Africa are subject to regulation by the Western Cape
Gambling and Racing Board (for the Caledon casino) and by the KwaZulu-Natal
Gambling Board (for the Century Casino & Hotel in Newcastle). 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.





The
current gaming tax established by the Western Cape Gambling and Racing Board is
a graduated rate of 6% to 17% on adjusted gross gaming revenue. The current
gaming tax established by the KwaZulu-Natal Gambling Board is a graduated rate
of 9% to 12% on adjusted gross gaming revenue plus a 0.5% levy on adjusted slot
revenue that is payable to the local government.





The
closing of the sale of CCA is still subject to approvals by the Western Cape
Gambling and Racing Board, the KwaZulu-Natal Gambling Board and other regulatory
approvals.





Cruise
Ships





The
casinos onboard the cruise ships only operate on 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.





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 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.





Rules and
regulations regarding the service of alcoholic beverages are strict. The loss or
suspension of a liquor license could significantly impair our operations. Local
building, parking and fire codes and similar regulations could also impact our
operations and proposed development of our properties.





A minimum
of 80% of the labor force at the Caledon must be comprised of designated
persons. A designated person is any person of color or a white female.
Currently, 81% of the labor force at the Caledon is comprised of designated
persons.





In
connection with the granting of a gaming license to the Caledon by the Western
Cape Gambling and Racing Board (“WCGRB”) in April 2000, the Caledon agreed to
allocate a percentage of its annual gross gambling revenue, in the form of Class
A preference dividends. There are a total of 200 preference shares outstanding,
100 shares each to the Overberg Empowerment Company and the Overberg Community
Trust. The Caledon paid preference shareholder dividends of $0.2 million (ZAR
1.5 million) and $0.4 million (ZAR 2.8 million) in 2008 and 2007,
respectively.





In
exchange for the granting of additional slot machines by the WCGRB, the Caledon
has also agreed to perform several community projects in the Western Cape. As of
December 31, 2008, the Caledon has accrued $0.6 million (ZAR 6.0 million) for
the completion of these projects.





A minimum
of 70% of the labor force at the Newcastle casino must be comprised of residents
from within the KwaZulu-Natal province. A minimum of 90% of the labor force at
the Newcastle casino must be residents of South Africa. Management believes that
we are in compliance with these regulations as of December 31,
2008.




-12-




Employees





As of
December 31, 2008, we had approximately 950 full-time employees (of which
approximately 440 were employed at discontinued operations). During busier months, each
casino property may supplement its permanent staff with seasonal employees.
Certain employees at our property inNewcastle,South Africaare represented by the South
African Commercial Catering and Allied Workers Union (“SACCAWU”). The agreement
with SACCAWU has no set termination, and will dissolve if non-managerial
employee representation in the union falls below 50%.Noother Company employees are
represented by alabor
union.





Executive
Management





Name
                  Age
                  Position HeldErwin
      Haitzmann
                  55
                  Chairman
      of the Board & Co Chief Executive OfficerPeter
      Hoetzinger
                  46
                  Vice
      Chairman of the Board, Co Chief Executive Officer &
      PresidentLarry
      Hannappel
                  56
                  Senior
      Vice President, Chief Operating Officer – North America, Secretary and
      TreasurerRay
      Sienko
                  51
                  Chief
      Accounting
Officer





Erwin Haitzmann holds a
Doctorate and a Masters degree in Social and Economic Sciences from the
University of Linz, Austria (1980), and has extensive casino gaming experience
ranging from dealer through various casino management positions. Dr. Haitzmann
has been employed full-time by us since May 1993 and has been our Chief
Executive Officer since March 1994.





Peter Hoetzinger received a
Masters degree from the University of Linz, Austria (1986). He thereafter was
employed in several managerial positions in the gaming industry with Austrian
casino companies. Mr. Hoetzinger has been employed full-time by us since May
1993 and has been Co Chief Executive Officer since March 2005.





Larry Hannappel graduated from
National College, Rapid City, South Dakota (1976) with a B.S. Degree in
Accounting, passed the CPA exam in 1980, and has over 30 combined years of
experience in public accounting, financial management and casino management. Mr.
Hannappel has been employed full-time by us since May 1994. He became Chief
Accounting Officer in October 1999, was appointed as Secretary in March 2000, as
Treasurer in June 2001, as Senior Vice President in March 2005 and as Chief
Operating Officer – North America in August 2007.





Ray Sienko graduated from St.
Joseph’s University in Philadelphia, Pennsylvania (1979) with a B.S. Degree in
Accounting, passed the CPA exam in 1979, and has over 25 combined years of
experience in public accounting and financial management. Mr. Sienko has
been employed by us since June 2000 as Controller. He was appointed Chief
Accounting Officer in March 2005.





Available
Information





For more
information about us please visit us on the Internet at http://www.cnty.com.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K and amendments to these reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act are made available free of charge
through the Investor Relations-Corporate section of our website athttp://www.cnty.com
as soon as reasonably practicable after such report has been filed with, or
furnished to, the SEC. None of the information posted to our website is
incorporated by reference into this report.





-13-


Segment
and Financial Information About Geographic Areas





Beginning
in the fourth quarter of fiscal year 2007, we modified our segment reporting
from seven reportable segments to one reportable segment in accordance with
Statement of Financial Accounting Standards No. 131 “Disclosures about Segments
of an Enterprise and Related Information” (“SFAS 131”). Based on a review of
SFAS 131, we have determined that our operations of casino facilities, which
includes the provision of gaming, hotel accommodations, dining facilities and
other amenities, can be aggregated as one reportable segment. Prior period
segments have been restated to conform to the current presentation.





As a
gaming company, our operating results are highly dependent on the volume of
customers at our casinos. Most of our revenue is essentially cash-based, through
customers wagering with cash or paying for non-gaming services with cash or
credit cards. Our industry is capital intensive, and we rely heavily on the
ability of our casinos to generate operating cash flow to repay debt financing,
fund maintenance capital expenditures and provide excess cash for future
development.





See Part
II, Item 8, “Financial Statements and Supplementary Data” – Note 15 for
additional financial information on geographical areas.





Item
1A.  Risk
Factors.





Our short
and long-term success is subject to many factors beyond our
control.  If any of the following risks, or any risks described
elsewhere in this Form 10-K, actually occur, our business, financial
condition or results of operations could suffer. The risks described below are
not the only ones facing us.  Additional risks not presently known to
us or which we currently consider immaterial may also adversely affect our
business, financial condition or results of operations.





Factors
That May Affect Future Results





A
downturn in general economic and geopolitical conditions has adversely affected
our results of operations. We are and may continue to be adversely affected by
the ongoing world financial crisis.





Our
business operations are subject to changes in international, national and local
economic conditions. The current volatile global economic environment is having
significant negative effects on our business. Our business is driven by
discretionary income. Recessions and downturns in the general economies of the
countries in which we operate have resulted in reduced consumer spending and
fewer customers visiting our properties, and have adversely affected our results
of operations. Our operations in Colorado and in Caledon, South Africa are
located approximately one hour away from the major markets they serve.
Management believes that increased fuel prices for a majority of 2008 and the
introduction of a smoking ban at all casinos in Colorado in 2008 have
contributed to a decline of revenue in these markets.





-14-


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 jurisdictions in which we operate.
Many of our competitors are larger and have substantially greater name
recognition, marketing resources and access to lower cost sources of financing
than we do. We seek to compete through promotion of our membership clubs and
other marketing efforts. For example, in Canada we emphasize the
casino’s showroom, heated parking, players’ club program, and superior
service. Some or all of these efforts may not be successful, which could
hurt our competitive position. The markets in which we operate are generally not
destination resort areas. The number of casinos in these markets may exceed
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. 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 much of the world. Other jurisdictions may legalize
gaming or liberalize their gaming rules in the near future. If additional
gaming opportunities become available near our operating facilities, such gaming
opportunities could attract players that might otherwise have visited our
casinos. The resulting loss of revenue at our casinos may have a material
adverse effect on our business, financial condition and results of
operations. In addition, established gaming jurisdictions could award
additional gaming licenses or permit the expansion of existing gaming
operations. We are particularly vulnerable to competition in Colorado. If
other gaming operations were permitted to open closer to Colorado Springs
or Denver, our operations in Cripple Creek and Central City,
respectively, could be substantially harmed, which would have a material adverse
effect on us. New or expanded operations by other entities will increase
competition for our gaming operations and could have a material adverse impact
on us. For example, in 2008, a large casino opened in Cripple Creek with
approximately 625 slot machines, 14 table games and 67 offsite hotel rooms,
further diluting the Cripple Creek market. We believe that the opening of this
casino has had an adverse impact on our casino revenue in Cripple
Creek.





Our
available cash balances have been declining and we may be unable to obtain the
capital necessary to fund our operations.





As of
December 31, 2008, we had $7.8 million in cash available (excluding cash of $1.5
million related to discontinued operations) to fund our operations and had
negative working capital (current assets minus current liabilities) of $7.8
million (excluding assets and liabilities held for sale). If operations at our
properties do not improve or if the pending sale of CCA does not occur, we may
need to raise additional capital or obtain additional debt financing in order to
fund our operations. We also intend to finance future expansion and renovation
projects primarily with cash flow from operations, from sales of existing
operations and from equity or debt financings.





We may
not be able to obtain this funding when we need it on favorable terms or at all.
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 and capital expenditures, selling
assets, restructuring debt, obtaining additional equity financing or joint
venture partners, or modifying our bank credit facility. In addition, the amount
of capital that we are able to raise often depends on variables that are beyond
our control, such as the share price of our stock and its trading volume.
Funding may be impacted by the global economic, credit and stock market
conditions. As a result, we may not be able to secure financing on terms
attractive to us, in a timely manner or at all. If we are able to consummate a
financing arrangement, the amount raised may not be sufficient to meet all of
our future needs and may be highly dilutive to our current stockholders. If we
cannot raise adequate funds to satisfy our capital requirements, we may have to
scale back or eliminate certain operations.





-15-


Our
indebtedness imposes restrictive covenants on us, which limits our operating
flexibility.





Our
various credit agreements require us, among other obligations, to maintain
specified financial ratios and satisfy certain financial tests, including
leverage ratios, total fixed charge coverages and minimum annualized EBITDA
(earnings before interest, taxes, depreciation and amortization, or a variant
thereof). In addition, these agreements restrict our ability to incur additional
indebtedness, 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. There can be no assurances that we or our
subsidiaries would be able to obtain a waiver to these restrictive covenants if
necessary. If we fail to comply with the restrictions contained in these credit
agreements, the resulting event of default could result in a lender accelerating
the repayment of all outstanding amounts due under these agreements. There can
be no assurances that we would be successful in obtaining alternative sources of
funding to repay these obligations should this occur. During 2008, we paid
approximately $0.3 million and $0.1 million to obtain waivers of a financial
covenant on our debt relating to our operations in Central City, Colorado and
Edmonton, Canada, respectively. On February 13, 2009, we repaid $1.0 million of
principal on our debt relating to our operations in Cripple Creek, Colorado and
$0.8 million of principal on our debt relating to our operations in Central
City, Colorado in order to remain in compliance with their respective
restrictive covenants.




The
sale of our operations in South Africa is subject to closing conditions,
including regulatory approvals, that, if not satisfied or waived by the
appropriate party, will result in the transaction not being completed, which may
result in material adverse effects to our liquidity, financial condition and
results of operations.






On
December 19, 2008, a subsidiary of ours entered into an agreement to sell all of
the outstanding shares of Century Casinos Africa (Pty) Limited (“CCA”) for a
gross selling price of ZAR 460.0 million (approximately $49.2 million) less the
balance of third party South African debt and other agreed to amounts. Net
proceeds from the transaction are expected to be approximately ZAR 357.3 million
(approximately $38.3 million) and are payable at closing.  The closing
of the transaction is subject to a number of risk and uncertainties, including
the satisfaction of the conditions to the completion of the sale, obtaining all
necessary regulatory approvals, including approvals by the Western Cape Gambling
and Racing Board, the KwaZulu-Natal Gambling Board and other regulatory
agencies, legal proceedings that may be instituted against us or others, and the
occurrence of any event, change or other circumstance that could give rise to
the termination of the agreement.  These and other factors could cause
our ability to complete the sale on the terms and within the time frame
anticipated to be different than expected. In the event that we are unable to
complete the transaction, our liquidity may be adversely affected, which could
have a material adverse effect on our business, financial condition and results
of operations.




We
face extensive regulation from gaming and other regulatory authorities, which
involve considerable expense and could harm our business.





As owners
and operators of gaming facilities, we are subject to extensive state, local,
and international 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 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 or plan to 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 force us to terminate operations at
an existing gaming facility, either on a temporary or permanent basis, could
result in us being fined or could prohibit us from successfully completing a
project in which we invest. Closing facilities or an inability to expand
may have a material adverse effect on our business, financial condition and
results of operations.





-16-


Gaming
authorities in the U.S. generally can require that any beneficial owner of our
common stock and other securities, including our Austrian Depositary
Certificates (“ADCs”) or common stock underlying the ADCs, 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 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 (including shares of common stock underlying our ADCs) 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 the regulatory environment may adversely affect the results of our
operations.





From time
to time, legislators and special interest groups have proposed legislation that
would expand, restrict or prevent gaming operations or that may otherwise
adversely impact our operations in the jurisdictions in which we
operate. Any expansion of the gaming industry that results in increased
competition and any 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 revenue. 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. In addition, as of January 1, 2008,
smoking was banned in all Colorado casinos. Management believes that this ban
adversely affected our Colorado operations during 2008.





We
face extensive taxation from gaming and regulatory authorities. Potential
changes to the tax laws in the jurisdictions in which we operate may adversely
affect the results of our operations.





We
believe that the prospect of significant revenue to a jurisdiction through
taxation and fees 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. For instance, the
Colorado constitution permits a gaming tax of up to 40% on adjusted gross gaming
proceeds and authorizes the Gaming Commission to change the rate annually. The
current gaming tax in Colorado is a graduated rate of 0.25% to 20% on adjusted
gross gaming proceeds. From time to time, federal, state, provincial and local
legislators and officials have proposed changes in tax laws, or in the
administration of such laws, affecting the gaming industry. With the
passage of Amendment 50 in Colorado, voter approval is now required for any
increase in gaming tax rates. In addition, worsening economic conditions could
intensify the efforts of state, provincial 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. Increases in gaming tax rates would increase our tax expenses and
impair our profitability.





-17-


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 are
required to obtain a gaming license for any additional facility we attempt to
open (excluding casinos operating on cruise ships in international
waters). We are currently licensed to operate gaming facilities in
Colorado, Alberta, Canada, Poland and the Western Cape and KwaZulu-Natal
provinces of South Africa. While our management believes that we are licensable
in any jurisdiction that allows gaming operations, 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 find industry partners that
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. 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 related to our investment in such application processes,
which could be significant. For instance, in 2005, we expended substantial
funds to develop a riverboat gaming operation in Franklin County, Iowa. The Iowa
Racing and Gaming Commission voted to allow four additional licenses, none of
which were for projects in Franklin County. As a result, we terminated the
project and had to write off costs of approximately $0.2 million.





Even if
we receive licenses to open and operate proposed new facilities, commencing
operations at new casino projects would require substantial development
capital. Development activities involve expenses and risks, including
expenses involved in securing licenses, permits or authorizations other than
those required from gaming regulators, and the risk of potential cost over-runs,
construction delays, and market deterioration. In addition, our ability to
attract and retain competent management and employees for any new location is
critical to our success. One or more of these risks may result in any new
property development not being successful. If we are not able to
successfully commence operations at these properties, our results of operations
will be harmed.





Difficulties
in managing our worldwide operations may have an adverse impact on our
business.





In 2008,
we derived 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 Europe. We are also listed on two stock exchanges, the
NASDAQ Stock Exchange and the Vienna Stock Exchange. 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 (See “Governmental Regulation and Licensing” in Item 1,
“Business”).





-18-


We
experience seasonal fluctuations that significantly impact our quarterly
operating results.





Weather
patterns and holidays affect our operations. For example, our Colorado casinos,
which are located in mountain tourist towns, typically experience greater gaming
revenues in the summer tourist season than any other time during the year.
During the year ended December 31, 2008, the net operating revenue attributable
to our Colorado operations fluctuated from a high of $7.7 million in the third
quarter to a low of $6.2 million in the fourth quarter. If we are not able
to offset these seasonal declines with additional revenue from other
sources, our quarterly results may suffer.





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. We expended approximately $1.6 million for utilities for all of
our operations in 2008. Substantial increases in the cost of electricity will
negatively affect our results of operations. In addition, energy and fuel price
increases in cities that constitute a significant source of customers for our
properties could result in a decline in disposable income of potential customers
and a corresponding decrease in visitation to our properties, which would
negatively impact our revenues. The extent of the impact is subject to the
magnitude and duration of the energy and fuel price increases, but this impact
could be material to our results of operations.





Inclement
weather and other conditions could seriously disrupt our business, which may
hamper our 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. High winds and blizzards, such as
those experienced in Colorado in January 2007, limit access to our properties in
North America from time to time. 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 revenue will suffer, which will
negatively impact our operating results.





Fluctuations
in currency exchange rates could adversely affect our business.





Our
facility in Canada and our equity interest in Casinos Poland represent a
significant portion of our business, and the revenue generated and expenses
incurred by these operations are generally denominated in Canadian Dollars and
Polish Zloty, respectively. A decrease in the value of either of these
currencies in relation to the value of the U.S. dollar would decrease the
revenue and operating profit from our foreign operations when translated into
U.S. dollars, which would adversely affect our consolidated results of
operations. 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 of these foreign currencies,
and there is no guarantee that we will be able to successfully hedge any future
foreign currency exposure. The pending sale of our interest in CCA is
denominated in South African rands. A decrease in the value of the South African
rand in relation to the U.S. dollar will decrease the amount of proceeds the
Company receives from the sale in U.S. dollars.





-19-


The
loss of key personnel could have a material adverse effect on us.





We are
highly dependent on the services of Erwin Haitzmann and Peter Hoetzinger, our Co
Chief Executive Officers, 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.





We
may be required in the future to record impairment losses related to the
indefinite lived intangible assets and the equity investment we currently carry
on our balance sheet.





We have
$4.0 million of goodwill (excluding $0.7 million of goodwill related to
discontinued operations) and a $10.5 million equity investment as of December
31, 2008. We also have casino licenses of $8.4 million, all of which relate to
discontinued operations. Accounting rules require that we make certain estimates
and assumptions related to our determinations as to the future recoverability of
these assets. If we were to determine that the values of the goodwill,
casino licenses or the equity investment carried on our balance sheet are
impaired, we may be required to record an impairment charge to write down the
value of these assets, which would adversely affect our results during the
period in which we recorded the impairment charge. For instance, in 2008 we
recorded goodwill impairments related to our investments in Cripple Creek,
Colorado and Central City, Colorado totaling  $9.3
million.





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. 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.





Service
of process and enforceability of certain foreign judgments is
limited.





We are
incorporated in the U.S. and, as of December 31, 2008, a substantial portion of
our assets are located in North America and South Africa. In addition, some
of our directors and officers are residents of the U.S. and all or a substantial
portion of their assets are located in the U.S. As a result, it may be
difficult for European investors who hold ADCs to effect service of process
within Austria upon us or our affiliates in the U.S. or to enforce judgments
obtained against us or our affiliates in Austrian or U.S. courts based on civil
liability provisions of the European securities laws.





-20-


While we believe that we currently
have adequate internal control over financial reporting, we are exposed to risks
from legislation requiring companies to evaluate those internal
controls.





The
Sarbanes-Oxley Act requires that we maintain effective internal control over
financial reporting and disclosure controls and procedures. In particular, for
the year ended December 31, 2008, we have performed system and process
evaluation and testing of our internal control over financial reporting to allow
management and our independent registered public accounting firm to report on
the effectiveness of our internal control over financial reporting, as required
by Section 404 of the Sarbanes-Oxley Act. Our compliance with Section 404 will
require that we incur substantial expense and expend significant management time
on compliance-related issues. Moreover, if we are not able to comply with the
requirements of Section 404 in the future, or if we or our independent
registered public accounting firm identify deficiencies in our internal control
over financial reporting that are deemed to be material weaknesses, the market
price of our stock may decline and we could be subject to sanctions or
investigations by the Nasdaq Stock Market, the SEC or other regulatory
authorities, which would require significant additional financial and management
resources.





Risks
Related to our Common Stock and the ADCs





We
are subject to the listing requirements under NASDAQ Marketplace Rules and the
Vienna Prime Market Rules.  If we fail to continue to meet all
applicable requirements, our stock or ADCs could be delisted from the NASDAQ
Capital Market (“NASDAQ”) or the Vienna Stock Exchange (“VSE”), as applicable,
which would adversely affect the market liquidity of our common stock or ADC’s,
as applicable, and harm our business.





Under
NASDAQ Marketplace Rules, our common stock is required to maintain a minimum $1
bid price in order to qualify for continued listing on the NASDAQ. Failure to
maintain the minimum bid price for a period of 30 consecutive business days
would potentially result in the delisting of our common stock.  Due to
the recent unusual market conditions, the NASDAQ has suspended the minimum bid
price requirement through April 20, 2009. Our stock has traded at or below
$1.00 per share in the recent past, and if our stock trades below $1.00 on or
after April 20, 2009, NASDAQ may take action against us to enforce its listing
standards.





Under the
Vienna Prime Market Rules, we are required to maintain a minimum market
capitalization for shares held by the public of €16.0 million. Although our
market capitalization has not been below this threshold, if we fail to maintain
this minimum market capitalization, our ADCs could be delisted from the VSE. The
delisting of our common stock by NASDAQ or of our ADC’s by the VSE could have a
material adverse impact on the market value and liquidity of our capital
stock.  No assurance can be given that our common stock or ADCs will
remain in compliance with their respective NASDAQ and VSE listing
requirements.





Certain
anti-takeover measures we have adopted may limit our ability to consummate
transactions that some of our security holders might otherwise
support.





We have a
fair price business combination provision in our certificate of incorporation,
which requires approval of certain business combinations and other transactions
by holders of 80% of our outstanding shares of voting stock. We also have
adopted a stockholder rights plan that allows 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
without the approval of our board of directors. 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, and may similarly
depress the price of the ADCs, due to the possibility that certain transactions
that our stockholders might favor could be precluded by these
provisions.





-21-


Our
stock price has been volatile and may decline significantly and
unexpectedly.





Our
common stock trades in the U.S. on the NASDAQ Capital Market, which consists of
relatively small issuers and a lack of significant trading volumes relative to
other U.S. markets. These factors may result in volatility in the price of our
common stock. For instance, the trading price of our common stock on the NASDAQ
Capital Market varied from high of $6.45 to a low of $0.60 during the year ended
December 31, 2008. Our common stock also trades on the Vienna Stock Exchange in
the form of ADCs. For a small company such as ours, having listings on two
securities markets could decrease the trading volume on each market to levels
that might increase the volatility of the trading price of our securities.
Increased trading focus of our securities on one trading market could affect and
significantly decrease the liquidity of our securities on the other market,
which could make it difficult or impossible for an investor to sell our common
stock or ADCs on the market with declining value.





Because
we are a foreign corporation listed on the Vienna Stock Exchange, the Austrian
and other European takeover regimes do not apply to us.





Austrian
takeover law does not apply to foreign corporations listed on the Vienna Stock
Exchange. If an investor proposes to take us over, Delaware law (including laws
relating to the enforceability of our stockholder rights plan) would apply, and
neither our stockholders nor our ADC holders could rely on the Austrian or any
other European takeover regime to influence such a takeover. As a result, a
holder of our ADCs may be forced to sell the ADCs at a price that is less than
the price paid by such holder or that is less than what such holder otherwise
would accept.





Item
1B.  Unresolved Staff
Comments.





None.





-22-


Item
2.  Properties.





The
following table sets forth the location, size and a description of the gaming
and other facilities at each of our casinos, as of December 31,
2008:





Summary
of Property Information





Property
                Casino
                  Space
                  Sq
      Ft (1)
                Acreage
      (1)
                Number
      of
                  Slot
                  Machines
                Number
      of
                  Table
                  Games
                Number
      of
                  Hotel
                  Rooms
                Number
      of
                  RestaurantsCentury
      Casino – Edmonton
                30,800
                7.0
                658
                35
                26
                4Womacks
                28,300
                3.5
                437
                4
                21
                1Century
      Casino – Central City
                22,350
                1.3
                525
                9
                26
                2Caledon
      (2)
                22,100
                600(4)
                370
                8
                81
                3Century
      Casino – Newcastle (2)
                12,960
                61
                250
                7
                40
                2Century
      Casino Millennium (3)
                2,700
                -
                30
                13
                -
                -Cruise
      Ships (total of four) (5)
                4,150
                -
                123
                18
                -
                -


(1)
            Approximate.


(2)
            We
      have entered into an agreement to sell these properties; the closing of
      the sale is expected to occur during the first half of
    2009.


(3)
            As
      of February 11, 2009, we no longer own this
  property.


(4)
            Of
      the 600 available acres, 500 acres currently remain
      undeveloped.


(5)
            Operated
      under concession agreements. We do not own the ships on which our casinos
      operate.





As of
December 31, 2008, our casino properties in Colorado, South Africa and Edmonton
secured our obligations under various loan agreements.





Additional
Property Information





Womacks –In addition to the
property described above, we also lease ten city lots from the City of Cripple
Creek, Colorado for parking. Under the terms of the lease, which expires in May
2010, we may purchase the property for $3.3 million, less cumulative lease
payments, at any time during the remainder of the lease term.





Corporate Offices – We currently lease office
spaces for corporate and administrative purposes in Colorado Springs, Colorado
and Vienna, Austria.





In the
opinion of management, the properties and equipment owned or leased by us are
adequate for our existing operating needs.





-23-


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 the year ended December 31, 2008.


-24-


PART
II





Item
      5.
            Market for
      Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity
Securities.








Our
common stock is traded on the NASDAQ Capital Market (“NASDAQ”), under the symbol
CNTY.





The
following graph illustrates the cumulative shareholder return of our common
stock during the period beginning December 31, 2003 through December 31, 2008,
and compares it to the cumulative total return on the NASDAQ and the Russell
2000 Gambling Index. The comparison assumes a $100 investment on December 31,
2003, in our common stock and in each of the foregoing indices, and assumes
reinvestment of dividends, if any. This table is not intended to forecast future
performance of our common stock.







At
February 20, 2009, we had 157 holders of record of our common
stock.





Our
common stock in the form of Austrian Depositary Certificates (“ADCs”) is also
traded on the Vienna Stock Exchange (“VSE”). At December 31, 2008, we had 3.3
million ADCs outstanding. Each ADC is equivalent to one share of our common
stock.


-25-


The
following table sets forth the low and high sales price per share of our common
stock as reported on the NASDAQ for the periods indicated.




2008
                  
                  
                  2007High
                  
                  
                  Low
                  
                  
                  High
                  
                  
                  LowFirst
      quarter
                  
                  $
                  6.45
                  
                  
                  $
                  3.18
                  
                  
                  $
                  11.37
                  
                  
                  $
                  7.94Second
      quarter
                  
                  $
                  4.51
                  
                  
                  $
                  3.13
                  
                  
                  $
                  9.28
                  
                  
                  $
                  7.58Third
      quarter
                  
                  $
                  3.39
                  
                  
                  $
                  1.85
                  
                  
                  $
                  9.01
                  
                  
                  $
                  6.05Fourth
      quarter
                  
                  $
                  2.25
                  
                  
                  $
                  0.60
                  
                  
                  $
                  7.46
                  
                  
                  $
                  5.25





No
dividends have been declared or paid by us, and we do not presently intend to
pay dividends. At the present time, we intend to use any earnings that may be
generated to finance the growth of our business. Our credit facilities currently
limit the payment of dividends.





In March 2000,
ourboard ofdirectors approved a
discretionary program to repurchase up to $5.0million ofouroutstanding common
stock.We did
not purchase any shares of our common stock on the open market in 2007 or
2008.The total remaining
authorization under the repurchase program was $1.2 million as of December 31,
2008. The repurchase program has no set expiration or termination
date.





-26-


Item
6.  Selected Financial
Data.





The
selected financial data below should be read in conjunction with Part II, Item
7, “Management’s Discussion and Analysis of Financial Condition and Results of
Operations”, and Part II, Item 8, “Financial Statements and Supplementary Data”,
of this Form 10-K.In
2008, we entered into agreements to sell our interests in CCA and Century Casino
Millennium (results from these operations have been restated to discontinued
operations for all periods presented)





For the Year Ended December
    31,Amounts
      in thousands,
                  except
      for share information
                
                2008(5)
                
                
                2007(4)
                
                
                2006(3)
                
                
                2005(2)
                
                
                2004(1)Results
      of Operations:Net
      operating revenue
                
                $
                53,042
                
                
                $
                59,043
                
                
                $
                30,203
                
                
                $
                20,354
                
                
                $
                20,430Operating
      (loss) earnings from continuing operations
                
                
                (9,257
                )
                
                
                2,206
                
                
                
                (4,747
                )
                
                
                817
                
                
                
                2,810(Loss)
      earnings from continuing operations
                
                
                (17,934
                )
                
                
                (528
                )
                
                
                2,212
                
                
                
                661
                
                
                
                1,558Earnings
      from discontinued operations
                
                
                4,461
                
                
                
                5,461
                
                
                
                5,417
                
                
                
                3,820
                
                
                
                3,180Net
      (loss) earnings
                
                
                (13,473
                )
                
                
                4,933
                
                
                
                7,629
                
                
                
                4,481
                
                
                
                4,738Basic
      (loss) earnings per share:(Loss)
      earnings from continuing operations
                
                $
                (0.76
                )
                
                $
                (0.02
                )
                
                $
                0.10
                
                
                $
                0.04
                
                
                $
                0.11Net
      (loss) earnings
                
                $
                (0.57
                )
                
                $
                0.21
                
                
                $
                0.33
                
                
                $
                0.28
                
                
                $
                0.35Diluted
      (loss) earnings per share:(Loss)
      earnings from continuing operations
                
                $
                (0.76
                )
                
                $
                (0.02
                )
                
                $
                0.09
                
                
                $
                0.04
                
                
                $
                0.10Net
      (loss) earnings
                
                $
                (0.57
                )
                
                $
                0.21
                
                
                $
                0.32
                
                
                $
                0.25
                
                
                $
                0.30Balance
      Sheet:Cash
      and Cash Equivalents
                
                $
                7,835
                
                
                $
                11,742
                
                
                $
                23,537
                
                
                $
                29,889
                
                
                $
                3,514Total
      Assets
                
                
                150,006
                
                
                
                198,083
                
                
                
                197,860
                
                
                
                123,348
                
                
                
                71,204Long-Term
      Debt (from continuing operations)
                
                
                28,501
                
                
                
                47,505
                
                
                
                44,780
                
                
                
                10,413
                
                
                
                16,656Total
      Liabilities
                
                
                62,233
                
                
                
                86,094
                
                
                
                97,433
                
                
                
                32,017
                
                
                
                30,825Total
      Shareholders’ Equity
                
                
                87,773
                
                
                
                111,989
                
                
                
                100,427
                
                
                
                91,331
                
                
                
                40,379Cash
      Dividends Per CommonShare
                
                $
                --
                
                
                $
                --
                
                
                $
                --
                
                
                $
                --
                
                
                $
                --





(1)
            In
      2004, we recorded a foreign currency gain of $0.4 million recognized on
      the disposition of a subsidiary.


(2)
            In
      2005, we raised $46.2 million in net proceeds in our offering of
      ADCs.


(3)
            In
      2006, we opened three new casinos. We incurred $4.0 million in pre-opening
      costs (pre-tax) related to these facilities. The facilities contributed
      additional total assets of $79.6 million and long-term debt of $49.1
      million in 2006. Also in 2006, we wrote off the remaining $0.4 million of
      the non-operating casino property and land held for sale in Nevada. In
      2006 we sold an option towards a casino development project in
      Johannesburg, South Africa for approximately $5.3 million, less
      commissions of $0.1 million. As a result of the transaction, we recorded
      other income of approximately $5.2
million.


(4)
            In
      2007, we acquired a 33.3% equity interest in Casinos Poland, Ltd. We also
      acquired the remaining 35% interest in CC Tollgate
  LLC.


(5)
            In
      2008, we wrote off goodwill of $9.3 million associated with our Colorado
      properties. Also, a valuation allowance was recorded on deferred tax
      assets of $3.8 million resulting from our net operating losses in the
      U.S.




-27-




Item 7.Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.





The
following discussion should be read in conjunction with Part II, Item 8,
“Financial Statements and Supplementary Data” included elsewhere herein.
Information contained in the following discussion of our results of operations
and financial condition contains forward-looking statements within the meaning
of Section 21E of the Exchange Act, 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 Item 1A, “Risk Factors,” and
elsewhere in this document. See “Disclosure Regarding Forward-Looking
Statements” that precedes Part I of this report. We undertake no obligation to
publicly update or revise any forward-looking statements as a result of new
information, future events or otherwise.





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





Executive
Overview





Overview





Since our
inception, we have been primarily engaged in developing and operating gaming
establishments and related lodging and restaurant facilities. As a gaming
company, our operating results are highly dependent on the volume of customers
at our casinos. Our primary source of revenue is from the net proceeds of our
gaming machines and tables, with ancillary revenues generated from the hotel and
restaurant facilities that are a part of the casino. Most of our revenue is
essentially cash-based, through customers wagering with cash or paying for
non-gaming services with cash or credit cards.





We own,
operate and manage the following casinos through wholly-owned
subsidiaries:


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


-
            Womacks
      Casino & Hotel in Cripple Creek, Colorado;
  and


-
            The
      Century Casino & Hotel in Central City,
  Colorado.





We also
operate casinos aboard the Silver Cloud and the vessels of Oceania Cruises.
Furthermore, we own a 33.3% ownership interest in Casinos Poland Ltd, the owner
and operator of seven full casinos and one slot casino in Poland and account for
this investment under the equity method.





During
2008, we entered into agreements to sell the following casinos:


-
            The
      Caledon Hotel, Spa & Casino near Cape Town, South
    Africa;


-
            The
      Century Casino & Hotel in Newcastle, South Africa;
  and


-
            The
      Century Casino Millennium in the Marriott Hotel in Prague, Czech
      Republic.





Our sale
of the Century Casino Millennium closed on February 11, 2009. We expect the sale
of our South African properties to close in the first half of 2009.





We have
made significant acquisitions and dispositions over the last three years and
expect to continue to pursue additional acquisition and development
opportunities in the future.





The
following timeline highlights our activity over the last three
years:





January 12, 2006 – We acquired the
remaining 43.6% equity interest that we did not previously own in Century
Resorts Alberta (“CRA”) for $6.5 million. CRA was established for the
purpose of developing and operating the Century Casino & Hotel in Edmonton,
Alberta, Canada.





-28-


April 1, 2006 – We acquired a 60%
controlling interest in Century Casino Newcastle (“CNEW”) for $7.4 million.
Following the purchase, we began the development of a new casino in Newcastle,
South Africa.





April 13, 2006 – We acquired the
remaining 50% interest that we previously did not own in Century Casino
Millennium, the owner and operator of the Century Casino Millennium in Prague,
Czech Republic, for $0.7 million.





July 11, 2006 – CC Tollgate LLC
(“CTL”), our 65% owned subsidiary, opened the Century Casino & Hotel in
Central City, Colorado.





November 17, 2006 – CRA opened the
casino portion of the Century Casino & Hotel in Edmonton, Alberta,
Canada.





December 2, 2006 – CNEW opened its
newly constructed casino and hotel facility in Newcastle, South
Africa.





March 12, 2007 – We acquired Century
Casinos Poland (“CCP”) (formerly known as G5 Sp. z o.o.), the owner of a
33.3% interest in Casinos Poland, for $2.8 million. In connection with the
purchase, we also loaned CCP $5.8 million to pay its creditors.





March 16, 2007 – CRA opened the hotel
portion of the Century Casino & Hotel in Edmonton, Alberta,
Canada.





December 31, 2007 – We acquired the
remaining 35% of CTL for $3.3 million, which included $1.2 million towards the
assumption of an outstanding loan and accrued interest.




November 24, 2008 – We entered into an
exclusive, long-term agreement with TUI Cruises GmbH (“TUI”) whereby we agreed
to operate casinos on all cruise ships that TUI will put into service before
December 31, 2012. The first vessel is anticipated to go into service in May
2009.




December 5, 2008 – We entered into an
agreement to sell the Century Casino Millennium, for approximately $2.3 million
(CZK 22.0 million plus $1.2 million).  Approximately $1.5 million (CZK
22.0 million plus $0.4 million) was paid to the Company at closing on February
11, 2009, with the balance payable over the following 12 months.





December 19, 2008 – A subsidiary of
ours entered into an agreement to sell all of the outstanding shares of Century
Casinos Africa (Pty) Limited (“CCA”) for a gross selling price of ZAR 460.0
million (approximately $49.2 million)less the balance of
third party South African debt and other agreed to amounts. Net proceeds from
the transaction are expected to be approximately ZAR 357.3 million
(approximately $38.3 million) and are payable at closing, which is expected to
occur in the first half of 2009. The closing of the transaction is subject to
customary conditions including, but not limited to, approvals by the Western
Cape Gambling and Racing Board, the KwaZulu-Natal Gambling Board and other
regulatory approvals. The Caledon Hotel, Spa and Casino and the Century Casino
Newcastle will be sold in connection with the sale of CCA.





Our
industry is capital intensive, and we rely heavily on the ability of our casinos
to generate operating cash flow to repay debt financing, fund maintenance
capital expenditures and provide excess cash for future
development.





-29-


Other
recent developments that we believe have impacted our results of operations or
will impact our casinos going forward are discussed below.





- In August
2007, the Alberta Gaming and Liquor Commission added 50 slot machines at the
Century Casino & Hotel in Edmonton. We believe that this is in recognition
of our accomplishments since opening in November 2006 and is also a sign that
the gaming market in Edmonton is expected to grow further.





-  During
2007, in an effort to reduce interest charges, we made early prepayments of
$12.1 million of principal against a term loan we incurred in connection with
the construction of the Century Casino & Hotel in Central City,
Colorado.





-  In
accordance with U.S. accounting standards, we recognized a $1.0 million charge
($0.6 million, net of taxes) to the income statement in the fourth quarter 2007
for previously allocated CTL’s losses against a $1.0 million note held by the
former minority partner that we assumed in the purchase of the remaining 35%
equity interest in CTL on December 31, 2007. We now recognize CTL’s net income
or losses at 100% (instead of the previous 65%).





-  In
November 2007, an arbitrator ruled in favor of our case to continue operating
our casino aboard the Silver Cloud through April 2011. In addition, we will be
able to operate casinos aboard any new Silversea vessel through April
2011.





- The
Century Casino & Hotel in Edmonton introduced non-stop, 24-hour poker, open
daily. In order to help meet strong customer demand, we added three poker tables
in the first quarter of 2008, bringing the number of poker tables to a total of
nine. Management believes
that this has lead to increased revenue and visitation of the
casino.





-  Womacks
completed a $1.8 million renovation of its casino.  Management
believes that the renovation, which occurred primarily during the fourth quarter
of 2007 and was completed in the first quarter of 2008, negatively affected
revenues at Womacks during this time.





-  In 2008,
a large casino opened in Cripple Creek. This casino operates with approximately
625 slot machines, 14 table games and 67 offsite hotel rooms, further diluting
the Cripple Creek market, where Womacks operates.





-  Effective
January 1, 2008, smoking was banned at all Colorado casinos. Management believes
that this has negatively impacted revenues in 2008 and will continue to
adversely affect our Colorado casino revenues.





-  In
November 2008,Amendment 50 was
approved by Colorado voters, giving the electorate in Black Hawk, Central
City and Cripple Creek the option to approve raising the maximum wager limit up
to $100, add the games of craps and roulette, and allow 24-hour gaming effective
July 2, 2009. Voters in all three towns have approved the changes for casinos in
their communities beginning July 2, 2009.





-  In 2009,
Casinos Poland intends to retrofit all of its existing compatible slot machines
at its flagship casino in the Marriott Hotel in Warsaw, Poland, to TITO
technology. Also, new slot machines will be added. Casinos Poland plans to
install the TITO system at all of its locations throughout Poland.





-30-


Beginning
in the fourth quarter of fiscal year 2007, we modified our segment reporting
from seven reportable segments to one reportable segment, as we believe that our
properties can now be aggregated together in accordance with Statement of
Financial Accounting Standards No. 131, “Disclosures about Segments of an
Enterprise and Related Information” (“SFAS 131”). Based on a review of SFAS 131,
we have determined that the operation of casino facilities, which includes the
provision of gaming, hotel accommodations, dining facilities and other
amenities, can be aggregated as one reportable segment. Prior period segments
have been restated to conform to the current presentation.





Presentation
of Foreign Currency Amounts





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





2008
                    
                    
                    2007
                    
                    
                    2006Canadian
      Dollars (CAD)
                    
                    
                    1.0671
                    
                    
                    
                    1.0736
                    
                    
                    
                    1.1344Czech
      Koruna (CZK)
                    
                    
                    17.0830
                    
                    
                    
                    20.2671
                    
                    
                    
                    22.4618Euros
      (€)
                    
                    
                    0.6837
                    
                    
                    
                    0.7294
                    
                    
                    
                    0.7934Polish
      Zloty (PLN)
                    
                    
                    2.4093
                    
                    
                    
                    2.7228
                    
                    
                    
                    N/ASouth
      African Rand (ZAR)
                    
                    
                    8.2609
                    
                    
                    
                    7.0513
                    
                    
                    
                    6.7381


Source:
Pacific Exchange Rate Service





-31-


Results
of Operations





Note:
Throughout this discussion of the results of our operations, all numbers
presented are revised to exclude discontinued operations except if otherwise
indicated.





The
results of operations for the years ended December 31, 2008, 2007 and 2006 are
below (in thousands):





For
      the Year Ended December 31,2008
                
                
                2007
                
                
                2006Gaming
      revenue
                
                $
                49,949
                
                
                $
                57,513
                
                
                $
                31,741Net
      operating revenue
                
                
                53,042
                
                
                
                59,043
                
                
                
                30,203Total
      operating costs and expenses
                
                
                63,108
                
                
                
                57,400
                
                
                
                34,950Earnings
      from equity investment
                
                
                809
                
                
                
                563
                
                
                
                -Operating
      (loss) earnings from continuing operations
                
                
                (9,257
                )
                
                
                2,206
                
                
                
                (4,747
                )(Loss)
      earnings from continuing operations
                
                
                (17,934
                )
                
                
                (528
                )
                
                
                2,212Net
      (loss) earnings
                
                
                (13,473
                )
                
                
                4,933
                
                
                
                7,629Earnings
      per shareBasic(Loss)
      earnings from continuing operations
                
                
                (0.76
                )
                
                
                (0.02
                )
                
                
                0.10Net
      (loss) earnings
                
                
                (0.57
                )
                
                
                0.21
                
                
                
                0.33Diluted(Loss)
      earnings from continuing operations
                
                
                (0.76
                )
                
                
                (0.02
                )
                
                
                0.09Net
      (loss) earnings
                
                
                (0.57
                )
                
                
                0.21
                
                
                
                0.32





The
decrease in net operating revenue from $59.0 million for the year ended December
31, 2007 to $53.0 million for the year ended December 31, 2008 is primarily the
result of a $9.1 million decline in gaming revenue at our properties in Colorado
partially offset, by a $1.7 million increase in gaming revenue and a $0.5
million increase in hotel, food and beverage revenue at our casino in Edmonton
and a $0.5 million decline in promotional allowances at our casino in Central
City, Colorado. Management attributes the decline in revenue, particularly at
our Colorado properties, to a decline in consumer discretionary income,
increased fuel prices for a majority of the year and a smoking ban that went
into effect on January 1, 2008.





The
increase in operating costs and expenses from $57.4 million for the year ended
December 31, 2007 to $63.1 million for the year ended December 31, 2008 is
primarily due to the write-off of $9.3 million of goodwill related to our
investments in our properties in Central City, Colorado and Cripple Creek,
Colorado, increased charges related to the amortization of restricted stock and
an increase in overall depreciation charges resulting from gaming and non-gaming
equipment additions in 2007 and 2008, partially offset by a decline in gaming
expense resulting from reduced gaming revenue.





The
increases in net operating revenue and operating costs and expenses from 2006 to
2007 are primarily the result of the opening and operations of two new casinos.
Revenue and operating expenses for the year ended December 31, 2007 reflect the
first full year of operations at our casinos in Central City, Colorado and
Edmonton, Canada. Our results for the year ended December 31, 2006 reflect new
casino operations of 5.5 months in Central City and 1.5 months in Edmonton. In
2006, we incurred approximately $3.6 million of preopening expenses in
connection with these new casinos.





-32-


The
decrease in earnings from continuing operations from a loss of $0.5 million for
the year ended December 31, 2007 to a loss of $17.9 million for the year ended
December 31, 2008, is primarily the result of the decline in overall operations,
the write-off of $9.3 million of goodwill and an increase in our tax expense of
$4.9 million, due primarily to the establishment of a valuation allowance for
our U.S. deferred tax assets of approximately $3.8 million. Additionally, in
connection with the establishment of a tax valuation allowance, we did not
record a tax benefit on U.S. losses during 2008. We recorded a tax benefit on
U.S. losses during 2007.





The
decrease in earnings from continuing operations from earnings of $2.2 million
for the year ended December 31, 2006 to a loss of $0.5 million for the year
ended December 31, 2007 is primarily the result of increased interest charges on
debt associated with our new properties and the 2006 recognition of $5.2 million
in other income relating to the sale of our interest in a casino development
project located in South Africa. For the year ended December 31, 2006, we
capitalized $2.0 million of interest charges towards construction of our new
casinos. No interest was capitalized for the year ended December 31,
2007.





Net
revenue by property for the years ended December 31, 2008, 2007 and 2006 is
summarized below (in thousands):





For
      the Year Ended December 31, (1)2008
                  
                  
                  2007
                  
                  
                  2006Century
      Casino & Hotel (Edmonton, Alberta, Canada)
                  
                  $
                  21,956
                  
                  
                  $
                  19,297
                  
                  
                  $
                  2,325Womacks
      (Cripple Creek, Colorado)
                  
                  
                  11,243
                  
                  
                  
                  16,722
                  
                  
                  
                  16,255Century
      Casino & Hotel (Central City, Colorado)
                  
                  
                  17,435
                  
                  
                  
                  20,374
                  
                  
                  
                  8,617Cruise
      Ships
                  
                  
                  2,401
                  
                  
                  
                  2,602
                  
                  
                  
                  2,991Casinos
      Poland (Poland)(2)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Corporate
                  
                  
                  7
                  
                  
                  
                  48
                  
                  
                  
                  15Net
      revenue
                  
                  $
                  53,042
                  
                  
                  $
                  59,043
                  
                  
                  $
                  30,203


(1)
            Excludes
      discontinued operations.


(2)
            Acquired
      March 12, 2007 and accounted for as an equity
  investment.





Operating
earnings and (losses) from continuing operations by property for the years ended
December 31, 2008, 2007 and 2006 are summarized below (in
thousands):





For
      the Year Ended December 31,(1)2008
                  
                  
                  2007
                  
                  
                  2006Century
      Casino & Hotel (Edmonton, Alberta, Canada)
                  
                  $
                  6,486
                  
                  
                  $
                  4,363
                  
                  
                  $
                  (1,369
                  )Womacks
      (Cripple Creek, Colorado) (2)
                  
                  
                  (7,371
                  )
                  
                  
                  3,785
                  
                  
                  
                  4,498Century
      Casino & Hotel (Central City, Colorado) (3)
                  
                  
                  (1,252
                  )
                  
                  
                  2,167
                  
                  
                  
                  (1,446
                  )Cruise
      Ships
                  
                  
                  150
                  
                  
                  
                  (100
                  )
                  
                  
                  509Casinos
      Poland (Poland)(4)
                  
                  
                  809
                  
                  
                  
                  563
                  
                  
                  
                  -Corporate
                  
                  
                  (8,079
                  )
                  
                  
                  (8,572
                  )
                  
                  
                  (6,939
                  )Operating
      (loss) earnings from continuing operations
                  
                  $
                  (9,257
                  )
                  
                  $
                  2,206
                  
                  
                  $
                  (4,747
                  )


(1)
            Excludes
      discontinued operations.


(2)
            Includes
      $7.2 million write-off of goodwill for the year ended December 31,
      2008.


(3)
            Includes
      $2.1 million write-off of goodwill for the year ended December 31,
      2008.


(4)
            Acquired
      March 12, 2007 and accounted for as an equity
  investment.





-33-


Year
Ended December 31, 2008 vs 2007





Revenue





The
following revenue discussion excludes discontinued operations. Revenue for the
years ended December 31, 2008 and 2007 was as follows (in
thousands):





Year
      ended December 31,2008
                  
                  
                  2007
                  
                  
                  Variance
                  
                  
                  Percentage
                    VarianceGaming
                  
                  $
                  49,949
                  
                  
                  $
                  57,513
                  
                  
                  $
                  (7,564
                  )
                  
                  
                  (13.2
                  %)Hotel,
      food and beverage
                  
                  
                  8,669
                  
                  
                  
                  8,027
                  
                  
                  
                  642
                  
                  
                  
                  8.0
                  %Other
                  
                  
                  1,935
                  
                  
                  
                  1,545
                  
                  
                  
                  390
                  
                  
                  
                  25.2
                  %Gross
      revenue
                  
                  
                  60,553
                  
                  
                  
                  67,085
                  
                  
                  
                  (6,532
                  )
                  
                  
                  (9.7
                  %)Less
      promotional allowances
                  
                  
                  (7,511
                  )
                  
                  
                  (8,042
                  )
                  
                  
                  531
                  
                  
                  
                  (6.6
                  %)Net
      operating revenue
                  
                  $
                  53,042
                  
                  
                  $
                  59,043
                  
                  
                  $
                  (6,001
                  )
                  
                  
                  (10.2
                  %)





Gaming
revenue





Gaming
revenue decreased by $7.6 million, or 13.2%, from $57.5 million in 2007 to $49.9
million in 2008. Declines in our Colorado operations were partially offset by
increased gaming revenue at our casino in Edmonton.





Gaming
revenue at the Century Casino & Hotel in Edmonton increased by $1.7 million,
or 11.6%, from $14.6 million in 2007 to $16.3 million in 2008, primarily due to
increased play at the casino resulting from additional slot machines and
increased traffic from the showroom. Gaming revenue in Canadian dollars
increased by CAD 1.8 million, or 11.3%, from CAD 15.5 million in 2007 to CAD
17.3 million in 2008. This is the result of an increase of 5.3% in slot revenue
and 19.9% in table revenue. The Alberta Gaming and Liquor Commission increased
the number of slot machines at the casino from 600 to 650 in September 2007. In
addition, we introduced 24-hour poker at the casino during the fourth quarter of
2007, which we believe has helped to attract more customers.





Gaming
revenue at Womacks decreased by $5.9 million, or 32.1%, from $18.3 million in
2007 to $12.4 million in 2008. Management believes that gaming revenue was
negatively impacted by a 9.6% decline in the Cripple Creek gaming market, which
is where Womacks is located, and can be attributed to a decline in consumer
discretionary income, increased fuel prices for a majority of the year and a
smoking ban that went into effect on January 1, 2008.  The Cripple
Creek gaming market experienced a smaller decline than either the Central City
or Black Hawk gaming markets, which posted declines of 15.9% and 12.5% in 2008,
respectively.  Management believes that a decision by several casinos
in Cripple Creek to claim an exemption to the smoking ban contributed to the
smaller decline in Cripple Creek than either Central City or Black Hawk (the
last casino permitting smoking stopped allowing it on October 9, 2008). Our
market share of the Cripple Creek gaming revenue declined from 11.8% in 2007 to
9.0% in 2008. In late May 2008, a new larger casino opened in Cripple Creek.
Management also believes that we lost a significant amount of our customer base
due to a renovation that we began during the fourth quarter of 2007 and
continued through the first quarter of 2008. We believe the renovation has
upgraded the gaming floor and dining area, but may have inconvenienced customers
which ultimately led to our decreased revenue. Womacks has continued the effort
to improve the customer experience by converting 100% of the machines on the
floor to TITO devices. We are currently reviewing various strategies to increase
gaming revenue at Womacks.  In connection with the passage of
Amendment 50 in Colorado, we are planning to add a roulette table and craps
table to our casino, which management believes will help improve revenue at
Womacks.





-34-


Gaming
revenue at the Century Casino & Hotel in Central City decreased by $3.2
million, or 14.6%, from $22.1 million in 2007 to $18.9 million in 2008. Similar
to the Cripple Creek market, management believes that gaming revenue was
negatively impacted by a 15.9% decline in the Central City gaming market in 2008
and can be attributed to a decline in consumer discretionary income, increased
fuel prices for a majority of the year and the smoking ban that went into effect
on January 1, 2008. Our market share of the Central City gaming revenue
increased from 27.5% in 2007 to 28.3% in 2008. In connection with the passage of
Amendment 50 in Colorado, we are planning to add a roulette table and craps
table to our casino, which management believes will help improve revenue at the
casino.





Gaming
revenue aboard the cruise ships on which we operated decreased by $0.1 million,
or 6.2%, from $2.5 million in 2007 to $2.4 million in 2008, primarily due to
operation of one fewer ship in 2008.





Hotel,
food and beverage revenue





Hotel,
food and beverage revenue increased by $0.7 million, or 8.0%, from $8.0 million
in 2007 to $8.7 million in 2008. The combined effect of opening our hotel in
Edmonton in March 2007 and converting the dinner theater to a live music
showroom in August 2007 increased hotel, food and beverage revenue in Edmonton
by $0.5 million year over year. In addition, hotel, food and beverage revenue at
our Colorado operations increased by $0.2 million, primarily due to a special
food promotion held at Womacks.





Other
revenue





Other
revenue increased by $0.4 million, or 25.2%, from $1.5 million in 2007 to $1.9
million in 2008 primarily due to increased lottery sales and ATM surcharges
collected by our casino in Edmonton.





Promotional
allowances





Promotional
allowances decreased by $0.5 million, or 6.6%, from $8.0 million in 2007 to $7.5
million in 2008. This was primarily the result of decreased promotional
allowances at our casino in Central City of $0.5 million, the direct result of a
decline in gaming revenue at the property.





Operating Costs and
Expenses





The
following operating cost and expense discussion excludes discontinued
operations. Operating costs and expenses for the years ended December 31, 2008
and 2007 were as follows (in thousands):





Year
      ended December 31,2008
                  
                  
                  2007
                  
                  
                  Variance
                  
                  
                  Percentage
                    VarianceGaming
                  
                  $
                  20,432
                  
                  
                  $
                  22,398
                  
                  
                  $
                  (1,966
                  )
                  
                  
                  (8.8
                  %)Hotel,
      food and beverage
                  
                  
                  6,961
                  
                  
                  
                  7,442
                  
                  
                  
                  (481
                  )
                  
                  
                  (6.5
                  %)General
      and administrative
                  
                  
                  19,586
                  
                  
                  
                  21,389
                  
                  
                  
                  (1,803
                  )
                  
                  
                  (8.4
                  %)Impairments
      and other write-offs, net of recoveries
                  
                  
                  9,357
                  
                  
                  
                  (95
                  )
                  
                  
                  9,452
                  
                  
                  
                  -
                  %Depreciation
                  
                  
                  6,772
                  
                  
                  
                  6,266
                  
                  
                  
                  506
                  
                  
                  
                  8.1
                  %Total
      operating costs and expenses
                  
                  $
                  63,108
                  
                  
                  $
                  57,400
                  
                  
                  $
                  5,708
                  
                  
                  
                  9.9
                  %





Gaming
expenses





Gaming
expenses decreased $2.0 million, or 8.8%, from $22.4 million in 2007 to $20.4
million in 2008, primarily due to a decrease in gaming expenses at our Colorado
casinos that are directly related to decreased gaming revenue, partially offset
by increased expenses at our casino in Edmonton.





-35-


Gaming
expenses at the Century Casino & Hotel in Edmonton increased $0.9 million,
or 16.1%, from $5.3 million in 2007 to $6.2 million in 2008.  This
increase is primarily due to a $0.6 million increase in payroll expenses
resulting from the introduction of 24-hour poker in the fourth quarter of 2007
and an increase of $0.3 million in advertising and promotional charges. Gaming
expenses in Canadian dollars increased by CAD 0.9 million, or 16.7%, from CAD
5.7 million in 2007 to CAD 6.6 million in 2008.





Gaming
expenses at Womacks decreased $1.3 million, or 22.2%, from $6.0 million in 2007
to $4.7 million in 2008. This decrease is the result of a $0.7 million decrease
in gaming taxes resulting from the decrease in gaming revenue, a decline in
payroll expenses of $0.3 million and a decline in royalty expense of $0.3
million.  Womacks was not able to completely offset the decrease in
revenue by decreasing variable expenses in 2008. As part of a plan to bring
expenses back in line with revenue levels, management reduced gaming staff
levels during 2008. Management also continues to evaluate various marketing
strategies to attract customers back to this casino.





Gaming
expenses at the Century Casino & Hotel in Central City decreased by $1.0
million, or 11.7%, from $8.7 million in 2007 to $7.7 in 2008. The decrease in
gaming expenses is primarily the result of a $0.6 million decrease in gaming
taxes resulting from the decrease in gaming revenue, $0.3 million decrease in
payroll expenses and a small decrease in advertising and promotional charges. As
part of a plan to bring expenses back in line with revenue levels, management
reduced gaming staff levels during 2008. Also, certain management level
employees from the casino are now performing similar job functions at Womacks.
Their compensation is now allocated between Womacks and the Century Casino &
Hotel in Central City.





Gaming
expenses aboard the cruise ships on which we operate decreased by $0.5 million,
or 20.4%, from $2.3 million for 2007 to $1.8 million for the 2008 primarily due
to one less ship being in operation for the majority of 2007. In addition, in
2007 we wrote off approximately $0.2 million in costs associated with a ship
contract that we decided not to pursue.





Hotel,
food and beverage expenses





Hotel,
food and beverage expenses declined $0.5 million, or 6.5%, from $7.4 million in
2007 to $6.9 million in 2008. The decrease is primarily due to a $0.4 million
decrease in hotel, food and beverage charges at the Century Casino & Hotel
in Edmonton, the result of cost savings achieved by converting the dinner
theater to a live music showroom in 2007.





General
and administrative expenses





General
and administrative expenses decreased by $1.8 million, or 8.4%, from $21.4
million in 2007 to $19.6 million in 2008. General and administrative expenses
include facility maintenance, utilities, property and liability insurance,
property taxes, housekeeping, and all administrative departments, such as
information technology, accounting, human resources and internal
audit.





General
and administrative expenses at the Century Casino & Hotel in Edmonton
remained flat at $4.6 million when comparing 2008 to 2007. In CAD, general and
administrative expenses decreased by CAD 0.1 million, or 1.3%, from CAD 5.0
million in 2007 to CAD 4.9 million in 2008 primarily due to a decrease in
payroll expense.





General
and administrative expenses at Womacks decreased by $0.6 million, or 16.6%, from
$3.8 million in 2007 to $3.2 million in 2008, primarily due to a $0.5 million
decline in payroll expenses from reduced staffing and the recognition of a $0.1
million loss on the disposition of fixed assets in 2007.





-36-


General
and administrative expenses at the Century Casino & Hotel in Central City
decreased by $0.7 million, or 14.6%, from $4.5 million in 2007 to $3.8 million
in 2008. The decrease is primarily the result of decreases of $0.2 in payroll
expenses, $0.2 million in our property tax expense accrual, $0.2 million of
professional fees and $0.1 million of insurance expenses.





General
and administrative expenses aboard the cruise ships remained flat at $0.1
million when comparing 2008 to 2007.





Corporate
expenses decreased by $0.6 million, or 7.3%, from $8.4 million in 2007 to $7.8
million in 2008. The decrease in 2008 is due to a $0.5 million decrease in
payroll (excluding stock amortization costs) primarily from a decline in our
annual bonus expenses, a $0.1 million decrease in communication expenses, a $0.1
million decrease in travel and a $0.3 million decrease in legal, accounting and
other professional fees, offset by a $0.5 million increase in payroll primarily
due to stock compensation expenses related to the amortization of costs
associated with restricted stock and stock options issued in July
2007.





At
December 31, 2008, there was $1.9 million of total unrecognized compensation
expense related to unvested stock options and unvested restricted stock
remaining to be recognized. Of this amount, $1.1 million will be recognized
during 2009, and $0.8 million will be recognized in subsequent years through
2011.





Impairments
and other write-offs, net of recoveries





For the
year ended December 31, 2008, we recorded $9.3 million in impairments of
goodwill related to Womacks and the Century Casino and Hotel in Central City,
Colorado. During 2008, these operations experienced a significant decline in
gaming revenue. We deemed this to be an indicator of potential impairment under
the guidance set forth in SFAS No. 142, “Goodwill and Other Intangible Assets.”
As a result, we performed interim goodwill impairment analyses as of September
30, 2008 and determined that there would be no remaining value attributable to
goodwill. Accordingly, we wrote-off the entire goodwill balances related to
these operations.





Depreciation





Depreciation
expense increased by $0.5 million, or 8.1%, from $6.3 million in 2007 to $6.8
million in 2008. This increase is primarily due to $0.5 million of gaming
equipment and non-gaming equipment additions during 2007 and the completion of a
renovation project at Womacks in the first quarter of 2008 which contributed
$1.8 million of depreciable assets.  These assets are depreciated over
periods varying from three to seven years.





Non-operating
expense





The
following non-operating expense discussion excludes discontinued operations.
Non-operating expense for the years ended December 31, 2008 and 2007 was as
follows (in thousands):





Year
      ended December 31,2008
                          
                          
                          2007
                          
                          
                          Variance
                          
                          
                          Percentage
                            VarianceInterest
      income
                          
                          $
                          31
                          
                          
                          $
                          627
                          
                          
                          $
                          (596
                          )
                          
                          
                          (95.1
                          %)Interest
      expense
                          
                          
                          (4,130
                          )
                          
                          
                          (5,333
                          )
                          
                          
                          1,203
                          
                          
                          
                          22.6
                          %(Losses)
      gains on foreign currency transactions and other
                          
                          
                          (441
                          )
                          
                          
                          920
                          
                          
                          
                          (1,361
                          )
                          
                          
                          (147.9
                          %)Non-operating
      expense
                          
                          $
                          (4,540
                          )
                          
                          $
                          (3,786
                          )
                          
                          $
                          (754
                          )
                          
                          
                          (19.9
                          %)





-37-


Interest
income





Interest
income is directly related to the cash reserves we have on hand. Since December
31, 2007, we have reduced our outstanding third party debt related to our
casinos in Colorado from $30.6 million to $21.9 million as of December 31, 2008,
utilizing cash on hand. This decrease in available cash, combined with a
decrease in interest rates that we earn on our deposits, contributed to the
overall decline in interest income for the year ended December 31, 2008 compared
to the year ended December 31, 2007. Also, during 2007, we recognized
approximately $0.3 million of interest income related to a $5.8 million loan
that we made to the previous owners of Century Casinos Poland in connection with
our acquisition of Century Casinos Poland. We did not determine the
collectibility of the interest to be reasonably assured until we completed the
acquisition of Century Casinos Poland in 2007.





Interest
expense





The
decrease in interest expense is primarily due to a decrease in interest rates
and a decrease in our average debt balance from $51.9 million for the year ended
December 31, 2007 to $43.8 million for the year ended December 31, 2008. Our
weighted average interest rate, excluding the impact of the amortization of
deferred financing charges and one-time charges of $0.4 million for bank waivers
of financial covenants related to our Central City debt and Edmonton debt was
9.4% and 7.8% for the years ended December 31, 2007 and 2008,
respectively.





(Losses)
gains on foreign currency transactions and other





We
recognized foreign currency losses of $0.4 million for the year ended December
31, 2008 and foreign currency gains of $0.9 million for the year ended December
31, 2007. During 2008, we recorded approximately $0.6 million of losses on the
revaluation of loans that we deemed to be no longer permanently invested. This
was offset by approximately $0.2 million in gains resulting from the exchange of
currency. We have outstanding cash denominated in U.S. dollars, Canadian
dollars, Euros and South African rand.





Other
Items





Earnings
from equity investment





On March
12, 2007, we completed the acquisition of Century Casinos Poland. Century
Casinos Poland owns 33.3% of all shares issued by CPL. Our portion of CPL’s
earnings are recorded as earnings from equity investment. We began reporting our
share of CPL’s earnings in April 2007. We recorded $0.6 million of earnings from
our investment in CPL for the period between March 12, 2007 and December 31,
2007. For the year ended December 31, 2008, we recorded $0.8 million of earnings
from our investment in CPL.





Taxes





Our
effective tax rate for continuing operations was 65.7% and (29.4%) for the years
ended December 31, 2007 and 2008, respectively. The mix of domestic losses and
foreign earnings significantly impacts our rate. The tax benefit received on
losses incurred by our U.S. domestic entities is significantly higher than the
tax on income at our foreign operations, particularly in Mauritius. For the year
ended December 31, 2008, we incurred pre-tax losses for our U.S. based
operations (including corporate losses) of $19.2 million compared to pre-tax
earnings at our remaining operations of $5.4 million. Our taxes are further
adjusted for non-deductible permanent differences. Also, for the year ended
December 31, 2008, we established a $3.8 million valuation allowance for our
U.S. deferred taxes. If we conclude at a later date that the realization of
these deferred taxes are more likely than not, we will reduce the valuation
allowance as appropriate.





-38-


Minority
interest in subsidiary earnings and losses





For the
year ended December 31, 2007, we allocated net losses of less than $0.1 million
to various parties who hold a minority interest in our properties. For the year
ended December 31, 2008, we allocated earnings of $0.1 million to these parties.
For the 2007 period, we allocated approximately $0.2 million in losses to a
former partner in CC Tollgate LLC. On December 31, 2007, we purchased this
partner’s interest in CC Tollgate LLC. As a result, we now retain all the
earnings and losses for the casino in CC Tollgate LLC.





Discontinued
Operations





The
results of the operations of Century Casinos Africa (which include the Caledon
Hotel, Spa & Casino and the Century Casino Newcastle) and Century Casino
Millennium are classified as discontinued operations. The results of our
discontinued operations for the years ended December 31, 2008 and 2007 are below
(in thousands):





For
      the Year Ended
                    December
      31,2008
                  
                  
                  2007Gaming
      revenue
                  
                  $
                  24,840
                  
                  
                  $
                  28,158Net
      operating revenue
                  
                  
                  29,313
                  
                  
                  
                  32,611Total
      operating costs and expenses
                  
                  
                  22,418
                  
                  
                  
                  23,945Operating
      earnings from discontinued operations
                  
                  
                  6,895
                  
                  
                  
                  8,666Net
      earnings from discontinued operations
                  
                  
                  4,461
                  
                  
                  
                  5,461Earnings
      per share from discontinued operationsBasic
                  
                  
                  0.19
                  
                  
                  
                  0.23Diluted
                  
                  
                  0.19
                  
                  
                  
                  0.23





The
decrease in net operating revenue from $32.6 million for the year ended December
31, 2007 to $29.3 million for the year ended December 31, 2008 is due to a
decline in gaming revenue at our South African properties, primarily due to
lower customer attendance at the Caledon Hotel, Spa & Casino and a 17.2%
decline in the average exchange rate between the U.S. dollar and South African
rand. As Caledon is located approximately 60 miles from Cape Town, management
believes that higher fuel prices during 2008 led local patrons from Cape Town to
gamble in Cape Town as opposed to traveling to our casino.





The
decrease in operating costs and expenses from $23.9 million for the year ended
December 31, 2007 to $22.4 million for the year ended December 31, 2008 is due
to a decline in gaming expenses of approximately $1.3 million at our South
African properties, primarily from the decline in gaming revenue, and a decline
in property write-downs of approximately $0.1 million. During 2007, we wrote off
losses related to thefts at the Century Casino Newcastle.





-39-


Year
Ended December 31, 2007 vs 2006





Revenue





The
following revenue discussion excludes discontinued operations. Revenue for the
years ended December 31, 2007 and 2006 was as follows (in
thousands):





Year
      Ended December 31,2007
                  
                  
                  2006
                  
                  
                  Variance
                  
                  
                  Percentage
                    VarianceGaming
                  
                  $
                  57,513
                  
                  
                  $
                  31,741
                  
                  
                  $
                  25,772
                  
                  
                  
                  81.2
                  %Hotel,
      food and beverage
                  
                  
                  8,027
                  
                  
                  
                  2,626
                  
                  
                  
                  5,401
                  
                  
                  
                  205.7
                  %Other
                  
                  
                  1,545
                  
                  
                  
                  715
                  
                  
                  
                  830
                  
                  
                  
                  116.1
                  %Gross
      revenue
                  
                  
                  67,085
                  
                  
                  
                  35,082
                  
                  
                  
                  32,003
                  
                  
                  
                  91.2
                  %Less
      promotional allowances
                  
                  
                  (8,042
                  )
                  
                  
                  (4,879
                  )
                  
                  
                  (3,163
                  )
                  
                  
                  64.8
                  %Net
      operating revenue
                  
                  $
                  59,043
                  
                  
                  $
                  30,203
                  
                  
                  $
                  28,840
                  
                  
                  
                  95.5
                  %





Gaming
revenue





Gaming
revenue increased by $25.8 million, or 81.2%, from $31.7 million in 2006 to
$57.5 million in 2007 due primarily to the opening of two new casinos and hotels
in Central City (Colorado) and Edmonton (Alberta, Canada) (collectively referred
to as “the two new casino properties”).





The
opening of the two new casino properties increased gaming revenue by $25.6
million in 2007. The casinos in Central City and Edmonton opened in July 2006
and November 2006, respectively.





Gaming
revenue at Womacks increased by $0.5 million, or 2.6%, from $17.8 million in
2006 to $18.3 million in 2007. Management believes that revenues between October
2006 and January 2007 were negatively impacted by a series of winter storms that
hit Cripple Creek during this time.  These blizzards limited the
amount of traffic into this market. Also, in the fourth quarter of 2007, we
began a $1.8 million renovation at Womacks, which depressed revenue during the
period. Womacks continued the effort to improve the customer experience at
Womacks by converting 100% of the total machines on the floor to TITO
devices.





Gaming
revenue aboard the cruise ships on which we operate decreased by $0.3 million,
or 11.9%, from $2.8 million in 2006 to $2.5 million in 2007, primarily due to
the operation of fewer cruise ships in 2007.





Hotel,
food and beverage revenue





Hotel,
food and beverage revenue increased by $5.4 million, or 205.7%, from $2.6
million in 2006 to $8.0 million in 2007. The opening of the two new casino
properties increased hotel, food and beverage revenue by $5.3 million in 2007.
Management believes that delays in opening the hotel at our Edmonton casino
hampered hotel, food and beverage revenue. The hotel opened in March
2007.





Other
revenue





Other
revenue increased by $0.8 million, or 116.1%, from $0.7 million in 2006 to $1.5
million in 2007 primarily due a full year of ancillary revenue related to
lottery sales and ATM surcharges collected by our casino in
Edmonton.





-40-


Promotional
allowances





Promotional
allowances increased by $3.1 million, or 64.8%, from $4.9 million in 2006 to
$8.0 million in 2007. The addition of the two new casino properties increased
promotional allowances by $3.1 million in 2007.





Operating Costs and
Expenses





The
following operating costs and expenses discussion excludes discontinued
operations. Operating costs and expenses for the years ended December 31, 2007
and 2006 were as follows (in thousands):





Year
      Ended December 31,2007
                  
                  
                  2006
                  
                  
                  Variance
                  
                  
                  Percentage
                    VarianceGaming
                  
                  $
                  22,398
                  
                  
                  $
                  13,044
                  
                  
                  $
                  9,354
                  
                  
                  
                  71.7
                  %Hotel,
      food and beverage
                  
                  
                  7,442
                  
                  
                  
                  3,523
                  
                  
                  
                  3,919
                  
                  
                  
                  111.2
                  %General
      and administrative
                  
                  
                  21,389
                  
                  
                  
                  14,155
                  
                  
                  
                  7,234
                  
                  
                  
                  51.1
                  %Impairments
      and other write-offs, net of recoveries
                  
                  
                  (95
                  )
                  
                  
                  956
                  
                  
                  
                  (1,051
                  )
                  
                  
                  (109.9
                  %)Depreciation
                  
                  
                  6,266
                  
                  
                  
                  3,272
                  
                  
                  
                  2,994
                  
                  
                  
                  91.5
                  %Total
      operating costs and expenses
                  
                  $
                  57,400
                  
                  
                  $
                  34,950
                  
                  
                  $
                  22,450
                  
                  
                  
                  64.2
                  %





Gaming
expenses





Gaming
expenses increased by $9.4 million, or 71.7%, from $13.0 million in 2006 to
$22.4 million in 2007, primarily due to increased gaming revenue resulting from
the addition of the two new casino properties and increased marketing charges at
Womacks.





The
addition of the two new casino properties increased gaming expenses by $8.4
million in 2007.





Gaming
expenses at Womacks increased $0.9 million, or 17.1%, from $5.1 million in 2006
to $6.0 million in 2007. The increase in 2007 is primarily the result of $0.3
million in increased marketing expenditures related to a special promotion in
the third quarter of 2007, a $0.4 million increase in royalties associated with
the increase in casino revenue for the period, and a $0.2 million increase in
payroll expense.





Gaming
expenses aboard the cruise ships increased $0.1 million, or 4.2%, from $2.2
million in 2006 to $2.3 million in 2007. The increase in 2007 is primarily due
to the write-off of approximately $0.2 million in costs associated with a cruise
ship contract that we decided not to pursue, offset by a decrease in gaming
expenses resulting from the decline in gaming revenue.





Hotel,
food and beverage expenses





Hotel,
food and beverage expenses increased by $3.9 million, or 111.2%, from $3.5
million in 2006 to $7.4 million in 2007. The addition of the two new casino
properties increased hotel, food and beverage expenses by $3.8 million in 2007.
The remaining increase of $0.1 million in 2007 is directly related to the
increase in hotel, food and beverage revenue at Womacks.





-41-


General
and administrative expenses





General
and administrative expenses increased by $7.2 million, or 51.1%, from $14.2
million in 2006 to $21.4 million in 2007. General and administrative expenses
include facility maintenance, utilities, property and liability insurance,
property taxes, housekeeping, and all administrative departments, such as
accounting, human resources and internal audit.





The
addition of the two new casino properties increased general and administrative
expenses by $5.0 million in 2007. Prior to the opening of the two new casino
properties, a significant portion of the general and administrative expenses
related to these properties were preopening expenses.





General
and administrative expenses at Womacks increased by $0.2 million, or 6.6%, from
$3.6 million in 2006 to $3.8 million in 2007, primarily due to increases in
repairs and maintenance expenses and an increase in property taxes.





General
and administrative expenses aboard the cruise ships remained flat in
2007.





Corporate
expenses increased by $1.9 million, or 29.1%, from $6.5 million in 2006 to $8.4
million in 2007. The increase in 2007 is primarily due to a $0.9 million
increase in payroll expense resulting from additional staffing and the
amortization of costs associated with restricted stock and stock options issued
in July 2007, $0.6 million in increased legal, accounting and other professional
fees, $0.2 million in increased travel expenses and $0.1 million in increased
insurance charges.





Impairments
and other write-offs, net of recoveries





In 2007,
we recovered approximately $0.2 million in costs related to slot machines
previously written off at our casino in Central City. This recovery was offset
by approximately $0.1 million in losses pertaining to a theft at one of the
ship-based casinos.





In 2006,
we wrote-off non-operating casino property and land held for sale located in
Wells, Nevada for $0.4 million. We also determined that approximately $0.6
million of fixed assets at our casino in Central City were
obsolete.





Depreciation





Depreciation
expense increased by $3.0 million, or 91.5%, from $3.3 million in 2006 to $6.3
million in 2007. The addition of the two new casino properties increased
depreciation expense by $2.9 million in 2007. As of December 31, 2006, the two
new casino properties contributed additional depreciable fixed assets of $64.5
million. Also contributing to additional depreciation expense in 2007 was the
implementation of a company-wide accounting software program in the second half
of 2006.


-42-





Non-operating (expense)
income





The
following non-operating (expense) income discussion excludes discontinued
operations. Non-operating (expense) income for the years ended December 31, 2007
and 2006 are as follows (in thousands):





Year
      Ended December 31,2007
                        
                        
                        2006
                        
                        
                        Variance
                        
                        
                        Percentage
                          VarianceInterest
      income
                        
                        $
                        627
                        
                        
                        $
                        583
                        
                        
                        $
                        44
                        
                        
                        
                        7.5
                        %Interest
      expense
                        
                        
                        (5,333
                        )
                        
                        
                        (2,525
                        )
                        
                        
                        (2,808
                        )
                        
                        
                        111.2
                        %Gain
      on sale of Gauteng interest
                        
                        
                        -
                        
                        
                        
                        5,231
                        
                        
                        
                        (5,231
                        )
                        
                        
                        -
                        %Gains
      on foreign currency transactions and other
                        
                        
                        920
                        
                        
                        
                        414
                        
                        
                        
                        506
                        
                        
                        
                        122.2
                        %Non-operating
      (expense) income
                        
                        $
                        (3,786
                        )
                        
                        $
                        3,703
                        
                        
                        $
                        (7,489
                        )
                        
                        
                        (202.2
                        %)





Interest
income





Interest
income in 2007 consisted of approximately $0.3 million of interest income
related to a $5.8 million loan that we made to the previous owners of CCP in
connection with our acquisition of CCP. We did not determine the collectibility
of the interest to be reasonably assured until we completed the acquisition of
CCP. The remaining interest income in 2007 is directly related to available cash
on hand or restricted cash deposits.





Interest
expense





Interest
expense increased primarily due to our ability to capitalize a significant
portion of our interest expense on loans related to the construction of our new
properties prior to their openings in 2006. Our weighted average interest rate,
excluding the impact of the amortization of deferred financing charges, was 8.7%
and 9.4% for the years ended December 31, 2006 and 2007,
respectively.





Gain
on sale of Gauteng Interest





On
September 28, 2006, we sold our interest in a casino development project located
in Gauteng, South Africa for $5.3 million (ZAR 40.3 million), less commissions
of $0.1 million (ZAR 1.3 million).





Gain
on foreign currency transactions and other





We
recognized foreign currency gains of $0.9 million and $0.4 million in 2007 and
2006, respectively, primarily resulting from the exchange of currency. We have
outstanding cash denominated in U.S. dollars, Canadian dollars, Euros and South
African rand.





Other
Items





Earnings
from equity investments





On March
12, 2007, we completed the acquisition of CCP. CCP owns 33.3% of all shares
issued by Casinos Poland (“CPL”). Our portion of CPL’s earnings is recorded as
earnings from equity investments.





-43-


Taxes





Our
effective tax rate for continuing operations was 140.2% and 65.7% for the years
ended December 31, 2006 and 2007, respectively. The mix of domestic and foreign
earnings and losses significantly impacts our rate. The tax benefit received on
losses incurred by our U.S. domestic entities (primarily from our new operation
in Central City, Colorado) is significantly higher than the tax on income at our
foreign operations, particularly in Mauritius. For the year ended December 31,
2007, we incurred pre-tax losses for our U.S. based operations (including
corporate losses) of $4.5 million compared to pre-tax earnings at our remaining
operations of $3.0 million. For the year ended December 31, 2006, we incurred
pre-tax losses for our U.S. operations (including corporate losses) of $3.8
million and from our casino in Edmonton of $1.7 million. During 2006, CRL sold
its interest in a casino development project located in Gauteng, South Africa.
The $5.2 million gain on this sale was taxed at a statutory rate of 3.0%. Our
taxes are further adjusted for items identified in the preparation of our tax
returns and the non-deductibility of permanent differences.





Minority
interest in subsidiary earnings and losses





For the
year ended December 31, 2006, we allocated net losses of $1.8 million to various
parties who hold a minority interest in our properties. For the year ended
December 31, 2007, we allocated net losses of less than $0.1 million to these
parties. In accordance with U.S. accounting standards, we recognized a $1.0
million charge to the income statement in the fourth quarter 2007 for CTL’s
losses we previously allocated against a $1.0 million note held by the former
minority partner that we assumed in the purchase of the remaining 35% equity
interest in CTL on December 31, 2007. We now retain all the earnings and losses
for the casino in CC Tollgate LLC.





Discontinued
operations





The
results of the operations of Century Casinos Africa (which include the Caledon
Hotel, Spa & Casino and the Century Casino Newcastle) and Century Casino
Millennium are classified as discontinued operations. The results of our
discontinued operations for the years ended December 31, 2007 and 2006 are below
(in thousands):





For
      the Year Ended December 31,2007
                  
                  
                  2006Gaming
      revenue
                  
                  $
                  28,158
                  
                  
                  $
                  22,758Net
      operating revenue
                  
                  
                  32,611
                  
                  
                  
                  26,082Total
      operating costs and expenses
                  
                  
                  23,945
                  
                  
                  
                  18,107Operating
      earnings from discontinued operations
                  
                  
                  8,666
                  
                  
                  
                  7,975Net
      earnings from discontinued operations
                  
                  
                  5,461
                  
                  
                  
                  5,417Earnings
      per share from discontinued operationsBasic
                  
                  
                  0.23
                  
                  
                  
                  0.23Diluted
                  
                  
                  0.23
                  
                  
                  
                  0.23





The
increase in net operating revenue from $22.8 million for the year ended December
31, 2006 to $28.2 million for the year ended December 31, 2007 is due to an
increase in net operating revenue at the Century Casino and Hotel in Newcastle,
South Africa of $5.8 million, offset by a decline in gaming revenue of $0.3
million at the Caledon. The casino in Newcastle operated in a temporary facility
until December 2006, at which time we opened a new permanent facility. We did
not acquire our ownership interest in Century Casino Newcastle until April 2006.
Revenue at the Caledon was impacted by a 4.6% decline in the average exchange
rate between the U.S. dollar and South African rand.





-44-


The
increase in operating costs and expenses from $18.1 million for the year ended
December 31, 2006 to $23.9 million for the year ended December 31, 2007 is due
to a full year of operations at the Century Casino Newcastle which led to an
overall expense increase of $4.4 million at this property and increased gaming
expenses at the Caledon of $0.2 million, primarily due to increased marketing
charges. In April 2006, we acquired the remaining 50% interest that we
previously did not own in Century Casino Millennium. A full year of operations
at this property contributed $0.5 million of additional gaming expenses in 2007.
Finally, CCA recovered approximately $0.4 million of a previously written-off
loan.





Liquidity
and Capital Resources





Cash
Flows





Cash and
cash equivalents totaled $7.8 million at December 31, 2008 (excluding cash of
$1.5 million related to discontinued operations), and the Company had negative
working capital (current assets minus current liabilities) of $7.8 million
(excluding assets and liabilities held for sale) compared to cash and cash
equivalents of $11.7 million (excluding cash of $6.1 million related to
discontinued operations) and negative working capital of $0.9 million (excluding
assets and liabilities held for sale) at December 31, 2007.





We use
the cash flows generated by our operations 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 either
cash on hand or funds provided by investing and/or financing
activities.





Cash
provided by operating activities was $7.7 million and $13.5 million in 2008 and
2007, respectively. The change from the 2007 period relates primarily to a $6.1
million decrease in pre-tax earnings from our Colorado and South Africa
operations (excluding the write-offs of goodwill at our Colorado operations),
offset by a $2.3 million increase in pre-tax earnings in Edmonton, Canada. Our
cash flows from operations have historically been positive and sufficient to
fund ordinary operations. If the anticipated sale of CCA does not occur,
management believes that we have sufficient cash to fund ordinary operations,
primarily from cash flows in Canada and South Africa. For a description of our
operating activities, please refer to the consolidated statements of cash flows
in Part II, Item 8, “Financial Statements and Supplementary Data,” and “Results
of Operations” in this Item 7.





Cash used
in investing activities of $2.5 million for the year ended December 31, 2008
consisted of $0.7 million in capital project additions at Womacks; $0.2 million
in gaming and non-gaming addition in Central City; $0.4 million of furniture and
non-gaming equipment additions in Edmonton; $0.9 million in capital project and
gaming equipment additions at Caledon; $0.6 million in gaming equipment and
capital project additions at Newcastle; and $0.2 million of cumulative additions
at our other remaining properties. These cash payments were offset by $0.5
million received from the disposition of assets.





Cash used
in investing activities of $18.2 million for the year ended December 31, 2007
consisted of net payments of $3.8 million towards the acquisition of G5; $3.3
million towards the buyout of our minority partner in Central City; $1.4 million
in residual payments towards the buyout of our minority partner in Edmonton;
$0.6 million in residual payments resulting from our 2006 acquisition of CNEW;
$2.8 million in property improvements and equipment additions at Womacks; $0.7
million towards construction in Edmonton; $1.6 million in property and gaming
equipment additions in Central City; $1.5 million towards the development of a
golf course and other improvements at the Caledon; $2.5 million towards property
improvements and furniture and fixtures at our Newcastle property; $0.2 million
for additional gaming equipment on the ships; and $0.1 million of cumulative
additions at our other remaining properties. These repayments were offset by a
release of restricted cash in the amount of $0.2 million related to the
construction of the casino in Edmonton and $0.1 million in proceeds from the
disposition of property.





-45-


Cash used
in financing activities of $12.5 million for the year ended December 31, 2008
consisted of repayments of $2.2 million towards the Central City term loan;
repayments of $1.4 million towards the Edmonton term loan; net repayments of
$6.6 million towards the Womacks revolving credit facility; net repayments of
$2.6 million towards our South African term loans; payments of $0.2 million for
fees associated with the amendment of debt agreements for the Central City term
loan and Womacks revolving credit facility; and other repayments of $0.2
million. These repayments were offset by $0.7 million of proceeds from stock
option exercises.





Cash used
in financing activities of $11.3 million for the year ended December 31, 2007
consisted of prepayments of $12.7 million of principal on the Central City term
loan; net repayments of $2.0 million towards the Central City revolving credit
facility; repayments of $1.5 million towards our Caledon term loan; repayments
of $1.3 million towards our Newcastle term loan; and other net repayments of
$0.1 million. These repayments were offset by net borrowings of $3.7 million
towards the Womacks revolving credit facility; borrowings of $0.7 million under
the loan agreement with Canadian Western Bank for the Edmonton property; the
release of $1.2 million in restricted cash previously required for our listing
on the Vienna Stock Exchange; and $0.7 million from the exercise of stock
options.





Common
Stock Repurchase Program





In March 2000,
ourboard ofdirectors approved a
discretionary program to repurchase up to $5.0million ofouroutstanding common
stock.We did
not purchase any shares of our common stock on the open market in 2007 or
2008.The total remaining
authorization under the repurchase program was $1.2 million as of December 31,
2008. The repurchase program has no set expiration or termination
date.





Sources
of Liquidity





Our primary sources of liquidity and
capital resources have been cash flow from operations and borrowings from banks
and proceeds from the issuance of equity securities.





On
December 5, 2008, we entered into an agreement to sell the Century Casino
Millennium, for approximately $2.3 million (CZK 22.0 million plus $1.2
million).  Approximately $1.5 million (CZK 22.0 million plus $0.4
million) was paid to us at closing on February 11, 2009, with the balance
payable over the next 12 months.





On
December 19, 2008, CRL entered into an agreement to sell all of the outstanding
shares of CCA for a gross selling price of $49.2 million (ZAR 460.0 million)
less the balance of third party South African debt and other agreed to amounts.
Net proceeds from the transaction are expected to be approximately $38.3 million
(ZAR 357.3 million) and are payable at closing, which is expected to occur in
the first half of 2009. CCA owns the Caledon Hotel, Spa & Casino and 60% of
the Century Casino & Hotel in Newcastle, South Africa. The closing of the
transaction is subject to customary conditions including, but not limited to,
approvals by the Western Cape Gambling and Racing Board, the KwaZulu-Natal
Gambling Board and other regulatory approvals.





We are
currently reviewing strategies to reduce our overall interest charges. This
includes, but is not limited to, the refinancing or repayment of some or all of
our outstanding debt.





-46-


Short-Term
Liquidity and Capital Requirements





We expect that the primary source of
our future operating cash flows will be from our gaming operations, supplemented
by the proceeds from the sale of CCA. We will continue to rely on term loans
with commercial banks or other debt instruments to supplement our working
capital and investing requirements. Expected short-term uses of cash include
ordinary operations, $1.0 million of approved capital expenditures at our
casinos, foreign income tax payments, and interest and principal payments on
outstanding debt. On February 13, 2009, we repaid $1.0 million of principal on
our debt in Cripple Creek, Colorado and $0.8 million of principal on our debt in
Central City, Colorado in order to remain in compliance with their respective
restrictive covenants.  In connection with the sale
of our interest in CCA, we have pledged to repay the entire balance outstanding
($3.1 million on February 28, 2009) on our debt related to ourCripple Creek,Coloradoproperty. Proceeds from the
sale of CCA may also be used to repay other debt, repurchase shares of our
outstanding common stock, fund future acquisitions and/or fund capital
improvements at existing locations.





We
believe that our cash at December 31, 2008, together with expected cash flows
from operations and from the sales of our casinos in Prague and South Africa,
will be sufficient to fund our anticipated operating costs, capital expenditures
at existing properties and satisfy our current debt repayment obligations. 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 we expect 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
or at all. As a result, limitations on our capital resources could delay or
cause us to abandon certain plans for the development of new
projects.





Contractual
Obligations and Commercial Commitments





The
following is a schedule of our contractual obligations and commercial
commitments as of December 31, 2008 (amounts in thousands):





Payments
      Due by Period (1)Total
                
                
                Less
      than
                  1
      year
                
                
                1-3
      years
                
                
                4-5
      years
                
                
                More
      than
                  5
      yearsDebt
      (2)
                
                $
                37,363
                
                
                $
                8,862
                
                
                $
                17,483
                
                
                $
                11,018
                
                
                $
                -Estimated
      interest payments on long-term debt (3)
                
                
                11,259
                
                
                
                2,891
                
                
                
                4,601
                
                
                
                2,593
                
                
                
                1,174Operating
      Leases
                
                
                1,038
                
                
                
                341
                
                
                
                528
                
                
                
                167
                
                
                
                2Other
                
                
                1,198
                
                
                
                1,198
                
                
                
                -
                
                
                
                -
                
                
                
                -Total
                
                $
                50,858
                
                
                $
                13,292
                
                
                $
                22,612
                
                
                $
                13,778
                
                
                $
                1,176


(1)
Excludes discontinued operations.


(2)
Includes capital lease obligations.


(3)
Estimated interest payments on long-term debt are based on principal amounts
outstanding at December 31, 2008 and a forecasted prime rate of 3.75% on
U.S.-based debt. For a description of our outstanding long-term debt, please see
Note 8 of the notes to the consolidated financial statements.





-47-


Off-Balance Sheet
Arrangements





In
December 2007, in lieu of a restricted cash deposit, we issued a guarantee of
$1.1 million (€0.8 million) to Bank Austria in connection with our listing of
ADCs on the Vienna Stock Exchange. The guarantee is provided to reimburse Bank
Austria for any and all amounts incurred by it as a result of claims or damages
and lawsuits that an ADC holder may raise or file against us. The guarantee is
required by the Oesterreichische Kontrollbank, the holder of our global
certificate representing the ADCs.





We do not
have any other off-balance sheet arrangements, transactions, obligations or
other relationships with unconsolidated entities that would be expected to have
a material current or future effect upon our financial 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, Equity
Investment and Other Intangible Assets – At December 31, 2008 we had
goodwill of $4.0 million (excluding goodwill of $0.7 million at our discontinued
operations) and an equity investment of $10.5 million. Our discontinued
operations also have casino licenses of $8.4 million. Our goodwill results from
the acquisitions of casino and hotel operations and represents the excess of the
purchase price over the fair value of identifiable net tangible and intangible
assets acquired. Goodwill, equity investments 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. 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 completed interim and annual
assessments of our goodwill, our equity investment and other intangibles with
indefinite lives during 2008. As a result of our testing, we wrote off
approximately $9.3 million of goodwill related to our properties in Colorado for
the year ended December 31, 2008.





Property and
Equipment – We have significant capital invested in our property and
equipment, which represents approximately 78% of our total assets (excluding
property and equipment at our discontinued operations). Judgments are made in
determining the estimated useful lives of assets, salvage values to be assigned
to assets and if or when an asset has been impaired. The accuracy of these
estimates affects the amount of depreciation expense recognized in our financial
results and the extent to which we have a gain or loss on the disposal of the
asset. We assign lives to our assets based on our standard policy, which we
believe is representative of the useful life of each category of assets. We
review the carrying value of our property and equipment whenever events and
circumstances indicate that the carrying value of an asset may not be
recoverable from the estimated future cash flows expected to result from its use
and eventual disposition. The factors we consider in performing this assessment
include current operating results, trends and prospects, as well as the effect
of obsolescence, demand, competition and other economic factors.





-48-


Point Liability
Program – Members of our casinos’ player’s clubs earn points based on
their volume of play (typically as a percentage of coin-in) or are awarded
points for their visits at certain of our casinos. Players can accumulate points
over time, which they may redeem at their discretion under the terms of the
program. Points can be redeemed for cash and/or various amenities at the casino,
such as meals, hotel stays and gift shop items. The cost of the points is offset
against the revenue that was generated in the period during which the points
were earned. The value of unused or unredeemed points is included in accounts
payable and accrued liabilities on our consolidated balance sheet. The
expiration of unused points results in a reduction of the corresponding
liability. We use historical data to assist in the determination of estimated
accruals. We had $0.2 million and $0.3 million (excluding our discontinued
operations) accrued for the cost of anticipated point redemption at December 31,
2008 and 2007, respectively.





Stock-Based
Compensation – We use the Black-Scholes option pricing model to estimate
the fair value of stock options. The Black-Scholes model requires management to
estimate certain variables. Such estimates include the estimated lives of
options from grant date to exercise date, the volatility of the underlying
shares and estimated future dividend rates. The two most significant estimates
in the Black-Scholes model are volatility and expected life. An increase in the
volatility rate increases the value of stock options and a decrease causes a
decline in value. We estimate expected volatility using an average of our common
stock price over the expected life of the option. For expected lives, an
increase in the expected life of an option increases its value. For all options
currently outstanding, we have estimated their expected lives to be the average
of their vesting term and their contractual terms.





In
addition, SFAS No. 123R, “Share-Based Payment,” requires that equity
compensation be recorded net of estimated forfeitures over the vesting term.
Determining this estimate requires significant judgment on the number of actual
awards that will ultimately vest over the term of the award. This estimate is
reviewed quarterly and any change in actual forfeitures in comparison to
estimates may cause an increase or decrease in the ultimate expense recognized
in that period.





Income
Taxes – Significant judgment is required in developing our income tax
provision. Due to the uncertainty of future taxable income, we have recorded a
valuation allowance of $3.8 million on our U.S. deferred tax assets as of
December 31, 2008. We will assess the continuing need for a valuation allowance
that results from uncertainty regarding our ability to realize the benefits of
our deferred tax assets. If we conclude that our prospects for the realization
of our deferred tax assets are more likely than not, we will reduce our
valuation allowance as appropriate.





Recent Accounting Pronouncements





Information
regarding accounting pronouncements that have been issued but not yet adopted by
us is incorporated by reference from Note 2 to our consolidated financial
statements.





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 may 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,
2008. Actual results may differ materially.





As of and
subsequent to December 31, 2008, we have no derivative instruments.





-49-


Interest Rate
Sensitivity





We are
subject to interest rate risk on our outstanding borrowings with Wells Fargo and
Nedbank Limited. Interest on amounts outstanding under these loan agreements are
variable and thus subject to fluctuations in their various prime or LIBOR
indexed rates. Based on our outstanding borrowings (including those related to
our discontinued operations) of $37.4 million as of December 31, 2008, a 1.0%
movement in the weighted average interest rate would result in an approximate
$0.2 million annualized increase or decrease in interest expense.





As of and subsequent to
December 31, 2008, we have no outstanding interest rate swap
agreements.





Foreign
Currency Exchange Risk





As a
result of our international business presence, we are exposed to foreign
currency exchange risk. We transact in foreign currencies and have significant
assets and liabilities denominated in foreign currencies. Therefore, our
earnings experience volatility related to movements in foreign currency exchange
rates.  We have not hedged against foreign currency exchange rate
changes related to our international operations. As a result, a 10% change in
the relative value of such foreign currency could cause a related 10% change in
our revenue, cost of services, and operating expenses related to such
currency.





Item
8.  Financial Statements and
Supplementary Data.





See Index
to the Financial Statements on page F-1 hereof.





Item
9.  Changes in and Disagreements
With Accountants on Accounting and Financial
Disclosure.


None.





Item
9A.Controls and
Procedures.





Evaluation of
Disclosure Controls and Procedures –Our management, with the
participation of our principal executive officers, principal financial officer
and chief accounting officer, has evaluated the effectiveness of our disclosure
controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act, as of December 31, 2008. Based on such evaluation, our principal
executive officers, principal financial officer and chief accounting officer
have concluded that, as of December 31, 2008, our disclosure controls and
procedures were effective to ensure that information required to be disclosed by
us in reports that we file or submit to the SEC is recorded, processed,
summarized and reported within the time periods specified in applicable SEC
rules and forms.





Management’s
Annual Report on Internal Control over Financial Reporting and Attestation
Report of Registered Public Accounting Firm –Our management is
responsible for establishing and maintaining adequate internal control over
financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act. Our internal control system was designed to provide reasonable
assurance to our management and board of directors regarding the preparation and
fair presentation of published financial statements.





-50-


Our
management has assessed the effectiveness of our internal control over financial
reporting as of December 31, 2008. In making this assessment, our management
used the criteria set forth in the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”) in Internal Control – Integrated
Framework.





Based on
the assessment using the criteria set forth by COSO, our management determined
that, as of December 31, 2008, our internal control over financial reporting was
effective.





Grant
Thornton LLP, our independent registered public accounting firm, also attested
to, and reported on, the effectiveness of our internal control over financial
reporting. Grant Thornton LLP’s report is included under the caption entitled
“Report of Independent Registered Public Accounting Firm” in Part II, Item 8,
“Financial Statements and Supplementary Data,” of this report.





Changes in
Internal Control Over Financial Reporting –There were no changes in our
internal control over financial reporting (as such term is defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended
December 31, 2008 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.





Item9B.  Other
Information.





None.


-51-


PART
III





Item
10.Directors, Executive
Officers and Corporate Governance.





The
information required by this item will be included in our definitive proxy
statement with respect to our 2009 Annual Meeting of Stockholders (the “Proxy
Statement”) to be filed with the SEC within 120 days of December 31, 2008, under
the captions “Information Concerning Directors” and “Compliance with Section
16(a) of the Securities Exchange Act” and is incorporated herein by reference.
Information required by this item concerning executive officers is included in
Part I of this Annual Report on Form 10-K under the caption “Executive
Management.”





We have
adopted a Code of Ethics that applies to all directors, officers and employees,
including our Co Chief Executive Officers, our Senior Vice President and our
Chief Accounting Officer. A complete text of this Code of Ethics is available on
the Company's web site (http://www.cnty.com).
Any future amendments to or waivers of the Code of Ethics will be posted to the
Investor Relations-Corporate section of the Company’s web site.





Item
11.Executive
Compensation.





The
information required by this item will be included in our Proxy Statement 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 our Proxy Statement under
the caption “Voting Securities” and is incorporated herein by
reference.





Information
related to securities authorized for issuance under equity compensation plans as
of December 31, 2008 is as follows:





Plan
      category
                  Number
      of securities to
                    be
      issued upon
                    exercise
      of outstanding
                    options,
      warrants and rights
                    
                    (a)
                  Weighted-average
                    exercise
      price of
                    outstanding
      options,
                    warrants
      and rights
                    
                    (b)
                  Number
      of securities remaining available for future issuance under equity
      compensation plans (excluding securities reflected in column
      (a))
                    
                    (c)Equity
      compensation plans
                    approved
      by security holders
                  1,353,282
      (1)
                  $2.74
                  1,111,928Equity
      compensation plans
                    not
      approved by security holders
                  -
                  -
                  -Total
                  1,353,282
                  $2.74
                  1,111,928





(1)
            As of December 31, 2008, there were 907,710 securities to be
      issued upon exercise of outstanding options, warrants and other rights
      exercisable under the Equity Incentive Plan adopted in 1994. The remaining
      445,572 securities pertain to outstanding options, warrants and other
      rights exercisable under the 2005 Equity Incentive
    Plan.


-52-


Item
13.  Certain Relationships and
Related Transactions, and Director Independence.





The
information in this item is incorporated by reference from our Proxy Statement
under the caption “Certain Relationships and Related Transactions” and is
incorporated herein by reference.





Item
14. Principal Accounting Fees
and Services.





The
information in this item is incorporated by reference from our Proxy Statement
under the caption “Principal Accounting Fees and Services” and is incorporated
herein by reference.


-53-


PART
IV





Item
15.  Exhibits, Financial
Statement Schedules.





(a)
            List
      of documents filed with this report





1.           Financial
Statements





The
financial statements and related notes, together with the report of Grant
Thornton LLP dated March 12, 2009, appear in Part II, Item 8, “Financial
Statements and Supplementary Data”, of this Form 10-K.





2.
              Financial
      Statement Schedules





None.





3.
              List
      of Exhibits





(b)
              Exhibits
      Filed Herewith or Incorporated by Reference to Previous Filings with the
      Securities and Exchange
Commis­sion:





(2)
Plan of Acquisition, Reorganization, Arrangement, Liquidation or
Succession





2.1
            Sale
      of Shares Agreement by and between Century Resorts Limited, Tsogo Sun
      Gaming (Pty) Ltd. and Century Casinos Africa (Pty) Ltd. is hereby
      incorporated by reference to Exhibit 2.1 to the Company’s Current Report
      on Form 8-K dated December 24,
2008.





(3)
Articles of Incorporation and Bylaws





3.1
            Certificate
      of Incorporation of Century Casinos, Inc. is hereby incorporated by
      reference to the Company’s Proxy Statement in respect of the 1994 Annual
      Meeting of Stockholders.





3.2
            Amended
      and Restated Bylaws of Century Casinos, Inc., is hereby incorporated by
      reference to Exhibit 11.14 to the Company’s Quarterly Report on Form 10-Q
      for the quarter ended June 30,
2002.





(4) Instruments Defining the Rights of
Security Holders, Including Indentures





4.1A
            Rights
      Agreement, dated as of April 29, 1999, by and between Century Casinos,
      Inc. and American Securities Transfer & Trust, Inc., as Rights Agent,
      is hereby incorporated by reference to Exhibit 1 to the Company’s Form 8-A
      dated May 7, 1999.





4.1B
            First
      Supplement to Rights Agreement dated April 2000, by and between Century
      Casinos, Inc. and American Securities Transfer & Trust, Inc., as
      Rights Agent, is hereby incorporated by reference to Exhibit A to the
      Company’s Proxy Statement in respect of the 2000 Annual Meeting of
      Stockholders.





4.1C
            Second
      Supplement to Rights Agreement dated July 2002, by and between Century
      Casinos, Inc. and Computershare Investor Services, Inc., as Rights Agent,
      is hereby incorporated by reference to Exhibit 11.13 to the Company’s
      Quarterly Report on Form 10-Q for the quarter ended June 30,
      2002.





-54-





(10)
Material Contracts





10.1
            Settlement
      and Release Agreement dated as of December 31, 2007 by and between Century
      Casinos Tollgate Inc., CC Tollgate LLC and Central City Venture, LLC, is
      hereby incorporated by reference to Exhibit 10.1C to the Company’s Annual
      Report on Form 10-K for the fiscal year ended December 31,
      2007.





10.2A
            Shareholders’
      Agreement by and between Century Casinos Africa (Proprietary) Limited and
      Winlen Casino Operators (Proprietary) Limited dated November 21, 2005, is
      hereby incorporated by reference to Exhibit 10.159 to the Company’s
      Current Report on Form 8-K dated November 23,
  2005.





10.2B
            Sale
      of Shares Agreement, entered into as of October 18, 2005, by and between
      Chicory Investments (Proprietary) Limited, Dynamo Investments Limited,
      Harvest Moon Investment Holdings (Proprietary) Limited, Izulu Gaming
      (Proprietary) Limited, Khulani Holdings Limited, Libalele Leisure
      (Proprietary) Limited, Malesela Gaming (Proprietary) Limited, Oakland
      Leisure Investments (Newcastle) (Proprietary) Limited, Purple Rain
      Properties No 62 (Proprietary) Limited, Ruvuma Investment (Proprietary)
      Limited, Saphila Investments (Proprietary) Limited, Viva Leisure
      Investment Holdings (Proprietary) Limited, The Viva Trust and Century
      Casinos Africa (Proprietary) Limited, is hereby incorporated by reference
      to Exhibit 10.170 to the Company’s Quarterly Report on Form 10-Q for the
      quarter ended March 31, 2006.





10.2C
            Memorandum
      of Agreement, entered into as of May 2, 2006, by and between Chicory
      Investments (Proprietary) Limited, Dynamo Investments Limited, Harvest
      Moon Investment Holdings (Proprietary) Limited, Izulu Gaming (Proprietary)
      Limited, Khulani Holdings Limited, Libalele Leisure (Proprietary) Limited,
      Malesela Gaming (Proprietary) Limited, Oakland Leisure Investments
      (Newcastle) (Proprietary) Limited, Purple Rain Properties No 62
      (Proprietary) Limited, Ruvuma Investment (Proprietary) Limited, Saphila
      Investments (Proprietary) Limited, Viva Leisure Investment Holdings
      (Proprietary) Limited, The Viva Trust, Century Casinos Africa
      (Proprietary) Limited, Balele Leisure (Proprietary) Limited and Winlen
      Casino Operators (Proprietary) Limited, is hereby incorporated by
      reference to Exhibit 10.171 to the Company’s Current Report on Form 8-K
      dated May 8, 2006.





10.3A
            Amendment
      to Share Sale Agreement by and between Malgorzata
      Maria Rogowicz-Angierman, Jerzy Cieślak, Piotr Marcin Nassius, Przemyslaw
      Dariusz Tomaszewski and Century Casinos Europe GmbH concluded on February
      1, 2007, is hereby incorporated by reference to Exhibit 10.4C to
      the Company’s Annual Report on Form 10-K for the fiscal year ended
      December 31, 2006.





10.3B
            Loan
      Agreement by and between Century Casinos Europe GmbH and G5 Sp. z o.o.
      entered into on February 1, 2007, is hereby incorporated by reference to
      Exhibit 10.4D to the Company’s Annual Report on Form 10-K for the fiscal
      year ended December 31, 2006 .





-55-


10.4
            Second
      Amended and Restated Credit Agreement, by and between WMCK Venture Corp.,
      Century Casinos Cripple Creek, Inc., and WMCK Acquisition Corp., Century
      Casinos, Inc. and Wells Fargo Bank, National Association, dated November
      6, 2008, is hereby incorporated by reference to Exhibit 10.1 to the
      Company’s Quarterly Report on Form 10-Q for the quarter ended September
      30, 2008.





10.5
            Loan
      agreement by and between Century Casinos Caledon (Pty) Limited and Nedbank
      Limited dated August 26, 2005, is hereby incorporated by reference to
      Exhibit 10.152 to the Company’s Current Report on Form 8-K dated September
      1, 2005.





10.6
            Mortgage
      agreement by and between Century Resorts Alberta Inc. and Canadian Western
      Bank dated December 6, 2007, is hereby incorporated by reference to
      Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the fiscal
      year ended December 31, 2007.





10.7A
            Credit
      Agreement dated as of November 18, 2005, by and between CC Tollgate LLC,
      the Lenders, the L/C issuer and Wells Fargo Bank, National Association, as
      Agent Bank, is hereby incorporated by reference to Exhibit 10.160 to the
      Company’s Current Report on Form 8-K dated November 29,
    2005.





10.7B
            First
      Amendment to Credit Agreement, dated as of June 28, 2006, by and between
      CC Tollgate LLC, the Lenders, the L/C issuer and Wells Fargo Bank,
      National Association, as Agent Bank, is hereby incorporated by reference
      to Exhibit 10.174 to the Company’s Current Report on Form 8-K dated July
      5, 2006.





10.7C
            Second
      Amendment to Credit Agreement, dated as of February 28, 2007, by and
      between CC Tollgate LLC, the Lenders, the L/C Issuer and Wells Fargo Bank,
      National Association, as Agent Bank, is hereby incorporated by reference
      to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 6,
      2007.





10.7D
            Third
      Amendment to Credit Agreement, dated as of November 6, 2008, by and
      between CC Tollgate LLC, the Lenders, the L/C Issuer and Wells Fargo Bank,
      National Association, as Agent Bank, is hereby incorporated by reference
      to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the
      quarter ended September 30, 2008.





10.8
            Term
      Loan Agreement by and between Nedbank Limited and Century Casino Newcastle
      (Pty) Ltd., is hereby incorporated by reference to Exhibit 10.182 to the
      Company’s Current Report on Form 8-K dated December 13,
    2006.





10.9*
            Deferred
      Compensation Agreement (Form) is hereby incorporated by reference to
      Exhibit 10.1 to the Company’s Current Report on Form 8-K dated November
      21, 2008.





10.10A*
            Employment
      Agreement by and between Century Casinos, Inc. and Erwin Haitzmann as
      restated on February 18, 2003, is hereby incorporated by reference to
      Exhibit 10.120 to the Company’s Annual Report on Form 10-K for the fiscal
      year ended December 31, 2002.





-56-


10.10B*
            Amendment
      to Employment Agreement by and between Century Casinos, Inc and Erwin
      Haitzmann, dated February 3, 2005, is hereby incorporated by reference to
      Exhibit 10.143 to the Company’s Current report on Form 8-K dated February
      3, 2005.





10.10C*
              Amendment
      No. 2 to Employment Agreement by and between Century Casinos, Inc. and
      Erwin Haitzmann, effective September 1, 2006, is hereby incorporated by
      reference to Exhibit 10.178 to the Company’s Current Report on Form 8-K
      dated October 19, 2006.





10.11A*
              Employment
      Agreement by and between Century Casinos, Inc. and Peter Hoetzinger as
      restated on February 18, 2003, is hereby incorporated by reference to
      Exhibit 10.121 to the Company’s Annual Report on Form 10-K for the fiscal
      year ended December 31, 2002.





10.11B*
            Amendment
      to Employment Agreement by and between Century Casinos, Inc. and Peter
      Hoetzinger, dated February 3, 2005, is hereby incorporated by reference to
      Exhibit 10.144 to the Company’s Current Report on Form 8-K dated February
      3, 2005.





10.11C*
              Amendment
      No. 2 to Employment Agreement by and between Century Casinos, Inc. and
      Peter Hoetzinger, effective September 1, 2006, is hereby incorporated by
      reference to Exhibit 10.179 to the Company’s Current Report on Form 8-K
      dated October 19, 2006.





10.12*
            Employment
      Agreement by and between Century Casinos, Inc. and Mr. Larry Hannappel is
      hereby incorporated by reference to Exhibit 10.147 to the Company’s
      Current Report on Form 8-K dated March 22,
2005.





10.13*
            Employment
      agreement, effective March 15, 2005, by and between Century Casinos, Inc.
      and Mr. Ray Sienko is hereby incorporated by reference to Exhibit 10.167
      to the Company’s Annual Report on Form 10-K for the fiscal year ended
      December 31, 2005.





10.14*
            Revised
      and Restated Management Agreement, effective September 30, 2006, by and
      between Century Resorts International Ltd, Century Casinos, Inc. and
      Flyfish Consulting Agreement is hereby incorporated by reference to
      Exhibit 10.176 to the Company’s Current Report on Form 8-K dated October
      19, 2006.





10.15*
            Revised
      and Restated Management Agreement, effective September 30, 2006, by and
      between Century Resorts International Ltd, Century Casinos, Inc. and Focus
      Consulting Agreement is hereby incorporated by reference to Exhibit 10.177
      to the Company’s Current Report on Form 8-K dated October 19,
      2006.





10.16*†
            Century
      Casinos, Inc. Amended and Restated 2005 Equity Incentive Plan effective
      June 17, 2005.





10.17A
            ADC
      Agreement, dated September 30, 2005, by and between Bank Austria
      Creditanstalt AG, Century Casinos, Inc., and Oesterreichische Kontrollbank
      Aktiengesellschaft, is hereby incorporated by reference to Exhibit 10.157
      to the Company’s Current Report on Form 8-K dated October 3,
      2005.








-57-


10.17B
            Annex
      to ADC Agreement by and between Bank Austria Creditanstalt AG, Century
      Casinos, Inc. and Oesterreichische Kontrollbank Aktiengesellschaft, is
      hereby incorporated by reference to Exhibit 10.158 to the Company’s
      Quarterly Report on Form 10-Q for the quarter ended September 30,
      2005.





10.18
            Management
      Agreement, effective April 1, 2006, by and between Balele Leisure
      (Proprietary) Limited and Century Casinos Africa (Proprietary) Limited, is
      hereby incorporated by reference to Exhibit 10.169 to the Company’s
      Current Report on Form 8-K dated April 6,
2006.





10.19
            Settlement
      Agreement by and between Gold Reef Resorts Ltd., Akani Leisure Investments
      (Pty) Ltd., Akani Leisure (Silverstar Holdings) (Pty) Ltd., Silver Star
      Development Ltd., Century Resorts Ltd., Century Casinos West Rand (Pty)
      Ltd., Novomatic AG, Century Casinos Africa (Pty) Ltd., Century Casinos,
      Inc, and Century Casinos Management, Inc., is hereby incorporated by
      reference to Exhibit 10.181 to the Company’s Quarterly Report on Form 10-Q
      for the quarter ended September 30,
2006.





(21)
Subsidiaries of the Registrant





21†
            Subsidiaries
      of the Registrant





(23)
Consents of Experts and Counsel





23†
            Consent
      of Independent Auditors – Grant Thornton
LLP





(31) Rule 13a-14(a)/15d-14(a)
Certifications





31.1†
            Certification
      of Erwin Haitzmann, Co Chief Executive Officer, pursuant to Rule 13a-14(a)
      under the Securities Exchange Act of
1934.





31.2†
            Certification
      of Peter Hoetzinger, President and Co Chief Executive Officer, pursuant to
      Rule 13a-14(a) under the Securities Exchange Act of
  1934.





31.3†
            Certification
      of Larry Hannappel, Senior Vice President and Principal Financial Officer,
      pursuant to Rule 13a-14(a) under the Securities Exchange Act of
      1934.





31.4†
            Certification
      of Ray Sienko, Chief Accounting Officer, pursuant to Rule 13a-14(a) under
      the Securities Exchange Act of
1934.





(32) Section 1350 Certifications





32.1†
            Certification
      of Erwin Haitzmann, Co Chief Executive Officer, pursuant to 18 U.S.C.
      Section 1350.





32.2†
            Certification
      of Peter Hoetzinger, President and Co Chief Executive Officer, pursuant to
      18 U.S.C. Section 1350.








-58-


32.3†
            Certification
      of Larry Hannappel, Senior Vice President and Principal Financial Officer,
      pursuant to 18 U.S.C. Section 1350.





32.4†
            Certification
      of Ray Sienko, Chief Accounting Officer, pursuant to 18 U.S.C. Section
      1350.







*A management
contract or compensatory plan or arrangement required to be filed as an exhibit
pursuant to Item 15(a)(3) of Form 10-K.


† Filed
herewith. All other exhibits previously filed.





-59-


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:
      March
      12,
      2009





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 March
12,
2009.








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
                              Peter
      Hoetzinger
                            Vice
      Chairman of the Board,
                              Co
      Chief Executive Officer
                              and
      President
                            /s/ Robert S. Eichberg
                              Robert
      S. Eichberg
                            Director/s/ Dinah Corbaci
                            DirectorDinah
      Corbaci


-60-


Item
8.  Financial Statements and
Supplementary Data.





Index
to Financial Statements





Financial
      Statements:Report of Independent Registered Public Accounting
      Firm
            F2Consolidated
      Balance Sheets as of December 31, 2008 and 2007
            F4Consolidated
      Statements of Operations for the Three Years Ended December 31,
      2008
            F5Consolidated
      Statements of Shareholders’ Equity and Comprehensive (Loss) Incomefor
      the Three Years Ended December 31, 2008
            F7Consolidated
      Statements of Cash Flows for the Three Years Ended December 31,
      2008
            F8Notes
      to Consolidated Financial Statements
            F10





Financial
      Statement Schedules:All
      schedules are omitted because they are not applicable or are
      insignificant, or the required information is shown in the consolidated
      financial statements or notes
thereto.


-F1-


REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM








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 (the” Company”) as of December 31, 2008
and 2007, and the related consolidated statements of operations, shareholders’
equity and comprehensive (loss) income and cash flows for each of the three
years in the period ended December 31, 2008. We also have audited the Company’s
internal control over financial reporting as of December 31, 2008 based on
criteria established in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”). The Company’s management is responsible for these
financial statements, for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over
financial reporting, included in the accompanying Management’s Annual Report on
Internal Control over Financial Reporting included in Item 9A. Our
responsibility is to express an opinion on these financial statements and an
opinion on Century Casinos, Inc.’s internal control over financial reporting
based on our audits.





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 audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement and whether effective
internal control over financial reporting was maintained in all material
respects.  Our audits of the financial statements included 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 and evaluating the overall financial statement
presentation.  Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audits also included performing such other procedures as
we considered necessary in the circumstances. We believe that our audits provide
a reasonable basis for our opinions.





A company’s internal
control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles.  A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial
statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.





-F2-


In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of December
31, 2008 and 2007, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2008 in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2008, based on
criteria established in Internal Control—Integrated
Framework issued by COSO.





As
discussed in Note 13 to the consolidated financial statements, the Company
adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes, on January 1, 2007 and also as discussed in Note 2 to the
consolidated financial statements during the year ended December 31, 2006, the
Company adopted the provisions of Statement of Financial Accounting Standards
No. 123(R), Share-Based
Payment, using the modified prospective method as of January 1,
2006.








/s/ Grant
Thornton LLP








Denver,
Colorado


March 12,
2009





-F3-


CENTURY
CASINOS, INC. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS





Amounts
      in thousands, except share information
                                          
                                          December
      31, 2008
                                          
                                          
                                          December
      31, 2007ASSETSCurrent
      Assets:Cash
      and cash equivalents
                                          
                                          $
                                          7,835
                                          
                                          
                                          $
                                          11,742Receivables,
      net
                                          
                                          
                                          426
                                          
                                          
                                          
                                          536Prepaid
      expenses
                                          
                                          
                                          388
                                          
                                          
                                          
                                          551Inventories
                                          
                                          
                                          170
                                          
                                          
                                          
                                          204Other
      current assets
                                          
                                          
                                          583
                                          
                                          
                                          
                                          399Deferred
      income taxes – foreign
                                          
                                          
                                          305
                                          
                                          
                                          
                                          38Assets
      held for sale
                                          
                                          
                                          35,983
                                          
                                          
                                          
                                          52,788Total
      current assets
                                          
                                          
                                          45,690
                                          
                                          
                                          
                                          66,258Property
      and Equipment, net
                                          
                                          
                                          88,558
                                          
                                          
                                          
                                          100,128Goodwill
                                          
                                          
                                          4,014
                                          
                                          
                                          
                                          14,258Deferred
      Income Taxes   – domestic
                                          
                                          
                                          -
                                          
                                          
                                          
                                          3,318– foreign
                                          
                                          
                                          -
                                          
                                          
                                          
                                          523Equity
      investment
                                          
                                          
                                          10,539
                                          
                                          
                                          
                                          11,974Other
      Assets
                                          
                                          
                                          1,205
                                          
                                          
                                          
                                          1,624Total
      assets
                                          
                                          $
                                          150,006
                                          
                                          
                                          $
                                          198,083LIABILITIES
      AND SHAREHOLDERS’ EQUITYCurrent
      Liabilities:Current
      portion of long-term debt
                                          
                                          $
                                          8,862
                                          
                                          
                                          $
                                          4,054Accounts
      payable and accrued liabilities
                                          
                                          
                                          5,724
                                          
                                          
                                          
                                          7,011Accrued
      payroll
                                          
                                          
                                          1,595
                                          
                                          
                                          
                                          1,492Taxes
      payable
                                          
                                          
                                          1,340
                                          
                                          
                                          
                                          1,798Deferred
      income taxes – domestic
                                          
                                          
                                          -
                                          
                                          
                                          
                                          5Liabilities
      related to assets held for sale
                                          
                                          
                                          14,584
                                          
                                          
                                          
                                          22,973Total current
      liabilities
                                          
                                          
                                          32,105
                                          
                                          
                                          
                                          37,333Long-Term
      Debt, less current portion
                                          
                                          
                                          28,501
                                          
                                          
                                          
                                          47,505Deferred
      Income Taxes – foreign
                                          
                                          
                                          427
                                          
                                          
                                          
                                          -Other
      Long-Term Accrued Liabilities
                                          
                                          
                                          303
                                          
                                          
                                          
                                          436Minority
      Interest
                                          
                                          
                                          897
                                          
                                          
                                          
                                          820Total
      liabilities
                                          
                                          
                                          62,233
                                          
                                          
                                          
                                          86,094Commitments
      and ContingenciesShareholders’
      Equity:Preferred stock; $.01 par
      value; 20,000,000 shares authorized;
      no shares issued and outstanding
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Common stock; $.01 par value;
      50,000,000 shares authorized; 23,895,443 and 23,668,443 shares issued,
      respectively;23,884,067
      and 23,657,067 shares outstanding, respectively
                                          
                                          
                                          239
                                          
                                          
                                          
                                          237Additional paid-in
      capital
                                          
                                          
                                          73,360
                                          
                                          
                                          
                                          71,223Accumulated other
      comprehensive (loss) income
                                          
                                          
                                          (5,147
                                          )
                                          
                                          
                                          7,735Retained
    earnings
                                          
                                          
                                          19,347
                                          
                                          
                                          
                                          32,82087,799
                                          
                                          
                                          
                                          112,015Treasury
      stock – 11,376 shares at cost
                                          
                                          
                                          (26
                                          )
                                          
                                          
                                          (26
                                          )Total
      shareholders’ equity
                                          
                                          
                                          87,773
                                          
                                          
                                          
                                          111,989Total
      Liabilities and Shareholders’ Equity
                                          
                                          $
                                          150,006
                                          
                                          
                                          $
                                          198,083


See notes
to consolidated financial statements.





-F4-




CENTURY
CASINOS, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS


Amounts
      in thousands, except share information
                                      
                                      For
      the Year Ended December 31,2008
                                      
                                      
                                      2007
                                      
                                      
                                      2006Operating
      revenue:Gaming
                                      
                                      $
                                      49,949
                                      
                                      
                                      $
                                      57,513
                                      
                                      
                                      $
                                      31,741Hotel,
      food and beverage
                                      
                                      
                                      8,669
                                      
                                      
                                      
                                      8,027
                                      
                                      
                                      
                                      2,626Other
                                      
                                      
                                      1,935
                                      
                                      
                                      
                                      1,545
                                      
                                      
                                      
                                      715Gross
      revenue
                                      
                                      
                                      60,553
                                      
                                      
                                      
                                      67,085
                                      
                                      
                                      
                                      35,082Less
      promotional allowances
                                      
                                      
                                      (7,511
                                      )
                                      
                                      
                                      (8,042
                                      )
                                      
                                      
                                      (4,879
                                      )Net
      operating revenue
                                      
                                      
                                      53,042
                                      
                                      
                                      
                                      59,043
                                      
                                      
                                      
                                      30,203Operating
      costs and expenses:Gaming
                                      
                                      
                                      20,432
                                      
                                      
                                      
                                      22,398
                                      
                                      
                                      
                                      13,044Hotel,
      food and beverage
                                      
                                      
                                      6,961
                                      
                                      
                                      
                                      7,442
                                      
                                      
                                      
                                      3,523General
      and administrative
                                      
                                      
                                      19,586
                                      
                                      
                                      
                                      21,389
                                      
                                      
                                      
                                      14,155Impairments
      and other write-offs, net of recoveries
                                      
                                      
                                      9,357
                                      
                                      
                                      
                                      (95
                                      )
                                      
                                      
                                      956Depreciation
                                      
                                      
                                      6,772
                                      
                                      
                                      
                                      6,266
                                      
                                      
                                      
                                      3,272Total
      operating costs and expenses
                                      
                                      
                                      63,108
                                      
                                      
                                      
                                      57,400
                                      
                                      
                                      
                                      34,950Earnings
      from equity investment
                                      
                                      
                                      809
                                      
                                      
                                      
                                      563
                                      
                                      
                                      
                                      -Operating
      (loss) earnings from continuing operations
                                      
                                      
                                      (9,257
                                      )
                                      
                                      
                                      2,206
                                      
                                      
                                      
                                      (4,747
                                      )Non-operating
      income (expense):Interest
      income
                                      
                                      
                                      31
                                      
                                      
                                      
                                      627
                                      
                                      
                                      
                                      583Interest
      expense
                                      
                                      
                                      (4,130
                                      )
                                      
                                      
                                      (5,333
                                      )
                                      
                                      
                                      (2,525
                                      )Gain
      on sale of Gauteng interest
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      5,231(Losses)
      gains on foreign currency transactions and other
                                      
                                      
                                      (441
                                      )
                                      
                                      
                                      920
                                      
                                      
                                      
                                      414Non-operating (expense) income,
      net
                                      
                                      
                                      (4,540
                                      )
                                      
                                      
                                      (3,786
                                      )
                                      
                                      
                                      3,703Loss
      from continuing operations before income taxes and minority
      interest
                                      
                                      
                                      (13,797
                                      )
                                      
                                      
                                      (1,580
                                      )
                                      
                                      
                                      (1,044
                                      )Provision
      (benefit) for income taxes
                                      
                                      
                                      4,060
                                      
                                      
                                      
                                      (1,038
                                      )
                                      
                                      
                                      (1,464
                                      )(Loss)
      earnings from continuing operations before minority
    interest
                                      
                                      
                                      (17,857
                                      )
                                      
                                      
                                      (542
                                      )
                                      
                                      
                                      420Minority
      interest in subsidiary (earnings) losses
                                      
                                      
                                      (77
                                      )
                                      
                                      
                                      14
                                      
                                      
                                      
                                      1,792(Loss)
      earnings from continuing operations
                                      
                                      
                                      (17,934
                                      )
                                      
                                      
                                      (528
                                      )
                                      
                                      
                                      2,212Discontinued
      operations:Earnings
      from discontinued operations
                                      
                                      
                                      5,247
                                      
                                      
                                      
                                      6,772
                                      
                                      
                                      
                                      7,015Provision
      for income taxes
                                      
                                      
                                      786
                                      
                                      
                                      
                                      1,311
                                      
                                      
                                      
                                      1,598Earnings
      from discontinued operations
                                      
                                      
                                      4,461
                                      
                                      
                                      
                                      5,461
                                      
                                      
                                      
                                      5,417Net
      (loss) earnings
                                      
                                      $
                                      (13,473
                                      )
                                      
                                      $
                                      4,933
                                      
                                      
                                      $
                                      7,629














-Continued
on following page-


-F5-


CENTURY
CASINOS, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF OPERATIONS (CONTINUED)


For
      the Year Ended December 31,2008
                
                
                2007
                
                
                2006Basic
      (loss) earnings per share:(Loss)
      earnings from continuing operations
                
                $
                (0.76
                )
                
                $
                (0.02
                )
                
                $
                0.10Earnings
      from discontinued operations
                
                
                0.19
                
                
                
                0.23
                
                
                
                0.23Net
      (loss) earnings
                
                $
                (0.57
                )
                
                $
                0.21
                
                
                $
                0.33Diluted
      (loss) earnings per share:(Loss)
      earnings from continuing operations
                
                $
                (0.76
                )
                
                $
                (0.02
                )
                
                $
                0.09Earnings
      from discontinued operations
                
                
                0.19
                
                
                
                0.23
                
                
                
                0.23Net
      (loss) earnings
                
                $
                (0.57
                )
                
                $
                0.21
                
                
                $
                0.32





See notes
to consolidated financial statements.


-F6-


CENTURY
CASINOS, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME
 FOR THE
YEARS ENDED DECEMBER 31, 2008, 2007 and 2006
 (Amounts
in thousands, except share information)


AccumulatedAdditional
                                    
                                    
                                    OtherCommon
      Stock
                                    
                                    
                                    Paid-in
                                    
                                    
                                    Comprehensive
                                    
                                    
                                    Retained
                                    
                                    
                                    Treasury
      StockShares
                                    
                                    
                                    Amount
                                    
                                    
                                    Capital
                                    
                                    
                                    Income
      (Loss)
                                    
                                    
                                    Earnings
                                    
                                    
                                    Shares
                                    
                                    
                                    Amount
                                    
                                    
                                    TotalBALANCE
      AT JANUARY 1, 2006
                                    
                                    
                                    22,568,443
                                    
                                    
                                    $
                                    226
                                    
                                    
                                    $
                                    68,571
                                    
                                    
                                    $
                                    2,568
                                    
                                    
                                    $
                                    20,391
                                    
                                    
                                    
                                    187,876
                                    
                                    
                                    $
                                    (425
                                    )
                                    
                                    $
                                    91,331Common
      stock issuance costs
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (22
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (22
                                    )Options
      exercised
                                    
                                    
                                    600,000
                                    
                                    
                                    
                                    6
                                    
                                    
                                    
                                    454
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (23,500
                                    )
                                    
                                    
                                    53
                                    
                                    
                                    
                                    513Tax
      impact of stock option exercises
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    403
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    403Amortization
      of stock based compensation
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    373
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    373Foreign
      currency translation adjustment
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    200
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    200Net
      earnings
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    7,629
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    7,629BALANCE
      AT DECEMBER 31, 2006
                                    
                                    
                                    23,168,443
                                    
                                    
                                    $
                                    232
                                    
                                    
                                    $
                                    69,779
                                    
                                    
                                    $
                                    2,768
                                    
                                    
                                    $
                                    28,020
                                    
                                    
                                    
                                    164,376
                                    
                                    
                                    $
                                    (372
                                    )
                                    
                                    $
                                    100,427FIN
      48 Adjustment
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (133
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (133
                                    )Issuance
      of restricted common stock
                                    
                                    
                                    400,000
                                    
                                    
                                    
                                    4
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    4Options
      exercised
                                    
                                    
                                    100,000
                                    
                                    
                                    
                                    1
                                    
                                    
                                    
                                    360
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (153,000
                                    )
                                    
                                    
                                    346
                                    
                                    
                                    
                                    707Tax
      impact of stock option exercises
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    205
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    205Amortization
      of stock based compensation
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    879
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    879Foreign
      currency translation adjustment
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    4,967
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    4,967Net
      earnings
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    4,933
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    4,933BALANCE
      AT DECEMBER 31, 2007
                                    
                                    
                                    23,668,443
                                    
                                    
                                    $
                                    237
                                    
                                    
                                    $
                                    71,223
                                    
                                    
                                    $
                                    7,735
                                    
                                    
                                    $
                                    32,820
                                    
                                    
                                    
                                    11,376
                                    
                                    
                                    $
                                    (26
                                    )
                                    
                                    $
                                    111,989Options
      exercised
                                    
                                    
                                    227,000
                                    
                                    
                                    
                                    2
                                    
                                    
                                    
                                    670
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    672Tax
      impact of stock option exercises
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    24
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    24Amortization
      of stock based compensation
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    1,443
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    1,443Foreign
      currency translation adjustment
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (12,882
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (12,882
                                    )Net
      loss
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (13,473
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (13,473
                                    )BALANCE
      AT DECEMBER 31, 2008
                                    
                                    
                                    23,895,443
                                    
                                    
                                    $
                                    239
                                    
                                    
                                    $
                                    73,360
                                    
                                    
                                    $
                                    (5,147
                                    )
                                    
                                    $
                                    19,347
                                    
                                    
                                    
                                    11,376
                                    
                                    
                                    $
                                    (26
                                    )
                                    
                                    $
                                    87,773





See notes
to consolidated financial statements.


-F7-




CENTURY
CASINOS, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS





Amounts
      in thousands
                
                For
      the Year Ended December 31,2008
                
                
                2007
                
                
                2006Cash
      Flows from Operating Activities:Net
      (loss) earnings
                
                $
                (13,473
                )
                
                $
                4,933
                
                
                $
                7,629Adjustments to reconcile net
      (loss) earnings tonet
      cash provided by operating activitiesDepreciation
                
                
                9,082
                
                
                
                8,631
                
                
                
                4,747Impairments
      of goodwill
                
                
                9,357
                
                
                
                -
                
                
                
                237Tax
      valuation allowance
                
                
                3,758
                
                
                
                -
                
                
                
                -Imputed
      interest
                
                
                1
                
                
                
                134
                
                
                
                160Amortization
      of stock-based compensation
                
                
                1,443
                
                
                
                879
                
                
                
                373Amortization
      of deferred financing costs
                
                
                495
                
                
                
                479
                
                
                
                200Deferred
      tax benefit
                
                
                (186
                )
                
                
                (1,583
                )
                
                
                (2,303
                )Minority
      interest in subsidiary earnings (losses)
                
                
                278
                
                
                
                254
                
                
                
                (1,461
                )Earnings
      from equity investment
                
                
                (809
                )
                
                
                (563
                )
                
                
                -Gain
      on sale of Gauteng interest
                
                
                -
                
                
                
                -
                
                
                
                (5,231
                )(Gain)
      loss on disposition of assets
                
                
                (164
                )
                
                
                155
                
                
                
                22(Recovery)
      write-offs of fixed assets
                
                
                -
                
                
                
                (158
                )
                
                
                1,028Other
                
                
                -
                
                
                
                4
                
                
                
                -Excess
      tax benefits from stock-based payment arrangements
                
                
                (24
                )
                
                
                (205
                )
                
                
                (403
                )Changes
      in operating assets and liabilities, net of effects of
      acquisitionsReceivables
                
                
                63
                
                
                
                156
                
                
                
                (380
                )Prepaid
      expenses and other assets
                
                
                252
                
                
                
                814
                
                
                
                (658
                )Accounts
      payable and accrued liabilities
                
                
                (1,605
                )
                
                
                (1,613
                )
                
                
                3,566Accrued
      payroll
                
                
                (5
                )
                
                
                44
                
                
                
                872Taxes
      payable
                
                
                (779
                )
                
                
                1,175
                
                
                
                1,096Net cash provided by operating
      activities
                
                
                7,684
                
                
                
                13,536
                
                
                
                9,494





Cash
      Flows from Investing Activities:Purchases
      of property and equipment
                  
                  $
                  (2,883
                  )
                  
                  $
                  (9,440
                  )
                  
                  $
                  (57,295
                  )Investment
      in Century Resorts Alberta, Inc., net of cash acquired
                  
                  
                  -
                  
                  
                  
                  (1,428
                  )
                  
                  
                  (5,135
                  )Investment
      in Century Casino Newcastle, net of cash acquired
                  
                  
                  -
                  
                  
                  
                  (580
                  )
                  
                  
                  (5,121
                  )Investment
      in Century Casino Millennium, net of cash acquired
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (362
                  )Investment
      in CC Tollgate LLC
                  
                  
                  (74
                  )
                  
                  
                  (3,290
                  )
                  
                  
                  -Investment
      in Century Casinos Poland
                  
                  
                  -
                  
                  
                  
                  (3,822
                  )
                  
                  
                  (4,752
                  )Net
      proceeds on sale of Gauteng interest
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  5,231Decrease
      (increase) in restricted cash
                  
                  
                  -
                  
                  
                  
                  220
                  
                  
                  
                  (416
                  )Proceeds
      from disposition of assets
                  
                  
                  498
                  
                  
                  
                  138
                  
                  
                  
                  229Net cash used in investing
      activities
                  
                  
                  (2,459
                  )
                  
                  
                  (18,202
                  )
                  
                  
                  (67,621
                  )








-Continued
on following page-




-F8-




CENTURY
CASINOS, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF CASH FLOWS (CONTINUED)


Amounts
      in thousands
                                    
                                    For
      the Year Ended December 31,2008
                                    
                                    
                                    2007
                                    
                                    
                                    2006Cash
      Flows from Financing Activities:Proceeds
      from borrowings
                                    
                                    $
                                    14,776
                                    
                                    
                                    $
                                    29,051
                                    
                                    
                                    $
                                    84,077Principal
      repayments
                                    
                                    
                                    (27,759
                                    )
                                    
                                    
                                    (42,367
                                    )
                                    
                                    
                                    (30,580
                                    )Excess
      tax benefits from stock-based paymentarrangements
                                    
                                    
                                    24
                                    
                                    
                                    
                                    205
                                    
                                    
                                    
                                    403Deferred
      financing costs
                                    
                                    
                                    (217
                                    )
                                    
                                    
                                    (61
                                    )
                                    
                                    
                                    (155
                                    )Decrease
      in restricted cash
                                    
                                    
                                    -
                                    
                                    
                                    
                                    1,184
                                    
                                    
                                    
                                    -Proceeds
      from exercise of options
                                    
                                    
                                    672
                                    
                                    
                                    
                                    707
                                    
                                    
                                    
                                    513Stock
      issuance costs
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (22
                                    )Net
      cash (used in) provided by financing activities
                                    
                                    
                                    (12,504
                                    )
                                    
                                    
                                    (11,281
                                    )
                                    
                                    
                                    54,236Effect
      of exchange rate changes on cash
                                    
                                    
                                    (1,272
                                    )
                                    
                                    
                                    (1,172
                                    )
                                    
                                    
                                    1,693Decrease
      in Cash and Cash Equivalents
                                    
                                    
                                    (8,551
                                    )
                                    
                                    
                                    (17,119
                                    )
                                    
                                    
                                    (2,198
                                    )Decrease
      (Increase) in Cash and Cash Equivalents related to Discontinued
      Operations
                                    
                                    
                                    4,644
                                    
                                    
                                    
                                    5,324
                                    
                                    
                                    
                                    (4,154
                                    )Cash
      and Cash Equivalents at Beginning of Year
                                    
                                    
                                    11,742
                                    
                                    
                                    
                                    23,537
                                    
                                    
                                    
                                    29,889Cash
      and Cash Equivalents at End of Year
                                    
                                    $
                                    7,835
                                    
                                    
                                    $
                                    11,742
                                    
                                    
                                    $
                                    23,537





Supplemental
Disclosure of Cash Flow Information:





Amounts
      in thousands
                
                For
      the Year Ended December 31,2008
                
                
                2007
                
                
                2006Interest
      paid, net of capitalized interest of$2,105
      in 2006
                
                $
                5,046
                
                
                $
                7,117
                
                
                $
                4,159Income
      taxes paid
                
                $
                1,543
                
                
                $
                1,875
                
                
                $
                787





Supplemental
Disclosure of Noncash, Investing and Financing Activities:








The
Company has approximately $0.6 million of accrued liabilities related to
community development projects in Caledon, South Africa as of December 31, 2008.
The Company agreed to perform these projects as a result of the granting of
additional slot machines at the Caledon Hotel, Spa & Casino (now a
discontinued operation). The Company has increased casino licenses for 2008 by
this amount.





The
Company had approximately $0.7 million of accrued construction liabilities
relating to its various development projects as of December 31, 2006. In
addition, the Company entered into capital leases of approximately $0.8 million
during 2006. The Company has offset the total purchases of property and
equipment for 2006 by these amounts.





Please
refer to Notes 3 and 4 to the consolidated financial statements for details of
the Company’s recent acquisitions and discontinued operations.





See notes
to consolidated financial statements.


-F9-




CENTURY
CASINOS, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


1.           DESCRIPTION
OF BUSINESS





Century
Casinos, Inc. (“CCI” or the “Company”) is an international casino entertainment
company. As of December 31, 2008, the Company owned and/or managed casino
operations in North America, South Africa, the Czech Republic and international
waters through various entities that are wholly-owned or in which the Company
has a majority ownership position. The Company also owns a 33.3% ownership
interest in Casinos Poland Ltd (“CPL”), the owner and operator of seven full
casinos and one slot casino in Poland.




Parent/Subsidiary
      Relationship
                    Abbreviation
                    Parent
                    OwnershipPercentageCentury
      Casinos, Inc.
                    CCI
                    n/a
                    n/aWMCK
      Venture Corp.
                    WMCK
                    CCI
                    100%WMCK-Acquisition
      Corp.
                    ACQ
                    WMCK
                    100%Century
      Casinos Cripple Creek, Inc.
                    CCC
                    WMCK
                    100%Century
      Casinos Tollgate, Inc
                    CTI
                    CCI
                    100%CC
      Tollgate LLC
                    CTL
                    CTI
                    100%Century
      Resorts International Ltd.
                    CRI
                    CCI
                    100%Century
      Resorts Alberta, Inc.
                    CRA
                    CRI
                    100%Century
      Resorts Ltd.
                    CRL
                    CCI
                    96.5%Century
      Casinos Europe GmbH
                    CCE
                    CCI
                    100%Century
      Casinos Poland Sp. z o.o. (formerly G5)
                    CCP
                    CCE
                    100%Casinos
      Poland Ltd.
                    CPL
                    CCP
                    33%Discontinued
      operations:Century
      Casinos Africa (Pty) Ltd.
                    CCA
                    CRL
                    100%Celebrations
      Accommodation & Food Service Management (Pty) Ltd.
                    CEL
                    CCA
                    100%Century
      Casino Newcastle (Pty) Ltd.
                    CNEW
                    CCA
                    60%Century
      Casinos Caledon (Pty) Ltd.
                    CCAL
                    CCA
                    100%Century
      Casino Millennium, a.s.
                    CM
                    CCE
                    100%




CCI serves as a holding
company, providing corporate and administrative services to its
subsidiaries.





WMCK owns and operates Womacks
Casino & Hotel (“Womacks”), a limited-stakes gaming casino in Cripple Creek,
Colorado.





CTI, as of December 31, 2007,
owns 100% of CTL (See Note 3). CTL owns and operates the Century Casino &
Hotel, a limited-stakes gaming facility, in Central City, Colorado.





-F10-




CRI has entered into casino
services agreements and/or executive management agreements for which it earns a
fee from other subsidiaries of CCI and serves as a concessionaire of small
casinos on luxury cruise vessels. CRI also owns 100% of CRA (See Note 3). CRA
owns and operates the Century Casino & Hotel in Edmonton, Alberta,
Canada.





CRL was formed to own our
South African interests and to provide technical casino services to some of our
foreign and offshore operations. CRL, through its subsidiary CCA, owns CCAL and
has a 60% controlling interest in CNEW. CCAL and CNEW, operating subsidiaries of
CCA, own and operate The Caledon Hotel, Spa & Casino (“Caledon”) and Century
Casino Newcastle, respectively. On December 19, 2008, CRL entered into an
agreement to sell all of the outstanding shares of CCA (See Note
4).





CCE owned CM, a full-stakes
casino located within the Marriott Hotel in Prague, Czech Republic (See Note 3).
On December 5, 2008, CCE entered into an agreement to sell CM, which closed on
February 11, 2009 (See Note 4). On March 12, 2007, CCE acquired CCP (formerly
known as G5 Sp. z o.o.) (See Note 3). CCP owns 33.3% of all shares issued by
CPL. CPL owns and operates seven full casinos and one slot casino in Poland. CCE
also provides administrative support for CCI executive management in
Europe.





2.           SIGNIFICANT
ACCOUNTING POLICIES





Principles of
Consolidation– The accompanying consolidated financial statements
include the accounts of CCI and its subsidiaries. Investments in unconsolidated
affiliates that are 20% to 50% owned and do not meet the criteria of Financial
Accounting Standards Board (“FASB”) Interpretation 46(R) (as amended),
“Consolidation of Various Interest Entities – an Interpretation of ARB No. 51”
(“FIN 46(R)”), are accounted for under the equity method. All intercompany
transactions and balances have been eliminated. Certain prior year amounts have
been reclassified to conform to the current year presentation.





Use of Estimates
–The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ materially from those
estimates.





Cash and Cash
Equivalents – All highly liquid investments with an original maturity of
three months or less are considered cash equivalents.





Restricted
Cash – Restricted cash consists of deposits of $1.2 million (CZK 22.0
million) held with the Ministry of Finance of the Czech Republic for the
Company’s casino in Prague (now a discontinued operation). All of the Company’s
restricted cash is shown as a component of assets held for sale on the Company’s
December 31, 2008 and 2007 consolidated balance sheets.




-F11-








Inventories –Inventories, which consist primarily of food, beverage, retail
merchandise and operating supplies, are stated at the lower of cost or
market.





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
are 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. Such capitalized interest becomes part of the cost of the
related asset and is depreciated over the estimated useful life of the asset.
The Company capitalized $2.1 million (of which $0.1 million pertained to
discontinued operations) towards our various construction projects during 2006.
No interest was capitalized during 2008 or 2007.





Assets are depreciated over
their respective service lives as follows:


Buildings
and improvements   7 – 39
yrs


Gaming
equipment                                                      3
– 7 yrs


Furniture
and non-gaming
equipment                     3
– 7 yrs





Purchased
software is recorded at cost and amortized over its estimated useful life.
Computer software and development costs incurred in the preliminary project
stage, as well as training and maintenance costs are expensed as incurred.
Direct and indirect costs associated with the application development stage of
internal use software are capitalized until such time that the software is
substantially complete and ready for its intended use. Capitalized costs are
amortized on a straight-line basis over the estimated useful life of the
software.





Impairment of
Long-Lived Assets– In accordance with Statement of Financial Accounting
Standard (“SFAS”) 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets”, the Company evaluates 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. For the year ended December 31, 2006, the
Company’s subsidiary, CTL, wrote off approximately $0.6 million of fixed assets
that were deemed obsolete. No long-lived asset impairment charges were recorded
for the years ended December 31, 2008 or 2007 (See Note 12).





-F12-


Goodwill-
Goodwill represents the excess of the purchase price over the fair value of the
net identifiable assets acquired in a business combination. SFAS 142, “Goodwill
and Other Intangible Assets” (“SFAS 142”), addresses the methods used to
capitalize, amortize and assess impairment of intangible assets, including
goodwill resulting from business combinations accounted for under the purchase
method. Based on the evaluations completed in 2008, the Company recorded
goodwill impairment charges of $9.3 million (see Note 7). Based on the
evaluations completed in 2006, the Company recorded a charge of $0.2 million
(CZK 5.0 million) to eliminate the goodwill associated with CM (which is
reported as a component of the Company’s discontinued operations in the
consolidated financial statements). No impairments to goodwill were recorded as
a result of the annual impairment evaluations in 2007.





Casino Licenses– In evaluating the Company’s capitalized casino license costs,
management considered all of the criteria set forth in SFAS 142 for determining
the useful life of the casino license costs. Of particular significance in this
evaluation are the existing regulatory provisions relating to the renewal of
licenses. In general, the renewal of a license can be done at minimal cost to
the Company, as long as the Company is in compliance with all applicable laws.
Based on this evaluation, the Company deemed that casino license costs have an
indefinite life. As of December 31, 2008 and 2007, all capitalized casino
license costs have been reported as a component of assets held for
sale.





Foreign
      Currency Translation – The Company accounts for currency
      translation in accordance with SFAS 52, “Foreign Currency Translation.”
      Balance sheet accounts are translated at the exchange rate in effect at
      each balance sheet date. Income statement accounts are translated at the
      average exchange rate prevailing during the period. Translation
      adjustments resulting from this process are charged or credited to other
      comprehensive income. Gains and losses from intercompany foreign currency
      transactions that are of a long-term investment nature and are between
      entities of a consolidated group are recorded as translation adjustments
      to other comprehensive income. Foreign currency translation gains or
      losses resulting from the translation of casino operations and other
      transactions that are denominated in a currency other than U.S. dollars
      are recognized in the statements of
earnings.





Historical
transactions that are denominated in a foreign currency are translated and
presented in accordance with the U.S. exchange rate in effect on the date of the
transaction. The exchange rates used to translate balances at the end of the
reported periods are as follows:





December 31, 2008
                
                
                December 31, 2007
                
                
                December 31, 2006Canadian
      Dollars (CAD)
                
                
                1.2246
                
                
                
                0.9881
                
                
                
                1.1653Czech
      Koruna (CZK)
                
                
                19.2550
                
                
                
                18.2240
                
                
                
                20.8500Euros
      (€)
                
                
                0.7184
                
                
                
                0.6849
                
                
                
                0.7578Polish
      Zloty (PLN)
                
                
                2.9709
                
                
                
                2.4703
                
                
                
                2.9016South
      African Rand (ZAR)
                
                
                9.3410
                
                
                
                6.8618
                
                
                
                7.0496


Source:
Pacific Exchange Rate Service





Comprehensive
(Loss) Income – Comprehensive (loss) income includes the effect of
fluctuations in foreign currency rates on the values of the Company’s foreign
investments and fair value gains and losses on the interest rate swap agreements
the Company maintains from time to time to hedge against interest rate increases
on the Company’s credit facilities.





-F13-


Investment in
Casinos Poland –The Company holds a 33.3% ownership interest in and
actively participates in the management of CPL. At CPL, day to day decision
making is controlled by a management board consisting of three persons.
Long-term decision making is controlled by a supervisory board consisting of
three persons. As the Company is the only shareholder with experience in the
gaming industry, it chairs both the management board and the supervisory board.
No material decisions can be made without the Company’s consent, including the
removal of the chairman of each board. Based on this influence, management
believes that it is appropriate to account for the Company’s investment in CPL
as a component of its operations. In accordance with SFAS 142, the Company
evaluates its investment in Casinos Poland for impairment on an annual basis or
whenever events or circumstances indicate that the carrying amount may not be
recoverable. No impairment was indicated based on the Company’s evaluation
performed in 2008.





Operating
Segment – Beginning in the fourth quarter 2007, the Company modified its
segment reporting from seven reportable segments to one reportable segment, as
the Company determined that its properties can be aggregated together in
accordance with SFAS 131, “Disclosures about Segments of an Enterprise and
Related Information” (“SFAS 131”). Based on a review of SFAS 131, the Company
determined that its operation of casino facilities, which includes the provision
of gaming, hotel accommodations, dining facilities and other amenities, can be
aggregated as one reportable segment. As a gaming company, the Company’s
operating results are highly dependent on the volume of customers at its
casinos. Most of the Company’s revenue is essentially cash-based, through
customers wagering with cash or paying for non-gaming services with cash or
credit cards. Prior period segments have been restated to conform to the current
presentation.





Revenue
Recognition - Casino revenue is the net win from gaming activities, which
is the difference between gaming wins and losses. Hotel, food and beverage
revenues are recognized when products are delivered or services are performed.
Management and consulting fees are recognized as revenue when services are
provided.The
incremental amount of unpaid progressive jackpots is recorded as a liability and
a reduction of casino revenue in the period during which the progressive jackpot
increases.





Revenues
are recognized net of certain sales incentives in accordance with the Emerging
Issues Task Force (“EITF”) consensus on Issue 01-09, “Accounting for
Consideration Given by a Vendor to a Customer (Including a Reseller of the
Vendor’s products)” (“EITF 01-09”). EITF 01-09 requires that sales incentives
and points earned in point-loyalty programs be recorded as a reduction of
revenue. The Company recognizes incentives related to gaming play and points
earned in point-loyalty programs as a direct reduction of revenues.





At the
Company’s casino in Edmonton, theAlberta Gaming and Liquor
Commission (“AGLC”) retains 85% of slot machine net sales. For all table games,
excluding poker and craps, the casino is required to allocate 50% of its net win
to a charity designated by the AGLC. For poker and craps, 25% of the casino’s
net win is allocated to the charity. In accordance with the EITF Issue 99-19,
“Reporting Revenue Gross as a Principal versus Net as an Agent,” the Century
Casino & Hotel in Edmonton record its revenues net of the amounts retained
by the AGLC.





The
retail value of accommodations, food and beverage, and other services furnished
to guests without charge is included in gross revenues and then deducted as
promotional allowances. The estimated cost of providing such promotional
allowances is primarily included in hotel, food and beverage
expenses.





-F14-


We issue
free play or coupons for the purpose of generating future revenue. Coupons are
issued the month prior to when they can be redeemed and are valid for defined
periods of time ranging up to 7 days. The net win from the coupons is expected
to exceed the value of the coupons issued. The cost of the coupons redeemed is
applied against the revenue generated on the day of the redemption.





Members
of our casinos’ player’s clubs earn points based on their volume of play
(typically as a percentage of coin-in) or are awarded points for their visits at
certain of our casinos. Players can accumulate points over time that they may
redeem at their discretion under the terms of the program. Points can be
redeemed for cash and/or various amenities at the casino, such as meals, hotel
stays and gift shop items. The cost of the points is offset against the revenue
generated in the period during which the points were earned. The value of unused
or unredeemed points is included in accounts payable and accrued liabilities on
the consolidated balance sheet. The expiration of unused points results in a
reduction of the corresponding liability.





Promotional
allowances presented in the consolidated statement of earnings for 2008, 2007
and 2006 include the following:





Year ended December 31,Amounts
      in thousands
                      
                      2008
                      
                      
                      2007
                      
                      
                      2006Food
      & Beverage and Hotel Comps
                      
                      $
                      3,100
                      
                      
                      $
                      2,662
                      
                      
                      $
                      1,556Free
      Plays or Coupons
                      
                      
                      2,588
                      
                      
                      
                      2,904
                      
                      
                      
                      1,600Player
      Points
                      
                      
                      1,823
                      
                      
                      
                      2,476
                      
                      
                      
                      1,723Total
      Promotional Allowances
                      
                      $
                      7,511
                      
                      
                      $
                      8,042
                      
                      
                      $
                      4,879





Stock-Based
Compensation – The Company accounts for stock-based compensation under
the provisions of SFAS 123 (Revised 2004), “Share-Based Payment” (“SFAS 123R”).
The Company selected the modified prospective method to initially report
stock-based compensation amounts in the consolidated financial statements. Under
the provisions of SFAS 123R, stock-based compensation cost is measured at the
grant date based on the fair value of the award and is recognized as expense
over the vesting period. The Company is currently using the Black-Scholes option
pricing model to determine the fair value of all option grants.





Advertising
Costs – The Company expenses advertising costs when incurred. Advertising
expense from continuing operations was $1.4 million, $1.7 million and $1.2
million for the years ended December 31, 2008, 2007 and 2006,
respectively.





Preopening and
Start-Up Expenses– The Company accounts for costs incurred during the
preopening and start-up phases of operations in accordance with Statement of
Position 98-5, “Reporting on the Costs of Start-Up Activities.” Preopening and
start-up costs, including organizational costs, are expensed as incurred. There
were no preopening expenses in 2008 or 2007. The Company incurred approximately
$3.6 million of preopening expenses for the year ended December 31, 2006 towards
its projects in Central City, Colorado and Edmonton, Canada.





Income
Taxes - The Company accounts for income taxes using the asset and
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. Recorded
deferred tax assets are evaluated for impairment on a quarterly basis by
reviewing internal estimates for future net income. Due to the uncertainty of
future taxable income, deferred tax assets of $3.8 million resulting from our
net operating losses in the U.S. were fully reserved during 2008. The Company
will assess the continuing need for a valuation allowance that results from
uncertainty regarding its ability to realize the benefits of the Company’s
deferred tax assets.





-F15-


(Loss) Earnings
Per Share– Basic (loss) earnings per share considers only
weighted-average outstanding common shares in the computation. Diluted (loss)
earnings per share gives effect to all potentially dilutive securities. Diluted
(loss) 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.





Recent
Accounting Pronouncements–In November 2008, the EITF reached
a consensus on Issue 08-06, “Equity Method Investment
Considerations”(“EITF 08-06”). The objective of EITF
08-06 is to clarify how to account for certain transactions involving equity
method investments. EITF 08-06 is effective for financial statements issued for
fiscal years beginning on or after December 15, 2008 and interim periods
within those years. The Company will adopt EITF 08-06 as of January 1, 2009, and
is currently assessing the potential impact upon adoption.





In May
2008, the FASB issued SFAS 162, “Hierarchy of Generally Accepted Accounting
Principles” (“SFAS 162”). SFAS 162 is intended to improve financial reporting by
identifying a consistent framework, or hierarchy, for selecting accounting
principles to be used in preparing financial statements of nongovernmental
entities that are presented in conformity with U.S. GAAP. This statement will be
effective 60 days following the Securities and Exchange Commission’s approval of
the Public Company Accounting Oversight Board amendment to AU Section 411,
“The Meaning of Present Fairly in Conformity with Generally Accepted Accounting
Principles.” The Company does not expect the adoption of SFAS 162 to have a
material impact on its consolidated financial statements.





In April
2008, the FASB issued FASB Staff Position No. SFAS 142-3, “Determination of the
Useful Life of Intangible Assets” (“FSP SFAS 142-3”). FSP SFAS 142-3 amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under SFAS
No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). The intent of
FSP SFAS 142-3 is to improve the consistency between the useful life of a
recognized intangible asset under SFAS 142 and the period of expected cash flows
used to measure the fair value of the asset under SFAS No. 141R (revised
2007), “Business Combinations” and other applicable accounting literature. FSP
SFAS 142-3 is effective for financial statements issued for fiscal years
beginning after December 15, 2008 and must be applied prospectively to
intangible assets acquired after the effective date. The Company does not expect
the adoption of FSP SFAS 142-3 to have a material impact on its consolidated
financial statements.





In March
2008, the FASB issued SFAS 161, "Disclosures about Derivative Instruments and
Hedging Activities - an amendment of FASB Statement No. 133" (“SFAS 161”). SFAS
161 requires companies to provide enhanced disclosures regarding derivative
instruments and hedging activities. It requires companies to better convey the
purpose of derivative use in terms of the risks the company is intending to
manage. Disclosures about (a) how and why an entity uses derivative instruments,
(b) how derivative instruments and related hedged items are accounted for under
SFAS 133 and its related interpretations, and (c) how derivative instruments and
related hedged items affect a company's financial position, financial
performance, and cash flows are required. SFAS 161 retains the same scope as
SFAS 133 and is effective for fiscal years and interim periods beginning after
November 15, 2008. The Company does not expect the adoption of SFAS 161 to have
a material impact on its consolidated financial statements.





-F16-


In
December 2007, the FASB issued SFAS 141 (revised 2007), “Business Combinations”
(“SFAS 141R”), which replaces SFAS 141. SFAS 141R establishes principles and
requirements regarding how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, any
noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141R
also establishes disclosure requirements that will enable users to evaluate the
nature and financial effects of the business combination. SFAS 141R is effective
for acquisitions made in fiscal years beginning after December 15, 2008. The
adoption of SFAS 141R will impact the Company’s results of operations and
financial position only to the extent that the Company makes acquisitions
subsequent to December 31, 2008.





In
December 2007, the FASB issued SFAS 160, “Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS 160”). SFAS
160 requires that accounting and reporting for minority interests will be
recharacterized as noncontrolling interests and classified as a component of
equity. SFAS 160 also establishes reporting requirements that provide sufficient
disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the noncontrolling owners. SFAS 160 is effective for
fiscal years beginning after December 15, 2008. Based upon the December 31, 2008
balance sheet, the adoption of SFAS 160 would require the Company to reclassify
$0.9 million in minority interests in consolidated subsidiaries from total
liabilities to a separate component of shareholders’ equity.





In
      February 2007, the FASB issued SFAS 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities” (“SFAS 159”), which permits an
      entity to measure certain financial assets and financial liabilities at
      fair value. SFAS 159 is effective for fiscal years beginning January 1,
      2008. The adoption of SFAS 159 did not have a material impact on the
      Company’s results of operations or financial
  position.





3.
            ACQUISITIONS





Century Resorts Alberta,
Inc.





On
January 12, 2006, CRI purchased the remaining 43.6% equity interest in CRA,
which it previously did not own, for approximately $6.5 million (CAD 7.2
million). At closing, CRI paid $5.1 million (CAD 5.8 million) of the purchase
price. The following table summarizes the fair values of the assets acquired and
liabilities assumed at the date of acquisition:





Amounts
      in thousandsFair
      value of minority interest acquired
                        
                        $
                        1,818Goodwill
                        
                        
                        4,342Long-term
      debt
                        
                        
                        (1,025
                        )Cash
      paid
                        
                        $
                        5,135





On
November 30, 2007, CRI paid the remaining $1.4 million (CAD 1.4 million). The
assets acquired and liabilities assumed are reported in the consolidated balance
sheets. CRA is a new entity, and therefore pro forma information is not
applicable.





-F17-


Century Casino Newcastle (a
discontinued operation)





On April
1, 2006, CCA completed the purchase of a 60% controlling interest in Balele, the
owner of a casino in Newcastle, South Africa, for approximately $9.3 million
(ZAR 57.5 million). Following the purchase, the Company began the development of
a new casino in Newcastle. In connection with CCA’s purchase of its equity
interest in Balele, a sale of share agreement (the “Share Agreement”) was
entered into on October 18, 2005 between CCA and a group of Balele shareholders
(the “Sellers”). As a condition to the Share Agreement, the Sellers
provided a warranty to CCA that the Sellers would be able to sell the facility
that housed the original casino for approximately $1.9 million (ZAR 12.0
million) within 60 days of closing. After the closing, the Sellers informed CCA
that they would not be able to sell the facility for $1.9 million (ZAR 12.0
million). As a result, the purchase price for the 60% interest in Balele
was reduced by this amount, resulting in an overall purchase price of $7.5
million (ZAR 45.5 million). CCA paid $6.7 million (ZAR 40.5 million) at
closing.





The
following table summarizes the fair values of the assets acquired and
liabilities assumed at the date of acquisition:





Amounts
      in thousandsCash
                    
                    $
                    1,530Accounts
      receivable
                    
                    
                    35Prepaid
      expenses
                    
                    
                    91Inventory
                    
                    
                    74Property
      and equipment, net
                    
                    
                    3,009Casino
      licenses
                    
                    
                    8,911Deferred
      income taxes – foreign
                    
                    
                    1,314Accounts
      payable and accrued liabilities
                    
                    
                    (802
                    )Accrued
      payroll
                    
                    
                    (183
                    )Taxes
      payable
                    
                    
                    (446
                    )Long-term
      debt
                    
                    
                    (1,965
                    )Amount
      credited to minority partner
                    
                    
                    (4,917
                    )Cash
      paid
                    
                    $
                    6,651Less:
      cash acquired
                    
                    
                    (1,530
                    )Net
      cash paid
                    
                    $
                    5,121





On
December 14, 2007, CCA paid an additional $0.6 million (ZAR 3.7 million) towards
the purchase of the 60% interest in Balele. The remaining $0.2 million (ZAR 1.3
million) is payable subject to the finalization of a South Africa Revenue
Service tax audit pertaining to periods prior to CCA’s acquisition of its 60.0%
interest. The Company consolidated the results of Balele, now known as Century
Casino Newcastle (Pty) Ltd. (“CNEW”), in its financial statements as of April 1,
2006. All assets and liabilities of CNEW are reported in the consolidated
balance sheets as being held for sale (See Note 4).





Century Casino Millennium (a
discontinued operation)





Prior to
April 13, 2006, CCE had a 50% equity ownership in CM. On April 13, 2006, CCE
purchased the remaining 50% of CM for approximately $0.7 million, which included
a security deposit for CM’s casino license in the amount of $0.4 million (CZK
10.0 million), the assumption of loans previously granted by the former partner
and the purchase price for the former partner’s 50% equity
interest.





-F18-


The
following table summarizes the fair values of the assets acquired and
liabilities assumed at the date of acquisition:





Amounts
      in thousandsCash
                    
                    $
                    318Restricted
      cash
                    
                    
                    929Accounts
      receivable
                    
                    
                    153Property
      and equipment, net
                    
                    
                    594Goodwill
                    
                    
                    (345
                    )Other
      assets, including intercompany debt assumed
                    
                    
                    196Accounts
      payable and accrued liabilities
                    
                    
                    (132
                    )Accrued
      payroll
                    
                    
                    (9
                    )Taxes
      payable
                    
                    
                    (343
                    )Long-term
      debt
                    
                    
                    (681
                    )Cash
      paid
                    
                    $
                    680Less:
      cash acquired
                    
                    
                    (318
                    )Net
      cash paid
                    
                    $
                    362





The
purchase price allocation for CM was completed in June 2006. All assets and
liabilities of CM are reported in the consolidated balance sheets as being held
for sale (See Note 4).





Casinos Poland
Ltd





On June
13, 2006, CCE entered into an agreement to acquire 100% of all of the issued and
outstanding shares of CCP, a Polish entity that owns a 33.3% interest in CPL,
for approximately $3.8 million (€2.9 million). In connection with the purchase,
CCE loaned CCP approximately $4.8 million (PLN 15.0 million) to repay existing
loans between CCP and its creditors. On February 1, 2007, CCE loaned CCP an
additional $1.0 million (PLN 3.0 million) to repay additional amounts to
creditors. As a result of the loans, the purchase price of the shares was
reduced by $1.0 million (€0.7 million).





CCE
acquired its shares on March 12, 2007. At closing, CCE paid $2.0 million (€1.6
million) of the purchase price. The following table summarizes the estimated
fair values of the assets acquired and liabilities assumed at the date of
acquisition:





Amounts
      in thousandsInvestment
      in Casinos Poland Ltd.
                  
                  $
                  9,164Accounts
      payable and accrued liabilities
                  
                  
                  (497
                  )Long-term
      debt, including intercompany debt assumed
                  
                  
                  (6,651
                  )Cash
      paid
                  
                  $
                  2,016





On
October 23, 2007, CCE paid the remaining $0.8 million (€0.6 million) towards the
purchase. The assets acquired and liabilities assumed, other than intercompany
debt (which eliminates in consolidation subsequent to the acquisition), are
reported in the consolidated balance sheets.





-F19-


CC Tollgate
LLC





On
December 31, 2007, CTI acquired from Central City Venture LLC (“Venture”) the
remaining 35% of all issued and outstanding partnership units of CTL that CTI
did not already own. CTL owns and operates the Century Casino & Hotel, a
limited-stakes gaming facility in Central City, Colorado. The purchase price for
the 35% equity interest was $2.1 million. In addition, CTI purchased a $1.0
million note previously issued to Venture by CTL and paid $0.2 million of
accrued interest on the note. The following table summarizes the fair values of
the assets acquired and liabilities assumed at the date of
acquisition:





Amounts
      in thousandsGoodwill
                  
                  $
                  2,050Other
      assets, including intercompany debt purchased
                  
                  
                  1,240Cash
      paid
                  
                  $
                  3,290





The
assets acquired and liabilities assumed are reported in the consolidated balance
sheets. CTL has been a consolidated entity since its formation in
2004.





Pro Forma
Results





The
following unaudited pro forma consolidated financial information has been
prepared assuming that the following transactions had occurred on January 1,
2006:


·
            The
      Company’s acquisition of a 60% controlling interest in
    CNEW;


·
            The
      Company’s acquisition of the remaining 50% interest in CM;
    and


·
            The
      Company’s acquisition of the remaining 35% interest in
  CTL.





Unaudited
pro forma results are as follows:


Amounts
      in thousands, except for share information
                      
                      2007
                      
                      
                      2006Net
      operating revenue
                      
                      $
                      59,043
                      
                      
                      $
                      30,203Operating
      earnings (loss) from continuing operations
                      
                      
                      2,206
                      
                      
                      
                      (4,747
                      )(Loss)
      earnings from continuing operations
                      
                      
                      (659
                      )
                      
                      
                      877Earnings
      from discontinued operations
                      
                      
                      5,461
                      
                      
                      
                      5,198Net
      earnings
                      
                      $
                      4,802
                      
                      
                      $
                      6,075Basic
      (loss) earnings per share:(Loss)
      earnings from continuing operations
                      
                      $
                      (0.03
                      )
                      
                      $
                      0.04Earnings
      from discontinued operations
                      
                      
                      0.24
                      
                      
                      
                      0.23Net
      earnings
                      
                      $
                      0.21
                      
                      
                      $
                      0.27Diluted
      (loss) earnings per share:(Loss)
      earnings from continuing operations
                      
                      $
                      (0.03
                      )
                      
                      $
                      0.03Earnings
      from discontinued operations
                      
                      
                      0.23
                      
                      
                      
                      0.22Net
      earnings
                      
                      $
                      0.20
                      
                      
                      $
                      0.25





These
unaudited pro forma results are presented for comparative purposes only. The pro
forma results are not necessarily indicative of what the Company’s actual
results would have been had the acquisitions been completed as of January 1,
2006, or of future results.


-F20-


4.
            DISCONTINUED
      OPERATIONS





On
December 5, 2008, the Company entered into an agreement to sell the Century
Casino Millennium for approximately $2.3 million (CZK 22.0 million plus $1.2
million).  Approximately $1.5 million (CZK 22.0 million plus $0.4
million) was paid to the Company at closing on February 11, 2009, with the
balance payable over the 12–month period following the closing.





On
December 19, 2008, CRL entered into an agreement to sell all of the outstanding
shares of CCA for a gross selling price of $49.2 million (ZAR 460.0 million)
less the balance of third party South African debt and other agreed to amounts.
Net proceeds from the transaction are expected to be approximately $38.3 million
(ZAR 357.3 million) and are payable at closing, which is expected to occur in
the first half of 2009. CCA owns the Caledon Hotel, Spa & Casino and 60% of
the Century Casino & Hotel in Newcastle, South Africa. The closing of the
transaction is subject to customary conditions including, but not limited to,
approvals by the Western Cape Gambling and Racing Board, the KwaZulu-Natal
Gambling Board and other regulatory approvals.





The
results of the Century Casino Millennium, the Caledon Hotel, Spa & Casino
and the Century Casino & Hotel in Newcastle are classified as discontinued
operations in the accompanying consolidated statements of income for all periods
presented, as applicable. Net operating revenue of discontinued operations was
$29.3 million, $32.6 million and $26.1 million for the years ended December 31,
2008, 2007 and 2006, respectively. The cash flows of discontinued operations are
included with the cash flows of continuing operations in the accompanying
consolidated statements of cash flows. The Company’s discontinued operations had
a combined carrying value of approximately $21.4 million and $29.8 million at
December 31, 2008 and 2007, respectively.





-F21-


The
following table summarizes the assets and liabilities of discontinued operations
as of December 31, 2008 and 2007 which are included as assets held for sale and
liabilities related to assets held for sale in the accompanying consolidated
balance sheets:




Amounts
      in thousands, except share information
                                  
                                  December
      31, 2008
                                  
                                  
                                  December
      31, 2007ASSETSCurrent
      Assets:Cash
      and cash equivalents
                                  
                                  $
                                  1,464
                                  
                                  
                                  $
                                  6,108Restricted
      cash
                                  
                                  
                                  104
                                  
                                  
                                  
                                  112Receivables,
      net
                                  
                                  
                                  278
                                  
                                  
                                  
                                  262Prepaid
      expenses
                                  
                                  
                                  287
                                  
                                  
                                  
                                  683Inventories
                                  
                                  
                                  244
                                  
                                  
                                  
                                  238Other
      current assets
                                  
                                  
                                  21
                                  
                                  
                                  
                                  27Deferred
      income taxes – foreign
                                  
                                  
                                  -
                                  
                                  
                                  
                                  209Total
      current assets
                                  
                                  
                                  2,398
                                  
                                  
                                  
                                  7,639Property
      and Equipment, net
                                  
                                  
                                  22,650
                                  
                                  
                                  
                                  31,749Goodwill
                                  
                                  
                                  704
                                  
                                  
                                  
                                  959Casino
      Licenses
                                  
                                  
                                  8,356
                                  
                                  
                                  
                                  10,780Deferred
      Income Taxes – foreign
                                  
                                  
                                  764
                                  
                                  
                                  
                                  448Other
      Assets
                                  
                                  
                                  1,111
                                  
                                  
                                  
                                  1,213Total
      assets
                                  
                                  $
                                  35,983
                                  
                                  
                                  $
                                  52,788LIABILITIESCurrent
      Liabilities:Current
      portion of long-term debt
                                  
                                  $
                                  3,405
                                  
                                  
                                  $
                                  4,691Accounts
      payable and accrued liabilities
                                  
                                  
                                  2,076
                                  
                                  
                                  
                                  2,378Accrued
      payroll
                                  
                                  
                                  453
                                  
                                  
                                  
                                  738Taxes
      payable
                                  
                                  
                                  1,035
                                  
                                  
                                  
                                  1,736Total
      current liabilities
                                  
                                  
                                  6,969
                                  
                                  
                                  
                                  9,543Long-Term
      Debt, less current portion
                                  
                                  
                                  3,801
                                  
                                  
                                  
                                  8,414Other
      Long-Term Accrued Liabilities
                                  
                                  
                                  -
                                  
                                  
                                  
                                  27Minority
      Interest
                                  
                                  
                                  3,814
                                  
                                  
                                  
                                  4,989Total
      liabilities
                                  
                                  
                                  14,584
                                  
                                  
                                  
                                  22,973Net
      assets
                                  
                                  $
                                  21,399
                                  
                                  
                                  $
                                  29,815





-F22-


5.             EQUITY
INVESTMENT IN UNCONSOLIDATED SUBSIDIARY





As
indicated in Note 3 above, the Company acquired a 33.3% ownership interest in
CPL on March 12, 2007. The Company accounts for this investment under the equity
method.





Following
is the summarized unaudited financial information of CPL as of December 31, 2008
and 2007:





Amounts
      in thousands
                  
                  As
      ofDecember 31, 2008
                  
                  
                  December 31, 2007Balance
      Sheet:Current
      assets
                  
                  $
                  3,208
                  
                  
                  $
                  3,225Noncurrent
      assets
                  
                  $
                  16,751
                  
                  
                  $
                  20,978Current
      liabilities
                  
                  $
                  10,530
                  
                  
                  $
                  17,757Noncurrent
      liabilities
                  
                  $
                  3,842
                  
                  
                  $
                  1,825





Year
      ended
                  December 31, 2008
                
                
                March
      12, 2007
                  through
                  December 31, 2007Operating
      Results:Net
      operating revenue
                
                $
                57,389
                
                
                $
                39,710Net
      earnings
                
                $
                2,427
                
                
                $
                1,689





The
Company’s maximum exposure to losses at December 31, 2008 is $10.5 million, the
value of its equity investment in CPL. Of the $10.5 million, $8.6 million
relates to goodwill recorded at the time of the Company’s acquisition of its
33.3% ownership interest in CPL.





6.            PROPERTY
AND EQUIPMENT





Property and equipment at December 31,
2008 and 2007 consist of the following:





Amounts
      in thousands
                      
                      2008
                      
                      
                      2007Land
                      
                      $
                      21,578
                      
                      
                      $
                      22,189Buildings
      and improvements
                      
                      
                      65,308
                      
                      
                      
                      70,078Gaming
      equipment
                      
                      
                      14,977
                      
                      
                      
                      14,999Furniture
      and non-gaming equipment
                      
                      
                      13,362
                      
                      
                      
                      13,109Capital
      projects in process
                      
                      
                      12
                      
                      
                      
                      707115,237
                      
                      
                      
                      121,082Less
      accumulated depreciation
                      
                      
                      (26,679
                      )
                      
                      
                      (20,954
                      )Property
      and equipment, net
                      
                      $
                      88,558
                      
                      
                      $
                      100,128





Depreciation
expense from continuing operations for the years ended December 31, 2008, 2007
and 2006 was $6.8 million, $6.3 million, and $3.3 million,
respectively.


-F23-


7.
              GOODWILL





Changes
in the carrying amount of goodwill for the years ended December 31, 2008 and
2007 are as follows:





Amounts
      in thousandsBalance
      – January 1, 2007
                  
                  $
                  11,451Additional
      investment in CTL
                  
                  
                  2,050Foreign
      currency translation
                  
                  
                  757Balance
      – December 31, 2007
                  
                  $
                  14,258Additional
      investment in CTL
                  
                  
                  74Impairment
      – CTL
                  
                  
                  (2,124
                  )Impairment
      – WMCK
                  
                  
                  (7,233
                  )Foreign
      currency translation
                  
                  
                  (961
                  )Balance
      – December 31, 2008
                  
                  $
                  4,014





In
accordance with SFAS 142, the Company performs impairment tests of its goodwill
on an annual basis or whenever events or circumstances indicate that the
carrying amount of the goodwill may not be recoverable. During 2008, our casinos
in Cripple Creek, Colorado and Central City, Colorado experienced a significant
decline in gaming revenue. The Company deems this factor to be an indicator of
potential impairment under the guidance set forth in SFAS 142. As a result, the
Company performed interim goodwill impairment analyses of each Colorado
operation as of September 30, 2008. The value of each operation was determined
using the present value of future cash flows, which is dependent on a number of
significant estimates including long-term revenue growth, each operation’s
ability to manage operating expenses, expected operating margins of future
operations and the discount rate used to calculate the present value of the cash
flows. Based on the results of these analyses, it was determined that the net
book value for each operation exceeded its respective estimated fair value. As a
result, the Company performed the second step of the impairment test to
determine the implied fair value of goodwill. Under step two, the difference
between the estimated fair value of each operation and the fair value of its
respective identified net assets results in the residual value of goodwill. The
results of step two of the goodwill analysis indicated that there would be no
remaining implied value at either property attributable to goodwill.
Accordingly, the Company wrote-off the entire goodwill balance for each
operation and recognized goodwill impairment charges in the aggregate of $9.3
million in the consolidated statement of operations.








-F24-


8.           LONG-TERM
DEBT





Long-term
debt at December 31, 2008 and 2007 consists of the following:





Amounts
      in thousands
                      
                      2008
                      
                      
                      2007Term
      Loan – Edmonton
                      
                      $
                      15,050
                      
                      
                      $
                      20,144Term
      Loan – Cripple Creek
                      
                      
                      4,255
                      
                      
                      
                      10,834Term
      Loan – Central City
                      
                      
                      17,600
                      
                      
                      
                      19,800Other
                      
                      
                      458
                      
                      
                      
                      781Total
      long-term debt
                      
                      
                      37,363
                      
                      
                      
                      51,559Less
      current portion
                      
                      
                      (8,862
                      )
                      
                      
                      (4,054
                      )Long-term
      portion
                      
                      $
                      28,501
                      
                      
                      $
                      47,505





Term
Loan - Edmonton





On
September 23, 2005, CRA agreed to the terms of a $20.1 million (CAD 20.0
million) credit facility with Canadian Western Bank (“CWB”) for the development
of the Century Casino & Hotel in Edmonton, Alberta, Canada. The credit
facility, originally structured as a construction loan, converted to a 60-month
mortgage (“Mortgage”) on December 20, 2007. The Mortgage matures on December 31,
2012. Prior to December 31, 2012, CRA will be able to renegotiate the Mortgage
for an additional one to five year term. The Mortgage bears interest at 7.0%.
Monthly principal and interest payments on the Mortgage are based on a 10-year
amortization and are payable on the last day of each month. Under the terms of
the Mortgage, CRA is subject to various reporting requirements, a minimum equity
requirement of CAD 11.3 million (approximately $9.2 million) and is required to
maintain a minimum Cash Flow Coverage Ratio (as defined in the Mortgage) of
1.20.





During
2008, the Company met all financial covenant terms related to this agreement
except the minimum Cash Flow Coverage Ratio covenant. The Company received a
written waiver from the Bank related to this covenant in exchange for
approximately $0.1 million.





The
Mortgage is secured by the assets of CRA and guaranteed by the Company. CRA may
elect to prepay up to 10%, or $1.6 million (CAD 2.0 million), of the original
principal amount of the Mortgage annually without penalty or bonus. The principal balance
outstanding under theMortgageas of December 31,
2008was$15.1 million, of which $13.8 million is
considered long-term debt in the accompanying December 31, 2008
consolidated balance sheet.





The
Company has three non-interest bearing stand-by letter of credit agreements
totaling $0.1 million with CWB. These letters of credit have no maturity date
and are cancelable upon written notice by CRA. CRA will incur a 1% charge for
each year the letters of credit are outstanding. Two of the letters of credit
guarantee to the City of Edmonton, Alberta, Canada the completion of certain
landscaping requirements at the casino. The third letter of credit is required
by the AGLC for CRA’s liquor ordering system. As of December 31, 2008, there
were no balances outstanding under these letters of credit.





-F25-


Term
Loan – Cripple Creek





On April21, 2000, the Company and Wells
Fargo Bank (the “Bank”) entered into an Amended and Restated Credit
Agreementwhich
provided the Company with an original aggregateborrowing commitment from
the Bank under a Revolving Line of Credit Facility (“WomacksRCF”)of$26 million.On November 6,
2008, the Company entered into a Second Amended and Restated Credit Agreement
with the Bank (“Amended Womacks Agreement”). The Amended Womacks Agreement
converted the Womacks RCF to a 44-month term loan facility requiring monthly
principal repayments of $0.1 million beginning on December 1, 2008 through
maturity (July 1, 2012). Interest on theAmended WomacksAgreement is variable based
on theBank’s
primeinterest
rateplus 5.5%(8.75% as of December 31, 2008). The payment of 3.0% of this
interest rate is deferred until maturity.Excluding the amortization of
deferred financing charges, the effective rate on the borrowings under the
Amended Womacks Agreement was 6.5%, 8.3% and 9.8% for 2008, 2007 and 2006,
respectively. The Amended Womacks Agreement is guaranteed by the Company and
permits the Company to enter into a management agreement with Womacks, subject
to certain limitations.In addition to the Company’s
guarantee, the
loan is collateralized by a deed of trust and a security agreement with
assignments of lease, rents and furniture, fixtures and equipment ofWomacksproperty.





TheAmended Womacks
Agreementincludes certain restrictive covenants on financial ratios of WMCKand the Company.The most significant
covenants include i) a maximum leverage ratiofor WMCK ofno greater than2.00 to 1.00, ii)a maximum leverage ratio for
the Company of no greater than 4.00 to 1.00and iii) an adjusted fixed
charge coverage ratio of no less than 1.10 to 1.00.In the event that WMCK does
not comply with these restrictive covenants, the Company has the ability to make
a cash payment to reduce the principal balance outstanding under the Amended
Womacks Agreementwithin 45 days following the
end of the period to which the covenant applies. On February 13, 2009, the
Company made a $1.0 million payment to ensure compliance with the restrictive
covenants on the financial ratios of WMCK as of December 31, 2008.The Companywasin compliance with the
restrictive covenants on the financial ratios of WMCK as of December 31,
2007.





Theprincipal balance outstanding
under theAmended Womacks
Agreementas of
December 31, 2008 was $4.3 million. In
connection with the Company’s sale of its interest in CCA, the Company has
pledged to repay the entire balance outstanding under the Amended Womacks
Agreement. Accordingly, the entire $4.3 million balance is considered
current in the accompanying December 31, 2008 consolidated balance
sheet.





Term
Loan – Central City





On
November 21, 2005, CTL entered into a $35 million loan agreement, which has
since been amended (“Amended Tollgate Agreement”), with the Bank and a syndicate
of institutional lenders for the development of the Century Casino & Hotel
in Central City, Colorado. The Amended Tollgate Agreement consists of a $32.5
million term loan which matures on November 22, 2011. Upon closing, CTL incurred
a facility fee of $1.1 million payable to the Bank, which was satisfied from the
proceeds of the loan. The Amended Tollgate Agreement is secured by all of CTL’s
assets and is guaranteed by the Company. The amount outstanding under the
Amended Tollgate Agreement is subject to monthly reductions of $0.2 million. The
Company has the ability to set the interest rate of the loan based on one of the
following options:





a.
            Bank’s
      Prime Rate + 6.5%; or


b.
            The
      greater of 3.75% or the 30-day LIBOR rate + 6.5%;
  or


c.
            The
      greater of 3.75% or the 90-day LIBOR rate +
  6.5%.


-F26-


The
Company can elect to convert the interest rate of the loan on three business
days notice. As of December 31, 2008, the interest rate on the loan is 9.75%.
The Company also is charged a service fee of 0.5% on the total outstanding
balance, payable monthly. Excluding the amortization of deferred financing
charges, the effective rate on the borrowings under the Amended Tollgate
Agreement was 8.9%, 10.5% and 12.8% for 2008, 2007 and 2006,
respectively.





The
Amended Tollgate Agreement is subject to various reporting requirements and
various financial covenants, the most significant being Senior Leverage Ratio,
Adjusted Fixed Charge Coverage, Limitation on Indebtedness and Restriction on
Distributions.In the event that CTL does
not comply with these restrictive covenants, the Company has the ability to make
a cash payment to reduce the principal balance outstanding under the Amended
Tollgate Agreementwithin 45 days following the
end of the period to which the covenant applies. On February 13, 2009, the
Company made a $0.8 million payment to ensure compliance with the restrictive
covenants on the financial ratios of CTL as of December 31, 2008.The Companywasin compliance with the
restrictive covenants on the financial ratios ofCTLcontained in theAmended Tollgate
Agreementas of
December 31,2007.





During
2008, the Company met all financial covenant terms related to this agreement
except the adjusted fixed charge coverage (“AFCC”) ratio covenant. The Company
received written waivers from the Bank related to this covenant in exchange for
approximately $0.3 million.





The
Amended Tollgate Agreement is also subject to a prepayment fee, currently at
6.0%, which decreases annually. During 2007, the Company made early repayments
of $12.1 million of principal. CTL incurred prepayment charges of $0.3 million
relating to these early repayments. The prepayment charges have been classified
as a component of other long-term accrued liabilities on the December 31, 2008
consolidated balance sheet. These charges will be payable on the maturity of the
Amended Tollgate Agreement.The principal balance
outstanding under theAmended Tollgate
Agreementas of
December 31, 2008 was $17.6 million,of which $14.4 million is considered long-term debt in the accompanying
December 31, 2008 consolidated balance sheet.





The Company’s remaining debt
at December 31, 2008 consists of a short-term note for Womacks and capital
leases at theEdmontonproperty.





Deferred financing charges,
which are reported as a component of other assets, are summarized as
follows:





Amounts
      in thousands
                  
                  2008
                  
                  
                  2007Deferred
      financing charges – current
                  
                  $
                  540
                  
                  
                  $
                  399Deferred
      financing charges – long-term
                  
                  
                  1,026
                  
                  
                  
                  1,463Total
                  
                  $
                  1,566
                  
                  
                  $
                  1,862





Amortization
expenserelating
to these deferred financing charges for the years endedDecember 31,2008, 2007, and2006 totaled$0.4 million, $0.5 million
and$0.2million, respectively.In 2006, the Company
capitalized approximately $0.3 million of deferred financing charges towards the
construction of our new casinos in Central City andEdmonton.





-F27-


The consolidated weighted
average interest rate on all borrowings forthe Company’s continuing
operationswas7.8%, 9.4%,
and8.7%for the years ended December
31,2008, 2007
and2006,respectively, excluding the
amortization of deferred financing chargesand one-time charges of $0.4
million for bank waivers.





As of
December 31, 2008 scheduled maturities of all long-term debt are as
follows:





Amounts
      in thousandsYear ending December 31,
                    
                    Amount2009
                    
                    $
                    8,8622010
                    
                    
                    3,8862011
                    
                    
                    13,5972012
                    
                    
                    11,018Total
                    
                    $
                    37,363





9.
            ACCOUNTS
      PAYABLE AND ACCRUED LIABILITIES





Accounts
      payable and accrued liabilities are composed of the following at December
      31, 2008 and 2007:





Amounts
      in thousands
                    
                    2008
                    
                    
                    2007Accounts
      payable
                    
                    $
                    1,076
                    
                    
                    $
                    1,746Accrued
      property taxes
                    
                    
                    1,394
                    
                    
                    
                    1,602Accrued
      commissions (AGLC)
                    
                    
                    725
                    
                    
                    
                    1,057Other
      accrued liabilities
                    
                    
                    2,529
                    
                    
                    
                    2,606Total
                    
                    $
                    5,724
                    
                    
                    $
                    7,011





10.
            SHAREHOLDERS’
      EQUITY





In March
2008, the Company issued 207,000 new shares of its common stock, at an exercise
price of $2.93 per share, for stock options exercised in cash by an officer of
the Company. In June 2008, the Company issued 20,000 new shares of its common
stock for stock options exercised in cash by an independent director of the
Company at an exercise price of $3.26 per share.





In July
2007, the Company issued 200,000 shares of restricted common stock with a fair
value of $9.00 per share to each of its Co Chief Executive Officers. The
restricted stock vests ratably over a four-year period. In October 2007, the Company issued100,000newshares of its common
stockfor stock
options exercised in cashat an exercise price of
$2.93per
share.





In March 2000, the
Company’sboard ofdirectors approved a
discretionary program to repurchase up to $5.0 million of the Company’s
outstanding common stock.The Companydid not purchase any shares
ofitscommon stock on the open
market in2008
or2007.The total remaining
authorization under the repurchase program was $1.2 million as of December 31,
2008.The repurchase program has no
set expiration or termination date.





There were11,376shares in treasury as of
December 31, 2008,at an average cost per share
of $2.26.The Company reissued 153,000
shares of treasury stock in 2007 for stock options exercised in cash, 28,000 of
which were to satisfy directors’ options.





-F28-


The
Company has not declared or paid any dividends, and it does not presently intend
to do so. At the present time, the Company intends to use any earnings that may
be generated to finance the growth of its business. In addition, the Company’s
credit facilities currently limit the payment of dividends.





The
Company does not have any minimum capital requirements related to its
status as a U.S. corporation in the state of Delaware.





11.
            STOCK-BASED
      COMPENSATION





The board
of directors of the Company adopted an Employees’ Equity Incentive Plan (the
“EEIP”) in April 1994, which expired in April 2004. The EEIP continues to be
administered for previously issued and outstanding options. Stockholders of the
Company approved a new equity incentive plan (the “2005 Plan”) at the 2005
annual meeting of stockholders. The 2005 Plan provides for the grant of awards
to eligible individuals in the form of stock, restricted stock, stock options,
performance units or other stock-based awards, all as defined in the 2005 Plan.
The 2005 Plan provides for the issuance of up to 2,000,000 shares of common
stock to eligible individuals through the various forms of permitted awards. The
2005 Plan limits the number of options that can be awarded to an eligible
individual to 200,000 per year. Stock options may not be issued at an option
price lower than fair market value at the date of grant. All stock options must
have an exercise period not to exceed ten years. Through December 31, 2008, the
Company has granted, under the EEIP and the 2005 Plan shares of restricted
common stock, incentive stock option awards (for which the option price was not
less than the fair market value at the date of grant) and non-statutory options
(which may be granted at any option price (as permitted under the EEIP)).
Options granted to date have six-month, one-year, two-year or four-year vesting
periods. Through December 31, 2008, all outstanding options have been issued at
market value as of the date of the grant. The Company’s Incentive Plan Committee
or, in the case of the 2005 Plan, any other committee as delegated by the board
of directors, 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 the United States Bankruptcy
Code or liquidation of the Company. Both plans also allow 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.





Stock
Options





As of
December 31, 2008, there were 1,291,530 options outstanding to employees of the
Company, of which 891,710 options were issued under the EEIP and 399,820 options
were issued under the 2005 Plan.





The fair
value of options granted under the Company’s stock-based compensation plans were
estimated on the date of grant using the Black-Scholes option pricing model with
the following assumptions:




2008
                2007
                2006Weighted-average
      risk-free interest rate
                1.94%
      - 2.08%
                4.99%
                -Weighted-average
      expected life
                5.25
      yrs
                6.25
      yrs
                -Weighted-average
      expected volatility
                61.7%
                47.5%
                -Weighted-average
      expected dividends
                $
      0
                $
      0
                -
  -F29-
   The
weighted-average fair value of options granted under the 2005 Plan was $0.54 in
2008 and $4.87 in 2007. A total of 347,320 options and 60,000 options were
granted to employees under the 2005 Plan in 2008 and 2007, respectively. No
options were granted to employees under the 2005 Plan in
2006.





Transactions
regarding the Company’s stock-based compensation plans are as
follows:





2008
                      
                      
                      2007
                      
                      
                      2006Weighted-
                      
                      
                      
                      
                      
                      Weighted-
                      
                      
                      
                      
                      
                      Weighted-Average
                      
                      
                      
                      
                      
                      Average
                      
                      
                      
                      
                      
                      AverageExercise
                      
                      
                      
                      
                      
                      Exercise
                      
                      
                      
                      
                      
                      ExerciseShares
                      
                      
                      Price
                      
                      
                      Shares
                      
                      
                      Price
                      
                      
                      Shares
                      
                      
                      PriceEmployee Stock Options:Outstanding
      at January 1,
                      
                      
                      1,161,210
                      
                      
                      $
                      3.19
                      
                      
                      
                      1,368,710
                      
                      
                      $
                      2.98
                      
                      
                      
                      1,986,210
                      
                      
                      $
                      2.33Granted
                      
                      
                      347,320
                      
                      
                      
                      0.98
                      
                      
                      
                      60,000
                      
                      
                      
                      9.00
                      
                      
                      
                      -
                      
                      
                      
                      -Exercised
                      
                      
                      (207,000
                      )
                      
                      
                      2.93
                      
                      
                      
                      (225,000
                      )
                      
                      
                      2.79
                      
                      
                      
                      (607,500
                      )
                      
                      
                      0.78Cancelled
      or forfeited
                      
                      
                      (10,000
                      )
                      
                      
                      2.93
                      
                      
                      
                      (42,500
                      )
                      
                      
                      6.80
                      
                      
                      
                      (10,000
                      )
                      
                      
                      7.68Outstanding
      at December 31,
                      
                      
                      1,291,530
                      
                      
                      $
                      2.64
                      
                      
                      
                      1,161,210
                      
                      
                      $
                      3.19
                      
                      
                      
                      1,368,710
                      
                      
                      $
                      2.98Options
      exercisable at December 31,
                      
                      
                      896,960
                      
                      
                      $
                      2.95
                      
                      
                      
                      589,226
                      
                      
                      $
                      2.91
                      
                      
                      
                      419,614
                      
                      
                      $
                      2.85Intrinsic
      Value of Options (in millions):Outstanding
                      
                      $
                      -
                      
                      
                      
                      
                      
                      
                      $
                      3.8
                      
                      
                      
                      
                      
                      
                      $
                      11.2Exercisable
                      
                      $
                      -
                      
                      
                      
                      
                      
                      
                      $
                      2.1
                      
                      
                      
                      
                      
                      
                      $
                      3.5





The
aggregate intrinsic value represents the difference between the Company’s
closing stock price of $1.02, $6.44 and $11.16 as of the last trading day of
2008, 2007 and 2006, respectively, and the exercise price multiplied by the
number of options outstanding or exercisable as of that date.





The
weighted-average contractual life for options outstanding to employees at
December 31, 2008 is 6.4 years.





Additionally,
independent directors of the Company have been issued the following options
under the 2005 Plan since January 1, 2006:




ExerciseShares
                  
                  
                  Price2007:July
      3
                  
                  
                  25,000
                  
                  
                  
                  9.002008:November
      19
                  
                  
                  10,000
                  
                  
                  
                  1.00November
      20
                  
                  
                  10,752
                  
                  
                  
                  0.93





There
were no options issued to independent directors of the Company during 2006. As
of December 31, 2008, there were 61,752 options outstanding to independent
directors of the Company with a weighted average exercise price of
$4.81.





-F30-


For the
years ended December 31, 2008, 2007 and 2006, the Company recorded $0.1 million,
$0.2 million and $0.4 million, respectively, for stock-based compensation
expense related to stock option grants made in prior years that vested during
the year. This amount is included in general and administrative
expense.





At
December 31, 2008, there was $0.3 million of total unrecognized compensation
expense related to unvested stock options remaining to be recognized. Of this
amount, $0.2 million will be recognized during 2009, and $0.1 million will be
recognized in subsequent years through 2011.





SFAS 123R
requires that cash flows from the exercise of stock options resulting from tax
benefits in excess of recognized cumulative compensation cost (excess tax
benefits) be classified as financing cash flows. For the years ended December
31, 2008, 2007, and 2006, less than $0.1 million, $0.2 million and $0.4 million,
respectively, of such excess tax benefits were classified as financing cash
flows.





Restricted
Stock





In 2007,
the Company issued 200,000 shares of restricted common stock with a fair value
of $9.00 per share to each of its Co Chief Executive Officers. The restricted
stock vests ratably over a four-year period. For the years ended December 31,
2008 and 2007, compensation expense related to restricted stock awards totaled
$1.3 million and $0.7 million, respectively. At December 31, 2008, there was
$1.6 million of total unrecognized compensation expense related to unvested
restricted stock remaining to be recognized. Of this amount, $0.9 million will
be recognized in 2009 and $0.7 million will be recognized in subsequent years
through 2011.





The table
below summarizes unvested restricted stock awards for the years ended December
31, 2008 and 2007:





2008
                  
                  
                  2007Grant
      Date
                  
                  
                  
                  
                  
                  Grant
      DateShares
                  
                  
                  Fair
      Value
                  
                  
                  Shares
                  
                  
                  Fair
      ValueUnvested
      at January 1,
                  
                  
                  400,000
                  
                  
                  $
                  9.00
                  
                  
                  
                  -
                  
                  
                  $
                  -Granted
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  400,000
                  
                  
                  
                  9.00Vested
                  
                  
                  (40,000
                  )
                  
                  
                  9.00
                  
                  
                  
                  -
                  
                  
                  
                  -Forfeited
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Unvested
      at December 31,
                  
                  
                  360,000
                  
                  
                  $
                  9.00
                  
                  
                  
                  400,000
                  
                  
                  $
                  9.00





The
impact of the amortization of all the Company’s equity awards to both basic and
diluted earnings per share was $0.06, $0.02, and $0.01 for the years ended
December 31, 2008, 2007 and 2006, respectively. There was no capitalized
stock-based compensation expense.





-F31-


12.
            IMPAIRMENTS
      AND OTHER WRITE-OFFS





Impairments
      and other write-offs consist of the
following:





Amounts
      in thousands
                  
                  For
      the Year Ended December 31,2008
                  
                  
                  2007
                  
                  
                  2006Write-off
      of property held for sale
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  389Goodwill
      impairments
                  
                  
                  9,357
                  
                  
                  
                  -
                  
                  
                  
                  -Write-down
      (recovery) of property and equipment
                  
                  
                  -
                  
                  
                  
                  (158
                  )
                  
                  
                  567Other
                  
                  
                  -
                  
                  
                  
                  63
                  
                  
                  
                  -Total Impairments and Other
      Write-Offs
                  
                  $
                  9,357
                  
                  
                  $
                  (95
                  )
                  
                  $
                  956





Write-off
of property held for sale





In 2006,
the Company wrote off non-operating casino property and land held for sale
located in Wells, Nevada.





Goodwill
impairments





In 2008,
in accordance with SFAS 142, the Company recorded goodwill impairments of $7.2
million for WMCK and $2.1 million for CTL (see Note 7).





Write-down
of property and equipment





For the
year ended December 31, 2006, the Company’s subsidiary, CTL, wrote off
approximately $0.6 million of fixed assets that were deemed obsolete. In 2007,
the vendor who sold these assets to the Company replaced approximately $0.2
million of these obsolete assets.





Other





For the
year ended December 31, 2007, the Company recorded $0.1 million in losses
primarily associated with thefts at certain of the Company’s
properties.





-F32-


13.
            INCOME
      TAXES





The
Company’s provision (benefit) for income taxes from continuing operations is
summarized as follows:





Amounts
      in thousands
                  
                  2008
                  
                  
                  2007
                  
                  
                  2006U.S.
      Federal – Current
                  
                  $
                  738
                  
                  
                  $
                  (1,280
                  )
                  
                  $
                  (852
                  )U.S.
      Federal – Deferred
                  
                  
                  2,257
                  
                  
                  
                  73
                  
                  
                  
                  (121
                  )Provision
      (benefit) for U.S. federal income taxes
                  
                  
                  2,995
                  
                  
                  
                  (1,207
                  )
                  
                  
                  (973
                  )State
      – Current
                  
                  
                  104
                  
                  
                  
                  (183
                  )
                  
                  
                  (122
                  )State
      – Deferred
                  
                  
                  307
                  
                  
                  
                  10
                  
                  
                  
                  (16
                  )Provision
      (benefit) for state income taxes
                  
                  
                  411
                  
                  
                  
                  (173
                  )
                  
                  
                  (138
                  )Foreign
      – Current
                  
                  
                  441
                  
                  
                  
                  (446
                  )
                  
                  
                  (436
                  )Foreign
      – Deferred
                  
                  
                  213
                  
                  
                  
                  788
                  
                  
                  
                  83Provision
      (benefit) for foreign income taxes
                  
                  
                  654
                  
                  
                  
                  342
                  
                  
                  
                  (353
                  )Total
      provision (benefit) for income taxes
                  
                  $
                  4,060
                  
                  
                  $
                  (1,038
                  )
                  
                  $
                  (1,464
                  )





The
Company’s effective income tax rate differs from the statutory federal income
tax rate as follows:


2008
                  
                  
                  2007
                  
                  
                  2006U.S.
      Federal income tax statutory rate
                  
                  
                  34.0
                  %
                  
                  
                  34.0
                  %
                  
                  
                  34.0
                  %Foreign
      income taxes
                  
                  
                  (3.7
                  %)
                  
                  
                  23.6
                  %
                  
                  
                  109.2
                  %State
      income tax (net of federal benefit)
                  
                  
                  1.0
                  %
                  
                  
                  7.8
                  %
                  
                  
                  9.0
                  %Effect
      of stock option exercises
                  
                  
                  0.2
                  %
                  
                  
                  13.0
                  %
                  
                  
                  13.9
                  %Goodwill
      impairments
                  
                  
                  (40.5
                  %)
                  
                  
                  -
                  
                  
                  
                  -Valuation
      allowance
                  
                  
                  (27.2
                  %)
                  
                  
                  -
                  
                  
                  
                  -Permanent
      and other items
                  
                  
                  6.8
                  %
                  
                  
                  (12.7
                  %)
                  
                  
                  (25.9
                  %)Total
      effective income tax rate
                  
                  
                  (29.4
                  %)
                  
                  
                  65.7
                  %
                  
                  
                  140.2
                  %





The
Company records deferred tax assets and liabilities based on the difference
between the financial statement and income tax basis of assets and liabilities
using the enacted statutory tax rate in effect for the year these differences
are expected to be taxable or refunded. Deferred income tax expenses or credits
are based on the changes in the asset or liability from period to period. The
recorded deferred tax assets are reviewed for impairment on a quarterly basis by
reviewing internal estimates for future net income. Due to the uncertainty of
future taxable income, deferred tax assets of $3.8 million resulting from net
operating losses in the U.S. were fully reserved during 2008.





In
accordance with SFAS 109, “Accounting for Income Taxes”, the Company will assess
the continuing need for a valuation allowance that results from uncertainty
regarding its ability to realize the benefits of the Company’s deferred tax
assets. The ultimate realization of deferred income tax assets is dependent upon
generation of future taxable income during the periods in which those temporary
differences become deductible. If the Company concludes that its prospects for
the realization of its deferred tax assets are more likely than not, the Company
will then reduce its valuation allowance as appropriate and credit income tax
expense after considering the following factors:





·
            The
      level of historical taxable income and projections for future taxable
      income over periods in which the deferred tax assets would be deductible,
      and


·
            Accumulation
      of net income before tax utilizing a look-back period of three
      years.





-F33-


The
Company’s deferred incomes taxes at December 31, 2008 and 2007 are summarized as
follows:





Amounts
      in thousands
                    Deferred
      tax assets (liabilities) – U.S. federal and state:
                  
                  2008
                  
                  
                  2007Deferred
      tax (liabilities) – non-current:Amortization
      of goodwill for tax
                  
                  $
                  -
                  
                  
                  $
                  (1,320
                  )Other
                  
                  
                  (178
                  )
                  
                  
                  (45
                  )Total
      deferred tax (liabilities) – non-current
                  
                  
                  (178
                  )
                  
                  
                  (1,365
                  )Deferred
      tax assets – non-current:Amortization
      of goodwill for tax
                  
                  
                  516
                  
                  
                  
                  -Property
      and equipment
                  
                  
                  559
                  
                  
                  
                  399NOL
      carryforward
                  
                  
                  1,327
                  
                  
                  
                  2,919Write-down
      of non-operating casino property
                  
                  
                  325
                  
                  
                  
                  325Excess
      tax benefits from stock-based payment
                    arrangements
                  
                  
                  230
                  
                  
                  
                  608FAS
      123R stock amortization
                  
                  
                  810
                  
                  
                  
                  309Other
                  
                  
                  125
                  
                  
                  
                  123Total
      deferred tax assets – non-current
                  
                  
                  3,892
                  
                  
                  
                  4,683Valuation
      allowance
                  
                  
                  (3,714
                  )
                  
                  
                  -Net
      deferred tax assets – non-current
                  
                  
                  -
                  
                  
                  
                  3,318Prepaid
      expenses – current
                  
                  
                  (122
                  )
                  
                  
                  (161
                  )Accrued
      liabilities and other – current
                  
                  
                  166
                  
                  
                  
                  156Net
      deferred tax assets (liabilities) – current
                  
                  
                  44
                  
                  
                  
                  (5
                  )Valuation
      allowance
                  
                  
                  (44
                  )
                  
                  
                  -Total
      deferred tax assets  – U.S. federal and state
                  
                  $
                  -
                  
                  
                  $
                  3,313





Deferred
      tax assets (liabilities) – foreign:Deferred
      tax (liabilities) – non-current:Property
      and equipment
                  
                  $
                  (643
                  )
                  
                  $
                  (1,143
                  )Deferred
      tax assets – non-current:NOL
      carryforward
                  
                  
                  216
                  
                  
                  
                  -Accrued
      liabilities and other
                  
                  
                  -
                  
                  
                  
                  1,666Total
      deferred tax assets – non-current
                  
                  
                  216
                  
                  
                  
                  1,666Net
      deferred tax (liabilities) assets – non-current
                  
                  
                  (427
                  )
                  
                  
                  523NOL
      carryforward – current
                  
                  
                  284
                  
                  
                  
                  -Accrued
      liabilities and other – current
                  
                  
                  21
                  
                  
                  
                  85Prepaid
      expenses – current
                  
                  
                  -
                  
                  
                  
                  (47
                  )Net
      deferred tax assets – current
                  
                  
                  305
                  
                  
                  
                  38Total
      deferred tax (liabilities) assets – foreign
                  
                  $
                  (122
                  )
                  
                  $
                  561Net
      deferred tax (liabilities) assets
                  
                  $
                  (122
                  )
                  
                  $
                  3,874





-F34-


The
Company adopted the provisions of FASB Interpretation No. 48, “Accounting
for Uncertainty in Income Taxes” (“FIN 48”), on January 1, 2007. FIN 48 seeks to
reduce the diversity in practice associated with certain aspects of the
recognition and measurement related to accounting for income taxes. The Company
has analyzed filing positions in all of the U.S. federal, state and foreign
jurisdictions where it is required to file income tax returns, as well as all
open tax years in these jurisdictions. The Company has identified its U.S.
federal tax return, its state tax return in Colorado and its foreign tax returns
in Canada and South Africa as “major” tax jurisdictions, as
defined.





The
Company’s tax returns for the following periods are subject to
examination:





Jurisdiction:
              PeriodsU.S.
      Federal
              2005-2008U.S.
      State – Colorado
              2003-2008Canada
              2005-2008South
      Africa
              1999-2008





As a
result of the implementation of FIN 48, the Company recognized a $0.1 million
liability for unrecognized tax liabilities related to tax positions taken in
prior periods, which is recorded as a component of other long-term accrued
liabilities. This increase was accounted for as an adjustment to the opening
balance of retained earnings on January 1, 2007. The Company has since reduced
this original liability to zero as it now believes that any previously recorded
FIN 48 liability would be offset by its large U.S. net operating loss that has
been fully reserved. During 2008, the Company recognized a $0.1 million
liability for an unrecognized tax liability related to a foreign tax position,
which is recorded as a component of taxes payable in the accompanying December
31, 2008 consolidated balance sheet.





The
Company may, from time to time, be assessed interest or penalties by major tax
jurisdictions, although any such assessments historically have been minimal and
immaterial to our financial results. The Company’s policy for recording interest
and penalties associated with audits is to record such items as a component of
earnings before income taxes. Penalties are recorded in general and
administrative expenses and interest paid or received is recorded in interest
expense or interest income, respectively, in the consolidated statement of
earnings.






-F35-


14.           (LOSS)
EARNINGS PER SHARE





Basic and
diluted (loss) earnings per share for the years ended December 31, 2008, 2007
and 2006 were computed as follows:





Amounts
      in thousands, except share data
                  
                  2008
                  
                  
                  2007
                  
                  
                  2006(Loss)
      earnings from continuing operations
                  
                  $
                  (17,934
                  )
                  
                  $
                  (528
                  )
                  
                  $
                  2,212Earnings
      from discontinued operations
                  
                  
                  4,461
                  
                  
                  
                  5,461
                  
                  
                  
                  5,417Net
      (loss) earnings
                  
                  $
                  (13,473
                  )
                  
                  $
                  4,933
                  
                  
                  $
                  7,629Weighted
      average common shares
                  
                  
                  23,455,351
                  
                  
                  
                  23,088,140
                  
                  
                  
                  22,777,707Dilutive
      effect of stock options and warrants
                  
                  
                  -
                  
                  
                  
                  806,733
                  
                  
                  
                  1,149,042Dilutive
      potential common shares
                  
                  
                  23,455,351
                  
                  
                  
                  23,894,873
                  
                  
                  
                  23,926,749Basic
      (loss) earnings per share:(Loss)
      earnings from continuing operations
                  
                  $
                  (0.76
                  )
                  
                  $
                  (0.02
                  )
                  
                  $
                  0.10Earnings
      from discontinued operations
                  
                  
                  0.19
                  
                  
                  
                  0.23
                  
                  
                  
                  0.23Net
      (loss) earnings
                  
                  $
                  (0.57
                  )
                  
                  $
                  0.21
                  
                  
                  $
                  0.33Diluted
      (loss) earnings per share:(Loss)
      earnings from continuing operations
                  
                  $
                  (0.76
                  )
                  
                  $
                  (0.02
                  )
                  
                  $
                  0.09Earnings
      from discontinued operations
                  
                  
                  0.19
                  
                  
                  
                  0.23
                  
                  
                  
                  0.23Net
      (loss) earnings
                  
                  $
                  (0.57
                  )
                  
                  $
                  0.21
                  
                  
                  $
                  0.32





The
following shares of restricted stock, stock options and warrants are
antidilutive and have not been included in the weighted average shares
outstanding calculation:





2008
                  
                  
                  2007
                  
                  
                  2006Restricted
      stock
                  
                  
                  360,000
                  
                  
                  
                  -
                  
                  
                  
                  -Stock
      options and warrants
                  
                  
                  1,353,282
                  
                  
                  
                  85,000
                  
                  
                  
                  25,000


-F36-


15.           GEOGRAPHIC
INFORMATION





The
following summary provides information concerning the Company’s principal
geographic areas, excluding discontinued operations, as of and for the years
ended December 31:





Long-Lived
      Assets*Amounts
      in thousands
                  
                  2008
                  
                  
                  2007
                  
                  
                  2006United
      States
                  
                  $
                  62,349
                  
                  
                  $
                  75,782
                  
                  
                  $
                  74,099International:Canada
                  
                  $
                  29,299
                  
                  
                  $
                  37,419
                  
                  
                  $
                  31,927Europe
                  
                  
                  11,463
                  
                  
                  
                  13,159
                  
                  
                  
                  1,013Total
      international
                  
                  
                  40,762
                  
                  
                  
                  50,578
                  
                  
                  
                  32,940Total
                  
                  $
                  103,111
                  
                  
                  $
                  126,360
                  
                  
                  $
                  107,039


*
Long-lived assets consist of property and equipment, goodwill and equity
investment.





Net
      Operating RevenueAmounts
      in thousands
                  
                  2008
                  
                  
                  2007
                  
                  
                  2006United
      States
                  
                  $
                  28,685
                  
                  
                  $
                  37,154
                  
                  
                  $
                  24,889International:Canada
                  
                  $
                  21,956
                  
                  
                  $
                  19,297
                  
                  
                  $
                  2,325Europe
                  
                  
                  2,401
                  
                  
                  
                  2,592
                  
                  
                  
                  2,989Total
      international
                  
                  
                  24,357
                  
                  
                  
                  21,889
                  
                  
                  
                  5,314Total
                  
                  $
                  53,042
                  
                  
                  $
                  59,043
                  
                  
                  $
                  30,203





16.           COMMITMENTS,
CONTINGENCIES AND OTHER MATTERS





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





Employee Benefit
Plans – In March 1998, the Company adopted a 401(k) Savings and
Retirement Plan (the “Plan”). The Plan allows eligible employees to make
tax-deferred cash contributions that are matched on a discretionary basis by the
Company up to a specified level. Participants become fully vested in employer
contributions over a six-year period. The Company contributed less than $0.1
million to the Plan in each of 2008, 2007 and 2006. Effective December 1, 2008,
the Company suspended matching contributions for the foreseeable
future.





The
Company also has a Deferred Compensation and Stock Option Plan (the “Deferred
Comp Plan”) for certain key members of management and independent directors
(“Participant”). The Deferred Comp Plan allows Participants to defer receipt of
all or a portion of their compensation through April 30, 2009, with a minimum
deferral of $3,000. Participants will receive the deferred compensation, plus
7.0% interest per annum, on or before June 30, 2009. In addition, Participants
were granted stock options equivalent to the amount of compensation deferred
divided by the NASDAQ closing price of the Company’s stock on the day the
Participant elected to participate in the Deferred Comp Plan. Such stock options
were issued in accordance with the 2005 Plan.





-F37-


Operating Lease
Commitments and Purchase Options-The Company has entered
into certain noncancelable operating leases for real property and equipment.
Rental expense for these leases for the years ended December 31, 2008, 2007 and
2006 was $0.6 million, $0.6 million and $0.4 million, respectively.





The
Company has an agreement to lease parking spaces from the City of Cripple Creek
through 2010. Under the terms of this agreement, the Company may purchase the
property for $3.3 million, less cumulative lease payments ($1.0 million through
December 31, 2008), at any time during the lease term.





Following
is a summary of operating lease commitments as of December 31,
2008:





Amounts
      in thousandsYear ending December 31,
                    
                    Amount2009
                    
                    $
                    3412010
                    
                    
                    2912011
                    
                    
                    2372012
                    
                    
                    1202013
                    
                    
                    47Thereafter
                    
                    
                    2Total
                    
                    $
                    1,038





Stock Redemption
Requirement – Colorado gaming regulations require the disqualification of
any stockholder 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, the Company would repurchase the
common stock of any stockholder found to be unsuitable under the regulations.
The Company could effect the repurchase with cash, Redemption Securities, as
such term is defined in its Certificate of Incorporation and having terms and
conditions asareapproved by theboard ofdirectors, or a
combination thereof.





Gain on Sale of
Gauteng Interest –  On September 28, 2006, the Company sold its
interest in a casino development project located in Gauteng, South Africa for
$5.3 million (ZAR 40.3 million), less commissions of $0.1 million (ZAR 1.3
million). The Company has recorded $5.2 million (ZAR 39.0 million) as a gain on
sale of Guateng interest in the December 31, 2006 consolidated statement of
operations.





Guarantee–As of December 31, 2008,
the Company has issued a guarantee of $1.1 million (€0.8 million) to Bank
Austria in connection with its listing on the Vienna Stock Exchange. The
guarantee is provided to reimburse Bank Austria for any and all amounts incurred
by Bank Austria as a result of claims or damages and lawsuits that an Austrian
Depositary Certificate holder may raise or file against the
Company.





-F38-


17.
            TRANSACTIONS
      WITH RELATED PARTIES





The
Company has entered into separate management agreements with Flyfish Casino
Consulting AG (“Flyfish”), a management company controlled by Erwin Haitzmann’s
family trust/foundation, and with Focus Casino Consulting AG (“Focus”), a
management company controlled by Peter Hoetzinger’s family trust/foundation, to
secure the services of each officer. Included in the consolidated statements of
earnings for the years ended December 31, 2008, 2007 and 2006 are cumulative
charges from Flyfish and Focus of $0.7 million, $0.7 million and $0.5 million,
respectively.





Erwin
Haitzmann, Peter Hoetzinger and their respective family trusts/foundations
collectively own 3.5% of CRL’s outstanding shares of common stock.





On
January 14, 2009, the Company completed the sale of a parcel of land
adjacent to the Company’s casino in Newcastle, South Africa (now a discontinued
operation) for approximately $0.1 million (ZAR 1.3 million) to a company
partially owned by the Chairman of the Board of CNEW (who is also a shareholder
of CNEW).





18.           UNAUDITED
SUMMARIZED QUARTERLY DATA





Summarized
quarterly financial data for 2008 and 2007 is as follows:





Amounts
      in thousands,
                    except
      share information:
                  
                  1st
      Quarter
                  
                  
                  2nd
      Quarter
                  
                  
                  3rdQuarter
                  
                  
                  4th
      QuarterYear
      ended December 31, 2008Net
      operating revenue
                  
                  $
                  13,530
                  
                  
                  $
                  13,873
                  
                  
                  $
                  13,964
                  
                  
                  $
                  11,675(Loss)
      earnings from operations
                  
                  $
                  (66
                  )
                  
                  $
                  289
                  
                  
                  $
                  (8,925
                  )
                  
                  $
                  (555
                  )(Loss)
      earnings from continuing operations (1)
                  
                  $
                  (568
                  )
                  
                  $
                  (164
                  )
                  
                  $
                  (15,372
                  )
                  
                  $
                  (1,830
                  )Net
      (loss) earnings
                  
                  $
                  541
                  
                  
                  $
                  835
                  
                  
                  $
                  (14,198
                  )
                  
                  $
                  (651
                  )Basic
      (loss) earnings per share: (2)(Loss)
      earnings from continuing operations
                  
                  $
                  (0.02
                  )
                  
                  $
                  (0.01
                  )
                  
                  $
                  (0.65
                  )
                  
                  $
                  (0.08
                  )Net
      (loss) earnings
                  
                  $
                  0.02
                  
                  
                  $
                  0.04
                  
                  
                  $
                  (0.60
                  )
                  
                  $
                  (0.03
                  )Diluted
      (loss) earnings per share: (2)(Loss)
      earnings from continuing operations
                  
                  $
                  (0.02
                  )
                  
                  $
                  (0.01
                  )
                  
                  $
                  (0.65
                  )
                  
                  $
                  (0.08
                  )Net
      (loss) earnings
                  
                  $
                  0.02
                  
                  
                  $
                  0.04
                  
                  
                  $
                  (0.60
                  )
                  
                  $
                  (0.03
                  )





-F39-





Amounts
      in thousands,
                    except
      share information:
                  
                  1st
      Quarter
                  
                  
                  2nd
      Quarter
                  
                  
                  3rdQuarter
                  
                  
                  4th
      QuarterYear
      ended December 31, 2007Net
      operating revenue
                  
                  $
                  13,430
                  
                  
                  $
                  14,647
                  
                  
                  $
                  16,596
                  
                  
                  $
                  14,370Earnings
      from operations
                  
                  $
                  640
                  
                  
                  $
                  487
                  
                  
                  $
                  1,047
                  
                  
                  $
                  32Earnings
      (loss) from continuing operations (3)
                  
                  $
                  589
                  
                  
                  $
                  (50
                  )
                  
                  $
                  187
                  
                  
                  $
                  (1,254
                  )Net
      earnings
                  
                  $
                  1,542
                  
                  
                  $
                  1,041
                  
                  
                  $
                  1,949
                  
                  
                  $
                  401Basic
      earnings (loss) per share: (2)Earnings
      (loss) from continuing operations
                  
                  $
                  0.03
                  
                  
                  $
                  0.00
                  
                  
                  $
                  0.01
                  
                  
                  $
                  (0.05
                  )Net
      earnings
                  
                  $
                  0.07
                  
                  
                  $
                  0.05
                  
                  
                  $
                  0.08
                  
                  
                  $
                  0.02Diluted
      earnings (loss) per share: (2)Earnings
      (loss) from continuing operations
                  
                  $
                  0.02
                  
                  
                  $
                  0.00
                  
                  
                  $
                  0.01
                  
                  
                  $
                  (0.05
                  )Net
      earnings
                  
                  $
                  0.06
                  
                  
                  $
                  0.04
                  
                  
                  $
                  0.08
                  
                  
                  $
                  0.02





(1)
            During
      the 3rd quarter of 2008, the Company recorded goodwill impairments of $9.3
      million related to its properties in Colorado and established a valuation
      allowance of approximately $6.0 million on its deferred tax assets. As of
      December 31, 2008, the Company has reserved approximately $3.8 million of
      deferred tax assets.


(2)
            Sum
      of quarterly results may differ from annual results presented in the
      consolidated statement of earnings and Note 14, Earnings per Share, due to
      rounding.


(3)
            In
      accordance with U.S. accounting standards, we recognized a $1.0 million
      charge ($0.6 million, net of taxes) to the income statement in the 4th
      quarter of 2007 for CTL’s losses previously applied against a $1.0 million
      note held by the former minority partner that we assumed in the purchase
      of the remaining 35% equity interest in CTL on December 31,
      2007.




-F40-