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,
2007





OR





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


For the
transition period from ___________ to ___________





Commission
file number  0-22290







CENTURY CASINOS,
INC.


(Exact
name of registrant as specified in its charter)





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


1263 Lake Plaza Drive, Suite
A, Colorado Springs, Colorado 80906


(Address
of principal executive offices)  (Zip Code)





(719)
527-8300


(Registrant’s
telephone number, including area code)





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


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, 2007, based upon the closing
price of $8.99 for the Common Stock on the NASDAQ Capital Market on that date,
was $189,170,879. For purposes of this calculation only, officers and directors
of the registrant are considered affiliates.





As of
February 29, 2008, the registrant had 23,657,067 shares of Common Stock
outstanding.





DOCUMENTS
INCORPORATED BY REFERENCE: PartIIIincorporates by reference from theregistrant’sdefinitive Proxy
Statement for its
2008Annual Meeting of Stockholders to
be filed with the Commission within 120 days of December 31,
2007.  -1-


INDEX


Part
      I
            
            PageItem 1.
            Business
            3Item 1A.
            Risk
      Factors
            13Item 1B.
            Unresolved
      Staff Comments
            20Item 2.
            Properties
            20Item 3.
            Legal
      Proceedings
            21Item 4.
            Submission
      of Matters to a Vote of Security Holders
            21Part
      IIItem 5.
            Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
            22Item 6.
            Selected
      Financial Data
            24Item 7.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            25Item 7A.
            Quantitative
      and Qualitative Disclosures About Market Risk
            43Item 8.
            Financial
      Statements and Supplementary Data
            43Item 9.
            Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure
            43Item 9A.
            Controls
      and Procedures
            43Item 9B.
            Other
      Information
            44




Part
      IIIItem 10.
            Directors,
      Executive Officers and Corporate Governance
            45Item 11.
            Executive
      Compensation
            45Item 12.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
            45Item 13.
            Certain
      Relationships and Related Transactions, and Director
      Independence
            46Item 14.
            Principal
      Accountant Fees and Services
            46Part
      IVItem 15.
            Exhibits,
      Financial Statement Schedules
            47SIGNATURES
            53


-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 goals
are to grow in size and profitability. Our strategy for obtaining these goals
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-


Overview
of Existing Operations





As of
December 31, 2007, 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 $31.2 million (CAD 35.8
million) 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 650 slot machines, 32 table games
(which includes a 24-hour poker room), a 400 seat showroom, 4 food/beverage
outlets and a lounge with live music.





On
November 30, 2007, we paid the remaining $1.4 million (CAD 1.4 million) towards
our purchase of our former minority partner’s interest in the
project.





Womacks
Casino & Hotel – Cripple Creek, Colorado





Since
1996, we have owned and operated Womacks in Cripple Creek, Colorado, located
approximately 45 miles southwest of Colorado Springs. Womacks has 512 slot
machines (of which 474 are Ticket In/Ticket out (“TITO”) machines), 6 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. As of January
31, 2008, the casino is 100% TITO. Womacks has 150 feet of frontage on Bennett
Avenue, the main gaming thoroughfare in Cripple Creek, and 125 feet of frontage
on Second Street, also known as Highway 67.





We are in thefinal stages of anapproximate$1.8million renovationofthe casino, which commenced in October2007.The renovation
hasupgraded the
gaming floor and dining area.





Century Casino & Hotel – Central
City, Colorado





In July
2006, as part of a joint venture, we opened our $48.7 million casino and hotel
development, the Century Casino & Hotel, in Central City, Colorado, located
approximately 35 miles west of Denver. The facility has 576 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 includes $1.2 million towards the assumption of an outstanding
loan and accrued interest.





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





We own
and operate the Caledon Hotel, Spa & Casino located in Caledon, South
Africa. The Town of Caledon lies on the N-2 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, 6 table
games, 81 hotel rooms and 3 restaurants.





We are in
the process of subdividing approximately 450 of the 600 acres of our land, with
plans to develop an 18 hole signature golf estate on the property with
approximately 450 residential homes. Construction
of the golf course is expected to commence in 2009. We expect that the
development of the golf estate will encourage additional visits to the existing
casino operation.


-4-


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 and 2
restaurants.





We have
entered into a casino services agreement, pursuant to which we manage the
property 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).





On
December 14, 2007, we paid an additional $0.6 million (ZAR 3.7 million) towards
the purchase of our 60% interest. 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 our acquisition.





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 11 table games.





Cruise
Ships





In
addition to our land-based casinos, we also operate five cruise ship-based
casinos aboardthe
Silver Cloud (a Silversea Cruise vessel), The World of ResidenSea (the “World”),
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 the World,
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. On March 8, 2006, we received notification that the concession
agreement with the Silver Cloud would not be renewed as of March 30, 2006;
however, at the time, we believed that we did not receive timely written
notification of Silversea’s intention to discontinue this agreement on the
Silver Cloud, as required by the original concession agreement. On November 27,
2007, an arbitrator ruled in our favor, allowing us to operate 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. We have a total of
143 slots machines and 22 table games aboard the 5 cruise ships.





Casinos
Poland





In March
2007, we completed the acquisition of G5 Sp. z o.o. (“G5”) for approximately
$2.8 million (€2.2 million). G5 owns 33.3% of all shares issued by Casinos
Poland Ltd (“CPL”). CPL owns and operates seven full casinos and one slot casino
in Poland. We account for this investment under the equity method. At closing,
we paid $2.0 million (€1.6 million). On October 23, 2007, we paid the remaining
$0.8 million (€0.6 million). In connection with the purchase, we loaned G5
approximately $5.8 million (PLN 18.0 million) to repay existing loans between G5
and its creditors, bringing our total initial investment in G5 to $8.6 million.
The loan and related interest are eliminated in consolidation subsequent to the
acquisition.





Additional
Company Projects and Other Developments





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





-5-


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 around
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 20 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 an
Indian gaming operation in Southwestern Colorado, where casino gaming is legal.
As of December 31, 2007, there were 15 casinos operating in Cripple Creek, 6
casinos operating in Central City and 20 casinos operating in Black Hawk.
Cripple Creek and Central City represented a combined 40% of the gaming devices
and generated a combined 29% of gaming revenues from these three cities in 2007.
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. Our casino in
Central City is the newest property in the Central City/Black Hawk gaming region
and is located at the end of the Central City Parkway.





Unlike
other regions in which we operate, gaming in Colorado is “limited stakes,” which
restricts any single wager to a maximum of five dollars.





Our
marketing objective is to create public awareness by positioning the 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
two of our competitors impact our casino, particularly during inclement weather.
Both 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.





-6-


In 2008,
a larger casino is expected to be opening in Cripple Creek. Management believes
that this casino will have approximately 700 slot machines, 14 table games and
no onsite hotel rooms. We are in the final stages of
an approximate $1.8 million renovation of Womackstoupgrade 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 25% to 30% of each
casino’s gaming revenues to marketing measures. In addition to our player’s
clubs, we market our casinos through a variety of media outlets including radio,
print and billboard advertising.





South Africa–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.





In
addition to the casinos, a total of 2,000 Limited Payout Machines (“LPMs”) are
being implemented in the Western Cape province. As of December 31, 2007,
approximately 1,400 LPMs have been placed in service. An approved operator,
which can have a maximum of five LPMs, will be permitted to operate the devices
without the overhead of a typical casino. Operators will, however, be subject to
central monitoring. Ten machines have been implemented in the town of Caledon.
No more than 150 of these devices are expected for the Overberg region, the
market in which Caledon operates. We expect that the implementation of the
remaining LPMs in the region will not have a significant impact to Caledon’s
overall results.





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, the historic mineral hot spring and spa and a team building
facility (known as the “outdoor experience”). We are also in the process of
subdividing approximately 450 out of 600 acres of our land, with plans to
develop an 18 hole signature golf estate on the property with approximately 450
residential homes. Construction of
the golf course is expected to commence in 2009.





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.





We have
agreed to sell a parcel of land adjacent to the Newcastle casino to a
company partially owned by the Chairman of the Board of CNEW for
approximately $0.2 million (ZAR 1.3 million). Pursuant to the terms of the
agreement, the purchaser proposes to develop a shopping mall attached to the
casino. The closing of the deal is subject to the purchaser satisfying certain
conditions, the most significant of which is the attainment of zoning approvals.
We believe that the shopping mall development will attract more customers to our
Newcastle casino.





-7-


Century Casino Millennium and Cruise
Ships. Century Casino Millennium in Prague, Czech Republic faces intense
competition from a large number of casinos of similar size. Market data is not
available for the cruise ships. We rely on each cruise ship’s marketing efforts
to attract customers to our 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. 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.





Century Casino Millennium and Cruise
Ships -Our businesses in Prague, Czech Republic and 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. Unlike our
other land based operations, Century Casino Millennium derives the majority of
its gaming revenue from live table games. The quality of the player has more of
an impact on the live game results when compared to the income derived from slot
machines. 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 the timing of 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.





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 jurisdictions in which we may do business. Management believes that
we are in compliance with all applicable gaming and non-gaming regulations as
described below.





-8-


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 personnel 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).





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.





-9-


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, fire safety
standards and standards for access for disabled persons. Our Colorado casinos
also must not exceed specified gaming square footage limits as a total of each
floor and the full building. 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.





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 is a graduated rate of 0.25% to 20% on adjusted gross gaming
proceeds.





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.





-10-


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.





Our
gaming operations in South Africa are subject to regulation by the Western Cape
Gambling and Racing Board (for the Caledon) 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 gross gaming revenue.





Prague,
Czech Republic





Century
Casino Millennium’s gaming operations are subject to regulation by the Czech
Republic under national legislation. Statutes and regulations require us to meet
various standards relating to, among other matters, business licenses, building,
fire and accessibility requirements, payment of gaming taxes, and regulations
concerning equipment, machines, tokens, gaming participants, and ownership
interests. Civil and criminal penalties can be assessed against us and/or our
officers to the extent of their individual participation in, or association
with, a violation of any of these gaming statutes or regulations.





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.





-11-


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, 91% 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 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 Black Empowerment Partners and the Overberg Community Trust.
If the casino business is sold or otherwise dissolved, for each Class A
preference share held, the shareholder would be entitled to 0.009% of any
surplus directly attributable to the casino business, net of all liabilities
attributable to the casino business.





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,
2007.





Employees





As of
December 31, 2007, we had approximately 1,030 full-time employees. 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
            54
            Chairman
      of the Board & Co Chief Executive OfficerPeter
      Hoetzinger
            45
            Vice
      Chairman of the Board, Co Chief Executive Officer &
      PresidentLarry
      Hannappel
            55
            Senior
      Vice President, Chief Operating Officer – North
      America,  Secretary & TreasurerRay
      Sienko
            50
            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 over 30 years of 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.





-12-


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 25 combined years of
experience in public accounting and financial 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.





Segment
and Financial Information About Geographic Areas





We
operate primarily in one segment, the operation of casino facilities, which
includes the provision of gaming, hotel accommodations, dining facilities and
other amenities. 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 14 for
additional financial information on geographical areas.





Item
1A.Risk
Factors.





Factors
That May Affect Future Results





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 South Africa we
emphasize Caledon’s destination resort appeal, players’ club programs, and
superior service. Some or all of these efforts may not be successful, which
could hurt our competitive position. In addition, with the exception of the
Caledon market, 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.





-13-


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 is expected to open in Cripple
Creek. Management believes this casino will have approximately 700 slot
machines,14 table games and no onsite hotel rooms, further diluting the Cripple
Creek market. The opening of this casino could have a material adverse impact on
our casino operation in Cripple Creek.





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.





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.


-14-


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 gaming or restriction on or prohibition of our
gaming operations could have a material adverse effect on our operating
results. For instance, in November 2003, a Colorado ballot issue was
proposed that would have permitted the installation of at least 500 video
lottery terminals or “VLTs” at each of the five racetracks throughout Colorado,
two of which are located in Colorado Springs and Pueblo, the dominant markets
for Cripple Creek. If this ballot issue had passed, our casino operations
in Cripple Creek might have suffered from reduced player visits and declining
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.
Management believes that a proposal might be put forward in 2008.In
addition, as of January 1, 2008, smoking has been banned in all Colorado
casinos. This could result in fewer customers who smoke visiting our
properties in Colorado, which would adversely affect our results of
operations.





We
face extensive taxation from gaming and regulatory authorities. Potential
changes to the tax laws in the jurisdictions 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 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. 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. Such changes, if adopted, could materially
increase our tax expenses and impair our profitability.





We
intend to develop and operate additional casino properties in the future, and if
our development efforts are not successful our business may be
harmed.





We 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, the Czech Republic, 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 satisfy ourselves that
industry partners are licensable, but cannot assure that such partners will, in
fact, be licensable. Additional risks before commencing operations include the
time and expense incurred and unforeseen difficulties in obtaining suitable
sites, liquor licenses, building permits, materials, competent and able
contractors, supplies, employees, gaming devices and related matters. In
addition, certain licenses include competitive situations where, even if we are
licensable, other factors such as the economic impact of gaming, financial and
operational capabilities of competitors must be analyzed by regulatory
authorities. 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.





-15-


Even if
we receive licenses to open and operate proposed new facilities, commencing
operations at our proposed new casino projects will 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 of our currently proposed properties not being successful. If we are
not able to successfully commence operations at these properties, our results of
operations will be harmed.





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.





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





We derive
our revenue from operations located on three continents and on cruise ships
operating around the world. Our management is located in the United States,
South Africa and 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. Moreover, economic or political instability in one or more
of our markets could adversely affect our operations in those
markets.





A
downturn in general economic or geopolitical conditions may adversely affect our
results of operations.





Our
business operations are subject to changes in international, national and local
economic conditions. Our business is fueled by discretionary income. Recessions
or downturns in the general economies in which we operate could result in fewer
customers visiting our properties, which would adversely affect our results of
operations.





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, 2007, the net operating revenue attributable
to our Colorado operations fluctuated from a high of $11.0 million in the third
quarter to a low of $8.1 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.





-16-


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 $1.7 million for utilities in 2007.
Substantial increases in the cost of electricity will negatively affect our
results of operations. Recently, South Africa has started to experience power
outages. Should similar events occur in the future, or should power
costs in this region increase significantly, our revenues could
suffer. 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.





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
facilities in South Africa and Canada represent a significant portion of our
business, and the revenue generated and expenses incurred by these facilities
are generally denominated in South African Rands and Canadian Dollars,
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 and could cause the
price of our common stock and ADCs to decrease. In addition, we expect to expand
our operations into other countries and, accordingly, we will face similar
exchange rate risk with respect to the costs of doing business in such countries
as a result of any increases in the value of the U.S. dollar in relation to the
currencies of such countries. We do not currently hedge our exposure to
fluctuations of these foreign currencies, and there is no guarantee that we will
be able to successfully hedge any future foreign currency exposure.





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





We are
highly dependent on the services of Erwin Haitzmann 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.





-17-


The
availability and cost of financing could have an adverse effect on our
business.





We intend
to finance our current and future expansion and renovation projects primarily
with cash flow from operations, borrowings under our bank credit facility and
equity or debt financings. If we are unable to finance our current or
future expansion projects, we will have to adopt one or more alternatives, such
as reducing or delaying planned expansion, development and renovation projects
and capital expenditures, selling assets, restructuring debt, obtaining
additional equity financing or joint venture partners, or modifying our bank
credit facility. These sources of funds may not be sufficient to finance
our expansion, and other financing may not be available on acceptable terms, in
a timely manner or at all. In addition, our credit agreements contain
certain restrictions on our ability to incur additional indebtedness. If we
are unable to secure additional financing, we could be forced to limit or
suspend expansion, development and renovation projects, which may adversely
affect our business, financial condition and results of operations.





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





Our
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 event occur.





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
$15.2 million of goodwill, $10.8 million of casino licenses and a $12.0
million equity investment as of December 31, 2007. 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, the 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 2006, we recorded an impairment of goodwill related to our
investment in Prague, Czech Republic of approximately $0.2 million.





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





We are
incorporated in the U.S. and 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 U.S. persons or to enforce judgments obtained against us or them in
such courts based on civil liability provisions of the European securities
laws.





Outside
investors own preference shares in our Caledon, South Africa operation, which
may reduce our return on investment from that property.





Century
Resorts Limited (“CRL”) owns 100% of the common equity of Century Casinos
Caledon (“CCAL”), our South African subsidiary that owns and operates the
Caledon Hotel, Spa & Casino. Two unrelated third parties own a total of 200
preference shares that entitle them to a priority on distributions in certain
circumstances. The preference shares are not cumulative, nor are they
redeemable. Each preference share entitles the holder to dividends of 0.009% of
the annual gross gambling revenue of the Caledon Hotel, Spa & Casino after
the deduction of gaming taxes and value added tax. Furthermore, if the casino
business is sold or otherwise dissolved, for each preference share held, the
shareholder would be entitled to 0.009% of any surplus directly attributable to
the casino business, net of all liabilities attributable to the casino
business.


-18-


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 test our internal control over financial
reporting and disclosure controls and procedures. In particular, for the year
ended December 31, 2007, 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





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.





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 is
characterized by 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 $11.37 to a low of $5.25 during
2007. 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 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.





-19-


Because
we are a foreign corporation to 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, if you
are a holder of our ADCs you may be forced to sell the ADCs at a price that is
less than you paid or that is less than you otherwise would accept.





Item
1B.  Unresolved Staff
Comments.





None.





Item
2.Properties.


Summary
of Property Information





Property
            Casino
              SpaceSq Ft(1)
            Acreage
            Number
      of
              SlotMachines
            Number
      of
              TableGames
            Number
      of
              HotelRooms
            Number
      of
              RestaurantsCentury
      Casino – Edmonton
            30,800
            7.0
            650
            32
            26
            4Womacks
            27,170
            3.5
            512
            6
            21
            1Century
      Casino – Central City
            27,190
            1.3(2)
            576
            9
            26
            2Caledon
            22,100
            600(3)
            370
            6
            81
            3Century
      Casino – Newcastle
            12,960
            61
            250
            7
            40
            2Century
      Casino Millennium
            2,700
            -
            30
            11
            -
            -Cruise
      Ships (total of five) (4)
            5,120
            -
            143
            22
            -
            -


(1)  
      Approximate.


(2)   We
      purchased an additional 9,400 square feet of undeveloped property in
      2007.


(3)  
      Of the 600 available acres, 500 acres currently remain
      undeveloped.


(4)   Operated
      under concession agreements.





Our
casino properties in Colorado, South Africa and Edmonton secure our obligations
under various loan agreements. See Part II, Item 8, “Financial Statements and
Supplementary Data” - Note 7 for further information.





Additional
Property Information





Womacks –In addition to the
property described above, we also lease 10 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.





Century Casino Millennium –We lease this property under a 20-year lease agreement that expires in
December 2019. The casino is located in the 293-room Marriott Hotel in Prague,
Czech Republic.





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 space and equipment owned or leased by us are
adequate for our existing operating needs.





-20-


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 fiscal year ended December 31, 2007.


-21-


PART
II





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


Our
common stock began trading on the NASDAQ Capital Market (“NASDAQ”), under the
symbol CNTY, on November 10, 1993.





The
following graph illustrates the cumulative shareholder return of our common
stock during the period beginning December 31, 2002 through December 31, 2007,
and compares it to the cumulative total return on the NASDAQ, the Russell 2000
Gambling Index (“Russell Index”) and the Dow Jones Gambling Index (“Dow Index”).
In prior years, we used the Dow Index for comparison purposes. However, we have
determined that the components of the Russell Index is more representative of
our peer group than the Dow Index. The following graph includes the cumulative
returns for both the Dow Index and the Russell Index, but in future periods, we
will only present the Russell Index. The comparison assumes a $100 investment on
December 31, 2002, 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
December 31, 2007, we had approximately 61 holders of record of our common
stock. We estimate that the number of beneficial owners as of December 31, 2007
is approximately 2,300.





Our
common stock in the form of Austrian Depositary Certificates (“ADCs”) is also
traded on the Vienna Stock Exchange (“VSE”). At December 31, 2007, we had 3.8
million ADCs outstanding. Each ADC is equivalent to one share of our common
stock.


-22-


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.




2007
            2006High
            Low
            High
            LowFirst
      quarter
            $11.37
            $  7.94
            $10.86
            $  8.31Second
      quarter
            $  9.28
            $  7.58
            $12.11
            $  9.55Third
      quarter
            $  9.01
            $  6.05
            $11.73
            $  9.05Fourth
      quarter
            $  7.46
            $  5.25
            $11.89
            $  9.10





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 2006 or
2007.The total remaining
authorization under the repurchase program was $1.2 million as of December 31,
2007. The repurchase program has no set expiration or termination
date.





-23-


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.





For the Year Ended December
    31,Amounts
      in thousands,except
      for share information
            
            2007(5)
            
            
            2006(4)
            
            
            2005(3)
            
            
            2004(2)
            
            
            2003(1)Results
      of Operations:Net
      Operating Revenue
            
            $
            91,654
            
            
            $
            56,285
            
            
            $
            37,445
            
            
            $
            35,765
            
            
            $
            31,430Earnings
      from Operations
            
            
            11,027
            
            
            
            3,250
            
            
            
            5,845
            
            
            
            7,008
            
            
            
            6,832Net
      Earnings
            
            
            4,933
            
            
            
            7,629
            
            
            
            4,481
            
            
            
            4,738
            
            
            
            3,246Net
      Earnings per Share:Basic
            
            $
            0.21
            
            
            $
            0.33
            
            
            $
            0.28
            
            
            $
            0.35
            
            
            $
            0.24Diluted
            
            $
            0.21
            
            
            $
            0.32
            
            
            $
            0.25
            
            
            $
            0.30
            
            
            $
            0.22Balance
      Sheet:Cash
      and Cash Equivalents
            
            $
            17,850
            
            
            $
            34,969
            
            
            $
            37,167
            
            
            $
            8,411
            
            
            $
            4,729Total
      Assets
            
            
            198,083
            
            
            
            197,860
            
            
            
            123,348
            
            
            
            71,204
            
            
            
            54,817Long-Term
      Debt
            
            
            55,919
            
            
            
            56,036
            
            
            
            17,934
            
            
            
            17,970
            
            
            
            14,913Total
      Liabilities
            
            
            86,094
            
            
            
            97,433
            
            
            
            32,017
            
            
            
            30,825
            
            
            
            21,769Total
      Shareholders’ Equity
            
            
            111,989
            
            
            
            100,427
            
            
            
            91,331
            
            
            
            40,379
            
            
            
            33,048Cash
      Dividends Per CommonShare
            
            $
            --
            
            
            $
            --
            
            
            $
            --
            
            
            $
            --
            
            
            $
            --





(1) In 2003,
we, through CCA, acquired the remaining 35% interest in CCAL.


(2) In 2004,
we recorded a foreign currency gain of $0.4 million recognized on the
disposition of a subsidiary. The increase in total assets is primarily the
result of the contribution of $9.2 million in land and buildings to the Central
City project by the minority partner, approximately $3.0 million in capital
improvements at Womacks, including new slot machines and new slot accounting
software and increases in foreign denominated assets resulting from fluctuations
in currency exchange rates. We borrowed approximately $3.5 million in 2004 to
finance our cash contribution to the Central City project. A $4.2 million
liability was created for the minority interest’s share of this
project.


(3) In 2005,
we raised $46.2 million in net proceeds by way of the offering of ADCs. As of
December 31, 2005, cash and cash equivalents included $26.2 million from the ADC
offering.


(4) In 2006,
we opened three new casinos. Additional net operating revenues contributed by
these new facilities was approximately $17.1 million. The facilities contributed
additional total assets of $79.6 million in 2006. Long-term financing for the
construction of three new casino properties contributed additional 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.
Finally, in 2006 we sold an option towards a casino development project in
Johannesburg 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.


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


-24-


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 to whole dollar amounts. 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. 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.





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


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


-
            Womacks
      Casino & Hotel in Cripple Creek,
Colorado;


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


-
            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.





We also
operate casinos aboard the Silver Cloud, The World of ResidenSea, 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.





We have
made significant acquisitions over the last three years and expect to continue
to pursue additional acquisition and development opportunities in the future.
The following timeline highlights acquisition and development activity over the
last three years:





February 24, 2005 – We acquired a 56.4%
equity interest in Century Resorts Alberta (“CRA”) for $2.4 million. CRA was
established for the purpose of developing and operating the Century Casino &
Hotel in Edmonton, Alberta, Canada.





January 12, 2006 – We acquired the
remaining 43.6% equity interest in CRA for $6.5 million.





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.





-25-


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 G5 Sp. z
o.o. (“G5”), the owner of a 33.3% interest in Casinos Poland, for $2.8 million.
In connection with the purchase, we also loaned G5 $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 includes $1.2 million towards the
assumption of an outstanding loan and accrued interest.





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.





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 we operate primarily in one segment, the operation of
casino facilities, which includes the provision of gaming, hotel accommodations,
dining facilities and other amenities.





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.





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





-  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.





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





-  Womacks
is in the final stages of an approximate $1.8 million renovation through which
we intend to raise the standard for facilities in the Cripple Creek, Colorado
market.  Management believes that the renovation, which occurred
primarily during the fourth quarter of 2007, negatively affected revenues at
Womacks during this time.





-26-


-  In 2008,
a larger casino is expected to be opening in Cripple Creek. Management believes
that this casino will have approximately 700 slot machines, 14 table games and
no onsite hotel rooms, and will provide further competition for
Womacks.





-  Effective
January 1, 2008, smoking has been banned at all Colorado casinos. Initial
indications are that the ban will negatively impact revenues.





-  Management
believes a proposal to introduce VLTs at Colorado race tracks might be put
forward in the November 2008 election.





-  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 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
and we recognized a $1.0 million charge ($0.6 million, net of taxes) to the
income statement in the fourth quarter 2007. In addition, we will now recognize
CTL’s net income or losses at 100% (instead of the previous 65%) going
forward.





-  In March
2007, a holder of 100 preference shares of Century Casinos Caledon (Pty) Ltd
accepted our offer to issue 100 shares of a new class of preference shares and
pay ZAR 5,000 per share in exchange for all of its original preference
shares.





-  Our
hotels in Caledon and Newcastle, South Africa, were awarded superior 4-star
ratings, which we believe will attract additional customers to these
properties.





-  We have
agreed to sell a parcel of land adjacent to the Newcastle casino to a
company partially owned by the Chairman of the Board of CNEW for
approximately $0.2 million (ZAR 1.3 million). Pursuant to the terms of the
agreement, the purchaser proposes to develop a shopping mall attached to the
casino. The closing of the deal is subject to the purchaser satisfying certain
conditions, the most significant of which is the attainment of zoning
approvals.





-  We have
entered into an agreement with the Newcastle Community Radio Station (“NCRS”),
whereby the NCRS has relocated its broadcasting studio to our casino. In
exchange, the NCRS will advertise our hotel and resort in
Newcastle.





-  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.





-  In March
2008, Casinos Poland will be hosting the premier EuropeanPoker Tour event in
Poland, the Polish Open 2008, at the Hyatt Hotel in Warsaw. Also in March 2008,
the Century Casino & Hotel in Edmonton will be hosting a six-day Texas Hold
‘Em poker tournament.








-27-


Results
of Operations





The
results of operations for the years ended December 31, 2007, 2006 and 2005 are
below (in thousands):





For
      the Year Ended December 31,2007
            
            
            2006
            
            
            2005Gaming
      revenue
            
            $
            85,671
            
            
            $
            54,499
            
            
            $
            36,394Net
      operating revenue
            
            
            91,654
            
            
            
            56,285
            
            
            
            37,445Total
      operating costs and expenses
            
            
            81,190
            
            
            
            53,035
            
            
            
            31,491Earnings
      (loss) from equity investments
            
            
            563
            
            
            
            -
            
            
            
            (109
            )Earnings
      from operations
            
            
            11,027
            
            
            
            3,250
            
            
            
            5,845Net
      earnings
            
            
            4,933
            
            
            
            7,629
            
            
            
            4,481Earnings
      per shareBasic
            
            
            0.21
            
            
            
            0.33
            
            
            
            0.28Diluted
            
            
            0.21
            
            
            
            0.32
            
            
            
            0.25





The 2007
and 2006 increases in net operating revenue and operating costs and expenses are
primarily the result of the opening and operations of our new casinos. Revenue
and operating expenses for 2007 reflect the first full year of operations at our
new casinos in Central City, Colorado, Edmonton, Canada, and Newcastle, South
Africa. Our results for 2006 reflect new casino operations of 5.5 months in
Central City, 1.5 months in Edmonton and less than one month at a new facility
in Newcastle, nine months in total including the temporary
facility.  In 2006, we incurred approximately $4.0 million of
preopening expenses in connection with these new casinos.





The
decrease in net income from $7.6 million for the year ended December 31, 2006 to
$4.9 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 $2.1 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, 2007, 2006 and 2005 are
summarized below (in thousands):





For
      the Year Ended December 31,2007
            
            
            2006
            
            
            2005Century
      Casino & Hotel (Edmonton, Alberta, Canada)
            
            $
            19,297
            
            
            $
            2,325
            
            
            $
            57Womacks
      (Cripple Creek, Colorado)
            
            
            16,722
            
            
            
            16,255
            
            
            
            17,111Century
      Casino & Hotel (Central City, Colorado)
            
            
            20,374
            
            
            
            8,617
            
            
            
            6The
      Caledon Hotel, Spa & Casino (Caledon, South Africa)
            
            
            18,139
            
            
            
            18,294
            
            
            
            17,015Century
      Casino & Hotel (Newcastle, South Africa)
            
            
            11,995
            
            
            
            6,176
            
            
            
            -Casino
      Millennium (Prague, Czech Republic)(1)
            
            
            2,467
            
            
            
            1,610
            
            
            
            -Cruise
      Ships
            
            
            2,602
            
            
            
            2,991
            
            
            
            3,151Casinos
      Poland (Poland)(2)
            
            
            -
            
            
            
            -
            
            
            
            -Corporate
            
            
            58
            
            
            
            17
            
            
            
            105Net
      Revenue
            
            $
            91,654
            
            
            $
            56,285
            
            
            $
            37,445


(1)
            Prior
      to April 13, 2006, Casino Millennium was recorded as an equity
      investment.


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





-28-


Earnings
and (losses) from operations by property for the years ended December 31, 2007,
2006 and 2005 are summarized below (in thousands):





For
      the Year Ended December 31,2007
            
            
            2006
            
            
            2005Century
      Casino & Hotel (Edmonton, Alberta, Canada)
            
            $
            4,367
            
            
            $
            (1,373
            )
            
            $
            (182
            )Womacks
      (Cripple Creek, Colorado)
            
            
            3,848
            
            
            
            4,498
            
            
            
            4,656Century
      Casino & Hotel (Central City, Colorado)
            
            
            2,167
            
            
            
            (1,445
            )
            
            
            (103
            )The
      Caledon Hotel, Spa & Casino (Caledon, South Africa)
            
            
            6,132
            
            
            
            6,559
            
            
            
            5,221Century
      Casino & Hotel (Newcastle, South Africa)
            
            
            3,159
            
            
            
            1,680
            
            
            
            -Casino
      Millennium (Prague, Czech Republic) (1)
            
            
            44
            
            
            
            (349
            )
            
            
            (109
            )Cruise
      Ships
            
            
            (12
            )
            
            
            509
            
            
            
            865Casinos
      Poland (Poland)(2)
            
            
            563
            
            
            
            -
            
            
            
            -Corporate
            
            
            (9,241
            )
            
            
            (6,829
            )
            
            
            (4,503
            )Earnings
      from Operations
            
            $
            11,027
            
            
            $
            3,250
            
            
            $
            5,845


(1)
            Prior
      to April 13, 2006, Casino Millennium was recorded as an equity
      investment.


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





Year
Ended December 31, 2007 vs 2006





Revenue





Revenue
for the years ended December 31, 2007 and 2006 was as follows (in
thousands):





Year
      Ended December 31,2007
            
            
            2006
            
            
            Variance
            
            
            Percentage
              VarianceGaming
            
            $
            85,671
            
            
            $
            54,499
            
            
            $
            31,172
            
            
            
            57.2
            %Hotel,
      food and beverage
            
            
            12,815
            
            
            
            6,066
            
            
            
            6,749
            
            
            
            111.3
            %Other
            
            
            2,062
            
            
            
            1,174
            
            
            
            888
            
            
            
            75.6
            %Gross
      revenue
            
            
            100,548
            
            
            
            61,739
            
            
            
            38,809
            
            
            
            62.9
            %Less
      promotional allowances
            
            
            (8,894
            )
            
            
            (5,454
            )
            
            
            (3,440
            )
            
            
            63.1
            %Net
      operating revenue
            
            $
            91,654
            
            
            $
            56,285
            
            
            $
            35,369
            
            
            
            62.8
            %





Gaming
revenue





Gaming
revenue increased by $31.2 million, or 57.2%, from $54.5 million in 2006 to
$85.7 million in 2007 due primarily to the opening of three new casinos and
hotels in Central City (Colorado), Edmonton (Alberta, Canada) and Newcastle
(South Africa) (collectively referred to as “the three new casino properties”)
and the acquisition of a controlling interest in a casino located in Prague
(Czech Republic).





The
opening of the three new casino properties increased gaming revenue by $30.5
million in 2007. The casinos in Central City and Edmonton opened in July 2006
and November 2006, respectively. The casino in Newcastle operated in a temporary
facility prior to our acquisition until December 2006, at which time we opened a
new permanent facility. Gaming revenue at our casino in Central City has not yet
met our expectations, but it has grown consistently since opening. We are
currently reviewing various strategies to increase gaming revenue at Central
City, which includes the potential addition of slot machines in the
future.





-29-


Gaming
revenue at Womacks increased by $0.5 million, or 2.6%, from $17.9 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. We have continued to focus on the marketing of Womacks through the
player’s club. Womacks has continued the effort to improve the customer
experience at Womacks by converting 100% of the total machines on the floor to
Ticket in/Ticket (“TITO”) out devices.





Gaming
revenue at our casino in Caledon, South Africa decreased by $0.3 million, or by
2.0% from $15.6 million in 2006 to $15.3 million in 2007, primarily due to the
decline in the average exchange rate between the U.S. dollar and the South
African Rand.  Gaming revenue in Rand increased by ZAR 2.5 million to
ZAR 108.0 million in 2007. During the year, we increased the number of slot
machines on the floor from 350 to 370. Our market share of the Western Cape
gaming revenue declined due to the opening of a new casino in the Western Cape
in November 2006.  Furthermore, the largest casino in the Western Cape
increased its total number of slot machines by 750, adding approximately 25%
more slot machines to the market. The Western Cape now operates with the maximum
permitted number of casinos.





Combined
gaming revenue at the Century Casino Millennium (Prague, Czech Republic) and
aboard the cruise ships on which we operate increased by $0.5 million, or 12.1%,
from $4.3 million in 2006 to $4.8 million in 2007. We acquired a controlling
interest in Century Casino Millennium in April 2006. The increase in gaming
revenue in 2007 is primarily due to a full year of operations at Casino
Millennium offset by decreased cruise ship revenue due to the operation of fewer
cruise ships in 2007.





Hotel,
food and beverage revenue





Hotel,
food and beverage revenues increased by $6.7 million, or 111.3%, from $6.1
million to $12.8 million in 2007. The opening of the three new casino properties
increased hotel, food and beverage revenue by $6.3 million and $1.8 million in
2007 and 2006, respectively. In addition, delays in opening the hotel at our
Edmonton casino hampered hotel, food and beverage revenue. The hotel opened in
March 2007.





Promotional
allowances





Promotional
allowances increased by $3.4 million, or 63.1%, from $5.5 million in 2006 to
$8.9 million in 2007. The addition of the three new casino properties increased
promotional allowances by $3.1 million in 2007.





-30-


Operating Costs and
Expenses





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
            
            $
            34,614
            
            
            $
            22,221
            
            
            $
            12,393
            
            
            
            55.8
            %Hotel,
      food and beverage
            
            
            10,738
            
            
            
            5,828
            
            
            
            4,910
            
            
            
            84.2
            %General
      and administrative
            
            
            27,176
            
            
            
            19,345
            
            
            
            7,831
            
            
            
            40.5
            %Impairments
      and other write-offs, net of recoveries
            
            
            31
            
            
            
            894
            
            
            
            (863
            )
            
            
            -
            %Depreciation
            
            
            8,631
            
            
            
            4,747
            
            
            
            3,884
            
            
            
            81.8
            %Total
      operating costs and expenses
            
            $
            81,190
            
            
            $
            53,035
            
            
            $
            28,155
            
            
            
            53.1
            %





Gaming
expenses





Gaming
expenses increased by $12.4 million, or 55.8%, from $22.2 million in 2006 to
$34.6 million in 2007, primarily due to increased gaming revenue resulting from
the addition of the three new casino properties, a full year’s worth of
operations at the Century Casino Millennium (which prior to April 13, 2006 was
recorded as an equity investment) and increased marketing charges at
Womacks.





The
addition of the three new casino properties increased gaming expenses by $10.6
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 resulting from
the increase in casino revenue for the period, and a $0.2 million increase in
payroll expense.





Gaming
expenses at the Caledon increased $0.2 million, or 3.1%, from $5.9 million in
2006 to $6.1 million in 2007. The increase in 2007 is primarily the result of an
increase in marketing charges and royalties, offset by decreases in payroll and
travel expenses.





Combined
gaming expenses at the Century Casino Millennium and aboard the cruise ships
increased $0.8 million, or 22.7%, from $3.4 million in 2006 to $4.1 million in
2007. The increase in 2007 is primarily due to a full year of operations at
Casino Millennium combined with the write-off of approximately $0.2 million in
costs associated with a cruise ship contract that we decided not to
pursue.





Hotel,
food and beverage expenses





Hotel,
food and beverage expenses increased by $4.9 million, or 84.2%, from $5.8
million in 2006 to $10.7 million in 2007. The addition of the three new casino
properties increased hotel, food and beverage expenses by $4.7 million in 2007.
The remaining increase of $0.2 million in 2007 is directly related to the
increase in hotel, food and beverage revenue at Womacks and the
Caledon.





General
and administrative expenses





General
and administrative expenses increased by $7.8 million, or 40.5%, from $19.3
million in 2006 to $27.2 million in 2007. General and administrative expenses at
the properties include facility maintenance, utilities, property and liability
insurance, property taxes, housekeeping, and all administrative departments,
such as accounting, human resources and internal audit.





-31-


The
addition of the three new casino properties increased general and administrative
expenses by $5.5 million in 2007. Prior to the opening of the three 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 4.9%, 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 at the Caledon decreased by $0.2 million, or 6.9%,
from $2.7 million in 2006 to $2.5 million in 2007. The decrease is primarily the
result of a decrease in payroll expense of $0.2 million and a decrease in
auditing and professional fees of $0.1 million, offset by an increase in
maintenance expenses of $0.1 million.





Combined
general and administrative expenses at the Century Casino Millennium and aboard
the cruise ships remained flat in 2007.





Corporate
expenses increased by $2.3 million, or 33.5%, from $6.8 million in 2006 to $9.1
million in 2007. The increase in 2007 is primarily due to a $1.4 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, $0.5 million in increased legal, accounting and other professional
fees, $0.2 million in increased travel expenses and $0.1 million in increased
insurance charges.





At
December 31, 2007, there was $3.1 million of total unrecognized compensation
expense related to unvested stock options and unvested restricted stock
remaining to be recognized. Of this amount, $1.4 million will be recognized
during 2008, and $1.7 million will be recognized in subsequent years through
2011.





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 $0.2 million in losses pertaining to thefts at certain of our
casinos.





In 2006,
we wrote-off non-operating casino property and land held for sale located in
Wells, Nevada for $0.4 million. In addition, as a result of our annual
impairment tests, we determined that our investment in Century Casino Millennium
was impaired. Accordingly, we recorded a pre-tax charge of $0.2 million to
write-off goodwill associated with this investment. Finally, we determined that
approximately $0.6 million of fixed assets at our casino in Central City were
obsolete. These impairments were offset by a $0.4 million recovery of a
previously written-off loan.





Depreciation





Depreciation
expense increased by $3.9 million, or 81.8%, from $4.7 million in 2006 to $8.6
million in 2007. The addition of the three new casino properties increased
depreciation expense by $3.6 million and $1.5 million in 2007 and 2006,
respectively. As of December 31, 2006, the three new casino properties
contributed additional depreciable fixed assets of $71.2 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 and an
increase of assets at the Caledon property.





-32-


Non-operating income
(expense)





Non-operating
income (expense) for the years ended December 31, 2007 and 2006 are as follows
(in thousands):





Year
      Ended December 31,2007
            
            
            2006
            
            
            Variance
            
            
            Percentage
              VarianceInterest
      income
            
            $
            975
            
            
            $
            896
            
            
            $
            79
            
            
            
            8.8
            %Interest
      expense
            
            
            (7,026
            )
            
            
            (3,406
            )
            
            
            3,620
            
            
            
            106.3
            %Gain
      on sale of Gauteng interest
            
            
            -
            
            
            
            5,231
            
            
            
            (5,231
            )
            
            
            -
            %Gains
      of foreign currency translation and other
            
            
            878
            
            
            
            469
            
            
            
            409
            
            
            
            87.2
            %Non-operating
      (expense) income
            
            $
            (5,173
            )
            
            $
            3,190
            
            
            $
            (8,363
            )
            
            
            -
            %





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 G5 in
connection with our acquisition of G5. We did not determine the collectibility
of the interest to be reasonably assured until we completed the acquisition of
G5. The remaining interest income in 2007 is directly related to available cash
on hand or restricted cash deposits.





Interest
expense





Interest
expense increased in 2007 due to a $19.9 million increase in our average debt
balance from $47.7 million for the year ended December 31, 2006 to $67.6 million
for the year ended December 31, 2007 as a result of the three new casino
properties. In addition, we were able 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 9.0% and 11.1%
for the years ended December 31, 2007 and 2006, 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
of foreign currency transactions and other





We
recognized foreign currency gains of $0.9 million and $0.5 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. These gains in 2007 were offset by approximately $0.2 million in
losses from the disposition of fixed assets at Womacks and aboard the
ships.





Other
Items





Earnings  from
equity investments





On March
12, 2007, we completed the acquisition of G5 Sp. z o.o. (“G5”). G5 owns 33.3% of
all shares issued by Casinos Poland (“CPL”). Our portion of CPL’s earnings are
recorded as earnings from equity investments.





-33-


Taxes





Our
effective tax rate was 4.7% and 2.1% for the years ended December 31, 2007 and
2006, 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 South Africa and Mauritius. Our taxes are further
adjusted for items identified in the preparation of our tax returns and the
non-deductibility of permanent differences.





Year
Ended December 31, 2006 vs 2005





Revenue





Revenue
for the years ended December 31, 2006 and 2005 was as follows (in
thousands):





Year
      Ended December 31,2006
            
            
            2005
            
            
            Variance
            
            
            Percentage
              VarianceGaming
            
            $
            54,499
            
            
            $
            36,394
            
            
            $
            18,105
            
            
            
            49.7
            %Hotel,
      food and beverage
            
            
            6,066
            
            
            
            4,522
            
            
            
            1,544
            
            
            
            34.1
            %Other
            
            
            1,174
            
            
            
            783
            
            
            
            391
            
            
            
            49.9
            %Gross
      revenue
            
            
            61,739
            
            
            
            41,699
            
            
            
            20,040
            
            
            
            48.1
            %Less
      promotional allowances
            
            
            (5,454
            )
            
            
            (4,254
            )
            
            
            (1,200
            )
            
            
            28.2
            %Net
      operating revenue
            
            $
            56,285
            
            
            $
            37,445
            
            
            $
            18,840
            
            
            
            50.3
            %





Gaming
revenue





Gaming
revenue increased by $18.1 million, or 49.7%, from $36.4 million in 2005 to
$54.5 million in 2006, due primarily to the opening of the three new casino
properties and the acquisition of a controlling interest in a casino located in
Prague (Czech Republic).





The
opening of the three new casino properties increased gaming revenue by $16.7
million in 2006. The casinos in Central City and Edmonton opened in July 2006
and November 2006, respectively. The casino in Newcastle operated in a temporary
facility prior to our acquisition until December 2006, at which time we opened a
new permanent facility.





Gaming
revenue at Womacks decreased by $1.1 million, or 5.7%, from $18.9 million in
2005 to $17.9 million in 2006. Management believes that revenue in the fourth
quarter of 2006 was negatively impacted by a series of winter storms hit Cripple
Creek during this time. These blizzards limited the amount of traffic into this
market. In 2006, gaming revenue at Womacks decreased primarily due to continued
competition within the market. To reverse this trend, there were a number of
changes made in key management positions at Womacks during the third quarter of
2006 that were intended to bring fresh ideas to help strengthen Womacks in a
highly competitive market. We have continued to focus on the marketing of
Womacks through the player’s club.





Gaming
revenue at the Caledon increased by $1.1 million, or 7.4%, from $14.5 million in
2005 to $15.6 million in 2006. The increase in gaming revenue in 2006 can be
attributed to an 11.5% increase in the average number of slot machines and
continued marketing efforts. In addition, revenue was impacted in 2005 by the
closure of a significant portion of the main east/west highway to the Caledon
from April 11, 2005 to May 27, 2005, as a result of severe flooding in the area.
Furthermore, the South African government introduced new currency notes during
the second quarter of 2005. The casino experienced an initial rejection rate of
80% on these new notes, which diminished as new bill validation software was
installed for the slot machines maintained at the Caledon.





-34-


Combined
gaming revenue at the Century Casino Millennium and aboard the cruise ships on
which we operate increased by $1.4 million, or 47.2%, from $2.9 million in 2005
to $4.3 million in 2006. We acquired a controlling interest in Century Casino
Millennium in April 2006.





Hotel,
food and beverage revenue





Hotel,
food and beverage revenue increased by $1.5 million, or 34.1%, from $4.5 million
in 2005 to $6.1 million in 2006. The opening of the three new casino properties
increased hotel, food and beverage revenue by $1.8 million in 2006. Hotel, food
and beverage revenue in 2006 was offset by a decline of revenue at Womacks,
which was primarily the result of a 4.5% decrease in restaurant sales and a
20.0% decrease in hotel occupancy. In addition, delays in opening the hotel and
showroom at our Edmonton casino hampered hotel, food and beverage revenues. The
showroom opened in December 2006 and the hotel opened in March
2007.





Promotional
allowances





Promotional
allowances increased by $1.2 million, or 28.2%, from $4.3 million in 2005 to
$5.5 million in 2006. The addition of the three new casino properties increased
promotional allowances by $1.9 million in 2006. This increase in promotional
allowances in 2006 was partially offset by a decrease in promotional allowances
of $0.7 million at our Womacks and Caledon casinos due to a revision of the
compensation policies at these casinos.





Operating Costs and
Expenses





Operating
costs and expenses for the years ended December 31, 2006 and 2005 were as
follows (in thousands):





Year
      Ended December 31,2006
            
            
            2005
            
            
            Variance
            
            
            Percentage
              VarianceGaming
            
            $
            22,221
            
            
            $
            13,263
            
            
            $
            8,958
            
            
            
            67.5
            %Hotel,
      food and beverage
            
            
            5,828
            
            
            
            3,806
            
            
            
            2,022
            
            
            
            53.1
            %General
      and administrative
            
            
            19,345
            
            
            
            11,134
            
            
            
            8,211
            
            
            
            73.7
            %Impairments
      and other write-offs, net of recoveries
            
            
            894
            
            
            
            (61
            )
            
            
            955
            
            
            
            -
            %Depreciation
            
            
            4,747
            
            
            
            3,349
            
            
            
            1,398
            
            
            
            41.7
            %Total
      operating costs and expenses
            
            $
            53,035
            
            
            $
            31,491
            
            
            $
            21,544
            
            
            
            68.4
            %





Gaming
expenses





Gaming
expenses increased by $9.0 million, or 67.5%, from $13.3 million in 2005 to
$22.2 million in 2006, primarily due to increased gaming revenue resulting from
the addition of the three new casino properties, a full year’s worth of
operations at the Century Casino Millennium and increased marketing charges at
Womacks.





The
addition of the three new casino properties increased gaming expenses by $7.9
million in 2006.





-35-


Gaming
expenses at Womacks decreased by $0.4 million, or 7.2%, from $5.5 million in
2005 to $5.1 million in 2006. The decrease is primarily the result of a $0.2
million decrease in payroll expense and a $0.3 million decrease in gaming taxes
and royalties resulting from the decrease in casino revenue for the period,
offset by an increase of $0.1 million in slot conversions compared to the year
ended December 31, 2005.





Gaming
expenses at the Caledon increased by $0.2 million, or 4.4%, from $5.9 million in
2005 to $6.1 million in 2006. The increase is primarily the result of increased
gaming taxes resulting from the increase in gaming revenue during such
period.





Combined
gaming expenses at the Century Casino Millennium and aboard the cruise ships
increased by $1.3 million, or 41.9%, from $2.1 million in 2005 to $3.4 million
in 2006, primarily due to our acquisition of a controlling interest in Century
Casino Millennium in April 2006.





Hotel,
food and beverage expenses





Hotel,
food and beverage expenses increased by $2.0 million, or 53.1%, from $3.8
million in 2005 to $5.8 million in 2006. The addition of the three new casino
properties increased hotel, food and beverage expenses by $2.3 million in 2006.
The increase in hotel, food and beverage expenses in 2006 was offset by a
decrease in such expenses of approximately $0.2 million at Womacks due to the
closing of a restaurant in July 2005.





General
and administrative expenses





General
and administrative expenses increased by $8.2 million, or 73.7%, from $11.1
million in 2005 to $19.3 million in 2006. General and administrative expenses at
the properties 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 three new casino properties increased general and administrative
expenses by $5.6 million in 2006. Prior to the opening of the three 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 and the Caledon remained flat in 2006
compared to 2005, primarily as the result of continued cost control
measures.





Combined
general and administrative expenses at the Century Casino Millennium and aboard
the cruise ships increased by $0.4 million, or 100%, from $0 in 2005 to $0.4
million in 2006. Our acquisition of the remaining 50% interest in Century Casino
Millennium accounted for the entire increase.





Corporate
expenses increased by $2.2 million, or 48.3%, from $4.6 million in 2005 to $6.8
million in 2006, primarily due to $1.3 million in increased compensation charges
(of which $0.4 million relates to the amortization of stock options), $0.4
million of increased travel and communication expenses, and higher professional
fees. We increased the number of employees in 2006 to support our
growth.





Impairments
and other write-offs, net of recoveries





In 2006,
we wrote-off non-operating casino property and land held for sale located in
Wells, Nevada for $0.4 million. In addition, as a result of our annual
impairment tests, we determined that our investment in Century Casino Millennium
was impaired. Accordingly, we recorded a pre-tax charge of $0.2 million to
write-off goodwill associated with this investment. Finally, we determined that
approximately $0.6 million of fixed assets at our casino in Central City were
obsolete. These impairments were offset by a $0.4 million recovery of a
previously written-off loan.





-36-


Depreciation





Depreciation
expense increased by $1.4 million, or 41.7%, from $3.3 million in 2005 to $4.7
million in 2006. The addition of the three new casino properties increased
depreciation expense by $1.5 million in 2006. As of December 31, 2006, the three
new casino properties contributed additional depreciable fixed assets of $71.2
million. The increase in depreciation expense in 2006 was offset by certain
fixed assets becoming fully depreciated and a decrease in fixed asset
expenditures during 2006.





Non-operating income
(expense)





Non-operating
income (expense) for the years ended December 31, 2006 and 2005 are as follows
(in thousands):





Year
      Ended December 31,2006
            
            
            2005
            
            
            Variance
            
            
            Percentage
              VarianceInterest
      income
            
            $
            896
            
            
            $
            476
            
            
            $
            420
            
            
            
            88.2
            %Interest
      expense
            
            
            (3,406
            )
            
            
            (2,290
            )
            
            
            (1,116
            )
            
            
            48.7
            %Gain
      on sale of Gauteng interest
            
            
            5,231
            
            
            
            -
            
            
            
            5,231
            
            
            
            -
            %Gains
      of foreign currency translation and other
            
            
            469
            
            
            
            9
            
            
            
            460
            
            
            
            -
            %Non-operating
      income (expense)
            
            $
            3,190
            
            
            $
            (1,805
            )
            
            $
            4,995
            
            
            
            -
            %





Interest
income





Interest
income increased in 2006 due to the cash reserves we accumulated from an equity
offering on the Vienna Stock Exchange that we completed in October 2005 and cash
flows generated from operations.





Interest
expense





Interest
expense increased in 2006 due to a $23.8 million increase in our average debt
balance from $23.9 million for the year ended December 31, 2005 to $47.7 million
for the year ended December 31, 2006. Our weighted average interest rate,
excluding the impact of the amortization of deferred financing charges, was
11.1% and 7.0% for the years ended December 31, 2006 and 2005,
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
of foreign currency transactions and other





We
recognized foreign currency gains of $0.5 million in 2006, respectively,
primarily a result from the exchange of currency. We had outstanding cash
denominated in U.S. dollars, Canadian dollars, Euros and South African
Rand.





-37-


Other
Items





Earnings
(loss) from equity investments





Equity
losses in 2005 represented our share of losses in Century Casino Millennium
prior to our acquisition of the remaining 50% of their outstanding
shares.





Taxes





Our
effective tax rate was 2.1% and 8.6% for the years ended December 31, 2006 and
2005, 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 South Africa and Mauritius. Our taxes are further
adjusted for items identified in the preparation of our tax returns and the
non-deductibility of permanent differences.





Liquidity
and Capital Resources





Cash
Flows





Cash and
cash equivalents totaled $17.9 million at December 31, 2007, and the Company had
negative working capital (current assets minus current liabilities) of $2.8
million compared to cash and cash equivalents of $35.0 million and working
capital of $4.2 million at December 31, 2006. During 2007, we repaid $12.7
million of principal on our Central City term loan.





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 financing activities.





Cash
provided by operating activities was $13.5 million and $9.5 million in 2007 and
2006, respectively. Changes from period to period relate primarily to changes in
working capital items, which can vary from period to period based on the timing
of cash receipts and payments, offset by cash generated from operations. Our
cash flows from operations have historically been positive and sufficient to
fund ordinary operations. 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 $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 relating to the
construction of the casino in Edmonton and $0.1 million in proceeds from the
disposition of property.





-38-


Cash used
in investing activities of $67.6 million for the year ended December 31, 2006
consisted of a $5.1 million buyout of our minority partner in CRA; $6.7
million towards the purchase of a 60% interest in Balele (offset by casino cash
acquired of $1.5 million); $0.7 million towards the buyout of our minority
partner in CM (offset by casino cash acquired of $0.3 million); a $4.8 million
loan to G5; $0.5 million in property improvements and equipment additions at
Womacks; $1.9 million in property improvements and additional gaming equipment
at Caledon; $10.2 million primarily towards the construction of a new permanent
facility in Newcastle; $0.2 million in additions to our corporate office in
Vienna, Austria; $0.4 million in expenditures to upgrade some of the cruise
ships with new gaming equipment; $24.0 million towards construction in Central
City; $19.4 million in additional expenditures towards construction on the
property in Edmonton; $0.5 million towards a company-wide information system
implementation; and $0.4 million of restricted cash deposits related to our
project in Edmonton. These outflows were offset by $5.2 million received from
the sale of our interest in a project located in Gauteng, South Africa and $0.2
million in proceeds from the disposition of property.





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.





Cash
provided by financing activities of $54.2 million for the year ended December
31, 2006 consisted of borrowings of $25.6 million under the CTL
construction/term loan; borrowings of $16.4 million under the CWB construction
loan; borrowings of $7.1 million under the CNEW construction/term loan; net
borrowings of $6.6 million under the Womacks revolving credit facility; $0.5
million in proceeds from the exercise of stock options; and the recognition of a
$0.4 million tax benefit related to the exercise of stock options. These
borrowings were offset by net repayments of $2.4 million towards the Caledon
term loan.





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 2006 or
2007.The total remaining
authorization under the repurchase program was $1.2 million as of December 31,
2007. 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, borrowings from banks and
proceeds from the issuance of equity securities.





Additional
liquidity for Womacks may be provided by our revolving credit facility with
Wells Fargo Bank (“Wells Fargo”). As of December 31, 2007, we had no available
borrowing capacity under this credit facility. However, as of March 14, 2009, we
have unused borrowing capacity of approximately $2.2 million, based on Womacks’
trailing 12 month EBITDA at December 31, 2007. On March 14, 2008, the maturity
date of the revolving credit facility was extended to December 31, 2009 and the
aggregate commitment available to us was reduced to $10 million by agreement.
Borrowings under the
credit facility may be used for capital expenditures and working capital at
Womacks and corporate headquarters. Womacks is also permitted to make cash
distributions to us up to the amount of our capital contributions (currently
$7.9 million, subject to the limitation based on Womacks’ current
EBITDA).





-39-


Additional liquidity for our
Central City casino may be provided by our $2.5 million revolving line of
credit with Wells Fargo. The revolving line of credit matures on November 21,
2011. Availability under the line of credit is conditional upon CTL’s compliance
with all of the financial and other covenants contained in the loan agreement at
the time of a particular drawdown, and our continued ability to satisfy certain
representations and warranties. As of December 31, 2007, funds were available to
us under this line of credit; however, at March 31, 2008, we believe that it is
probable that CTL will not be in compliance with a financial covenant. This will
limit our ability to borrow funds on the line of credit. Prior to March 31,
2008, we plan to seek a waiver from Wells Fargo related to this covenant or
possibly seek an amendment to this loan facility. There can be no assurance that
Wells Fargo will grant any waiver or agree to any amendment that might be
necessary. If CTL fails to meet any of its debt covenants and Wells Fargo does
not grant a waiver or agree to amend the facility, the lenders would have the
right to declare an event of default and seek remedies, including the
acceleration of all outstanding amounts due under this agreement or a call for
CCI to repay the loan pursuant to its guarantee. There can be no assurances that
we would be successful in obtaining alternative sources of funding to repay this
obligation if required.





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





Short-Term
Liquidity and Capital Requirements





We expect that the primary source of
our future operating cash flows will be from our gaming operations. We will
continue to rely on revolving lines of credit and 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, $4.0
million of capital improvements at our casinos, foreign income tax payments, and
interest and principal payments on outstanding debt.





We
believe that our cash at December 31, 2007, together with expected cash flows
from operations and borrowing capacity under the various credit facilities, 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.


-40-


Contractual
Obligations and Commercial Commitments





The
following is a schedule of our contractual obligations and commercial
commitments as of December 31, 2007 (amounts in thousands):





Payments
      Due by PeriodTotal
            
            
            Less
      than
              1
      year
            
            
            1-3
      years
            
            
            4-5
      years
            
            
            More
      than
              5
      yearsDebt
      (1)
            
            $
            64,664
            
            
            $
            8,745
            
            
            $
            25,953
            
            
            $
            18,154
            
            
            $
            11,812Estimated
      interest payments on long-term debt (2)
            
            
            18,206
            
            
            
            4,929
            
            
            
            6,926
            
            
            
            4,130
            
            
            
            2,221Operating
      Leases
            
            
            3,280
            
            
            
            1,030
            
            
            
            810
            
            
            
            469
            
            
            
            971Other
            
            
            584
            
            
            
            221
            
            
            
            230
            
            
            
            -
            
            
            
            133Total
            
            $
            86,734
            
            
            $
            14,925
            
            
            $
            33,919
            
            
            $
            22,753
            
            
            $
            15,137


(1)  
Includes capital lease obligations.


(2)  
Estimated interest payments on long-term debt are based on principal amounts
outstanding at December 31, 2007 and a forecasted prime rate of 6.0% on
U.S.-based debt and 14.5% on South African-based debt. For a description of our
outstanding long-term debt, please see Note 7 of the notes to the consolidated
financial statements.





Off-Balance Sheet
Arrangements





In
December 2007, in lieu of a restricted cash deposit, we issued a guarantee of
$1.2 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
Investments and Other Intangible Assets – At December 31, 2007 we had
goodwill of $15.2 million, equity investments of $12.0 million and other
intangible assets (primarily casino licenses) of $10.8 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 have completed our annual
assessments of goodwill, equity investments and other intangibles with
indefinite lives for impairment at December 31, 2007 and determined that there
have been no significant changes in the fair value of the assets, no adverse
changes in the projected cash flows or any events or circumstances that would
lead management to believe that the fair value of the assets are less than the
current carrying value of the reporting units.





-41-


Property and
Equipment – We have significant capital invested in our property and
equipment, which represents approximately 67% of our total assets. 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.





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) 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 $0.4 million accrued for the
cost of anticipated point redemption at December 31, 2007 and 2006.





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 estimated 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, Statement of Financial Accounting Standard No. 123R
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.





-42-


Income
Taxes – Significant judgment is required in developing our income tax
provision. We have not recorded a valuation allowance on our deferred tax assets
as of December 31, 2007, based on management’s belief that operating income will
more likely than not be sufficient to realize the benefit of our deferred tax
assets over time. In the event that actual results differ from these estimates,
we may be required to record a valuation allowance on our deferred tax assets,
which could have a material adverse effect on our consolidated financial
statements.





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,
2007. Actual results may differ materially.





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 current outstanding borrowings, a 1.0% movement in
the weighted average interest rate would result in an approximate $0.4 million
annualized increase or decrease in interest expense.





As of and subsequent to
December 31, 2007, 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, 2007. Based on such evaluation, our principal
executive officers, principal financial officer and chief accounting officer
have concluded that, as of December 31, 2007, 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.





-43-


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.





Our
management has assessed the effectiveness of our internal controls over
financial reporting as of December 31, 2007. 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 believes
that, as of December 31, 2007, 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 controls 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, 2007 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.





Item
9B.  Other
Information.





None.


-44-


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 2008 Annual Meeting of Stockholders (the “Proxy
Statement”) to be filed with the SEC within 120 days of December 31, 2007, 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, 2007 is as follows:





Plan
      category
            Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
            Weighted-average
      exercise price of outstanding options, warrants and rights
            Number
      of securities remaining available for future issuance under equity
      compensation plans (excluding securities reflected in column
      (a))(a)
            (b)
            (c)Equity
      compensation plans approved by security holders
            1,222,210
      (1)
            $3.31
            1,480,000Equity
      compensation plans not approved by security holders
            -
            -
            -Total
            1,222,210
            $3.31
            1,480,000





(1)
            As of December 31, 2007, there were 1,144,710 securities to be
      issued upon exercise of outstanding options, warrants and other rights
      exercisable under the Equity Incentive Plan adopted in 1994. The remaining
      77,500 securities pertain to outstanding options, warrants and other
      rights exercisable under the 2005 Equity Incentive
    Plan.


-45-


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 Accountant Fees
and Services.





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


-46-


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 reports of Grant
Thornton LLP dated March 14, 2008, 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:




(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.








-47-


(10)
Material Contracts





10.1A
            Contribution
      agreement dated as of October 12, 2004 by and between Century Casinos
      Tollgate Inc., Tollgate Venture, LLC, KJE Investments, LLC, Central City
      Venture, LLC, and CC Tollgate LLC., is hereby incorporated by reference to
      Exhibit 10.132 to the Company’s Quarterly Report on Form 10-Q for the
      quarter ended September 30, 2004.





10.1B
            Limited
      Liability Company Agreement of CC Tollgate LLC dated as of October 12,
      2004, is hereby incorporated by reference to Exhibit 10.133 to the
      Company’s Quarterly Report on Form 10-Q for the quarter ended September
      30, 2004.





10.1C†
            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.





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
            Share
      Sale and Purchase Agreement by and between Malgorzata Maria
      Rogowicz-Angierman, Jerzy Cieślak, Piotr
      Marcin Nassius, Przemyslaw Dariusz Tomaszewski and Century Casinos Europe
      GmbH, is hereby incorporated by referenceto Exhibit 10.172 to the
      Company’s Current Report on Form 8-K dated June 19,
  2006.





10.3B
            Loan
      Agreement by and between Century Casinos Europe GmbH and G5 Sp. z o.o. is
      hereby incorporated by reference to Exhibit 10.173 to the Company’s
      Current Report on Form 8-K dated June 19,
2006.





-48-


10.3C
            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.





10.3D
            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 .





10.4
            Binding
      letter of intent by and between Century Resorts Alberta Inc., 746306
      Alberta Ltd and Century Resorts International Ltd dated December 2, 2005
      and accepted on December 6, 2005, is hereby incorporated by reference to
      Exhibit 10.164 to the Company’s Current Report on Form 8-K dated December
      12, 2005.





10.5A
            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 April 21, 2000, is
      hereby incorporated by reference to Exhibit 10.93 to the Company’s
      Quarterly Report on Form 10-QSB for the quarter ended March 31,
      2000.





10.5B
            First
      Amendment to the 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 August 22, 2001, is hereby incorporated by reference to
      Exhibit 11.01 to the Company’s Quarterly Report on Form 10-QSB for the
      quarter ended September 30, 2001.





10.5C
            Second
      Amendment to the 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 August 28, 2002, is hereby incorporated by reference to
      Exhibit 10.115 to the Company’s Quarterly Report on Form 10-Q for the
      quarter ended September 30, 2002.





10.5D
            Third
      Amendment to the Amended and Restated Credit Agreement dated October 27,
      2004, by and between WMCK Venture Corp., Century Casinos Cripple Creek,
      WMCK Acquisition Corp., Century Casinos, Inc. and Wells Fargo Bank, N.A.,
      is hereby incorporated by reference to Exhibit 10.136 to the Company’s
      Quarterly Report on Form 10-Q for the quarter ended September 30,
      2004.





10.5E
            Fourth
      Amendment to the Amended and Restated Credit Agreement, by and between
      WMCK Venture Corp., Century Casinos Cripple Creek, WMCK Acquisition Corp.,
      Century Casinos, Inc. and Wells Fargo Bank, N.A., dated as of September
      23, 2005, is hereby incorporated by reference to Exhibit 10.153 to the
      Company’s Current Report on Form 8-K dated September 27,
    2005.





10.5F
            Fifth
      Amendment to the Amended and Restated Credit Agreement, by and between
      WMCK Venture Corp., Century Casinos Cripple Creek, WMCK Acquisition Corp.,
      Century Casinos, Inc. and Wells Fargo Bank, N.A., dated as of December 6,
      2005, is hereby incorporated by reference to Exhibit 10.165 to the
      Company’s Current Report on Form 8-K dated December 12,
    2005.





-49-


10.5G
            Sixth
      Amendment to the Amended and Restated Credit Agreement, by and between
      WMCK Venture Corp., Century Casinos Cripple Creek, WMCK Acquisition Corp.,
      Century Casinos, Inc. and Wells Fargo Bank, N.A., dated as of October 31,
      2006, is hereby incorporated by reference to Exhibit 10.180 to the
      Company’s Current Report on Form 8-K dated November 6,
    2006.





10.5H
            Seventh
      Amendment to the Amended and Restated Credit Agreement, by and between
      WMCK Venture Corp., Century Casinos Cripple Creek, WMCK Acquisition Corp.,
      Century Casinos, Inc. and Wells Fargo Bank, N.A., dated as of February 28,
      2007, is hereby incorporated by reference to Exhibit 10.2 to the Company’s
      Current Report on Form 8-K dated March 6,
2007.





10.6
            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.





10.7†
            Mortgage
      agreement by and between Century Resorts Alberta Inc. and Canadian Western
      Bank dated December 6, 2007.





10.8A
            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.





10.8B
            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.





10.8C
            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.





10.9
            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.





10.10A*
            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.





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.





-50-


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. 2005 Equity Incentive Plan effective June 17, 2005, is
      hereby incorporated by reference to Appendix A to the Company’s Proxy
      Statement in respect of the 2005 Annual Meeting of
      Stockholders.





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.





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.








-51-


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.





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.








-52-


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 andCo 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 17, 2008





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 March17, 2008.








Signature
            Title/s/ Erwin
      Haitzmann
            Chairman
      of the Board and Co Chief Executive OfficerErwin
      Haitzmann/s/ Peter
      Hoetzinger
              Peter
      Hoetzinger
            Vice
      Chairman of the Board,Co
      Chief Executive Officerand
      President/s/Gottfried
      Schellmann
            DirectorGottfried
      Schellmann/s/ Robert S.
      Eichberg

              Robert
      S. Eichberg
            Director/s/ Dinah
      Corbaci
            DirectorDinah
      Corbaci


-53-


Item
8.  Financial Statements and
Supplementary Data.





Index
to Financial Statements





Financial
      Statements:Report of Independent Registered Public Accounting Firm – Grant
      Thornton LLP
            F2Consolidated
      Balance Sheets as of December 31, 2007 and 2006
            F4Consolidated
      Statements of Earnings for the Three Years Ended December 31,
      2007
            F5Consolidated
      Statements of Shareholders’ Equity and Comprehensive Incomefor
      the Three Years Ended December 31, 2007
            F6Consolidated
      Statements of Cash Flows for the Three Years Ended December 31,
      2007
            F7Notes
      to Consolidated Financial Statements
            F9





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-


REPORT OF 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 as of December 31, 2007 and 2006,
and the related consolidated statements of earnings, shareholders’ equity and
comprehensive income and cash flows for each of the three years in the period
ended December 31, 2007. We also have audited Century Casinos, Inc. and
subsidiaries internal control over financial reporting as of December 31,
2007 based on criteria established in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”). Century Casinos, Inc.’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 Century Casinos, Inc. and
subsidiaries as of December 31, 2007 and 2006, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2007 in conformity with accounting principles generally
accepted in the United States of America. Also, in our opinion, Century Casinos,
Inc. and subsidiaries, maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2007, based on criteria
established in Internal
Control—Integrated Framework issued by COSO.





As
discussed in Note 12 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 14,
2008


-F3-
 CENTURY
CASINOS, INC. AND SUBSIDIARIES
 CONSOLIDATED
BALANCE SHEETS





Amounts in thousands, except share
      information
            
            December
      31, 2007
            
            
            December
      31, 2006ASSETSCurrent
      Assets:Cash
      and cash equivalents
            
            $
            17,850
            
            
            $
            34,969Restricted
      cash
            
            
            112
            
            
            
            1,393Receivables,
      net
            
            
            798
            
            
            
            934Prepaid
      expenses
            
            
            1,234
            
            
            
            1,183Inventories
            
            
            442
            
            
            
            445Other
      current assets
            
            
            426
            
            
            
            1,091Deferred
      income taxes – foreign
            
            
            247
            
            
            
            193Total
      current assets
            
            
            21,109
            
            
            
            40,208Property
      and Equipment, net
            
            
            131,877
            
            
            
            124,638Goodwill
            
            
            15,217
            
            
            
            12,262Casino
      Licenses
            
            
            10,780
            
            
            
            9,341Deferred
      Income Taxes – domestic
            
            
            3,318
            
            
            
            1,763– foreign
            
            
            971
            
            
            
            2,143Note
      Receivable
            
            
            -
            
            
            
            5,170Equity
      investment
            
            
            11,974
            
            
            
            -Other
      Assets
            
            
            2,837
            
            
            
            2,335Total
            
            $
            198,083
            
            
            $
            197,860LIABILITIES
      AND SHAREHOLDERS’ EQUITYCurrent
      Liabilities:Current
      portion of long-term debt
            
            $
            8,745
            
            
            $
            20,669Accounts
      payable and accrued liabilities
            
            
            9,389
            
            
            
            10,625Accrued
      payroll
            
            
            2,230
            
            
            
            2,172Taxes
      payable
            
            
            3,534
            
            
            
            2,509Deferred
      income taxes - domestic
            
            
            5
            
            
            
            16Total
      current liabilities
            
            
            23,903
            
            
            
            35,991Long-Term
      Debt, less current portion
            
            
            55,919
            
            
            
            56,036Other
      Long-Term Accrued Liabilities
            
            
            463
            
            
            
            -Minority
      Interest
            
            
            5,809
            
            
            
            5,406Commitments
      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;23,668,443 and 23,168,443 shares issued,
      respectively;23,657,067
      and 23,004,067 shares outstanding, respectively
            
            
            237
            
            
            
            232Additional paid-in
      capital
            
            
            71,223
            
            
            
            69,779Accumulated other
      comprehensive income
            
            
            7,735
            
            
            
            2,768Retained
    earnings
            
            
            32,820
            
            
            
            28,020112,015
            
            
            
            100,799Treasury
      stock – 11,376 and 164,376 shares at cost, respectively
            
            
            (26
            )
            
            
            (372
            )Total
      shareholders’ equity
            
            
            111,989
            
            
            
            100,427Total
            
            $
            198,083
            
            
            $
            197,860





See notes
to consolidated financial statements.





-F4-


CENTURY
CASINOS, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF EARNINGS


Amounts
      in thousands, except share information
            
            For
      the Year Ended December 31,2007
            
            
            2006
            
            
            2005Operating
      Revenue:Gaming
            
            $
            85,671
            
            
            $
            54,499
            
            
            $
            36,394Hotel,
      food and beverage
            
            
            12,815
            
            
            
            6,066
            
            
            
            4,522Other
            
            
            2,062
            
            
            
            1,174
            
            
            
            783Gross
      revenue
            
            
            100,548
            
            
            
            61,739
            
            
            
            41,699Less
      promotional allowances
            
            
            (8,894
            )
            
            
            (5,454
            )
            
            
            (4,254
            )Net
      operating revenue
            
            
            91,654
            
            
            
            56,285
            
            
            
            37,445Operating
      Costs and Expenses:Gaming
            
            
            34,614
            
            
            
            22,221
            
            
            
            13,263Hotel,
      food and beverage
            
            
            10,738
            
            
            
            5,828
            
            
            
            3,806General
      and administrative
            
            
            27,176
            
            
            
            19,345
            
            
            
            11,134Impairments
      and other write-offs, net of recoveries
            
            
            31
            
            
            
            894
            
            
            
            (61
            )Depreciation
            
            
            8,631
            
            
            
            4,747
            
            
            
            3,349Total
      operating costs and expenses
            
            
            81,190
            
            
            
            53,035
            
            
            
            31,491Earnings
      (loss) from equity investments
            
            
            563
            
            
            
            -
            
            
            
            (109
            )Earnings
      from Operations
            
            
            11,027
            
            
            
            3,250
            
            
            
            5,845Non-Operating
      Income (Expense):Interest
      income
            
            
            975
            
            
            
            896
            
            
            
            476Interest
      expense
            
            
            (7,026
            )
            
            
            (3,406
            )
            
            
            (2,290
            )Gain
      on sale of Gauteng interest
            
            
            -
            
            
            
            5,231
            
            
            
            -Gains
      on foreign currency transactions and other
            
            
            878
            
            
            
            469
            
            
            
            9Non-operating
      (expense) income, net
            
            
            (5,173
            )
            
            
            3,190
            
            
            
            (1,805
            )Earnings
      before Income Taxes, Minority Interest and Preferred
    Dividends
            
            
            5,854
            
            
            
            6,440
            
            
            
            4,040Provision for income taxes
            
            
            273
            
            
            
            134
            
            
            
            347Earnings
      before Minority Interest and Preferred Dividends
            
            
            5,581
            
            
            
            6,306
            
            
            
            3,693Minority
      interest in subsidiary (earnings) losses
            
            
            (254
            )
            
            
            1,461
            
            
            
            788Preferred dividends issued by subsidiary
            
            
            (394
            )
            
            
            (138
            )
            
            
            -Net
      Earnings
            
            $
            4,933
            
            
            $
            7,629
            
            
            $
            4,481Earnings
      Per ShareBasic
            
            $
            0.21
            
            
            $
            0.33
            
            
            $
            0.28Diluted
            
            $
            0.21
            
            
            $
            0.32
            
            
            $
            0.25





See notes
to consolidated financial statements.


-F5-
 CENTURY
CASINOS, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME
 FOR THE
YEARS ENDED DECEMBER 31, 2007, 2006 and 2005
 (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, 2005
            
            
            14,485,776
            
            
            $
            145
            
            
            $
            21,528
            
            
            $
            4,597
            
            
            $
            15,910
            
            
            
            790,876
            
            
            $
            (1,801
            )
            
            $
            40,379Issuance
      of common stock, net of   $3.0 million in issuance
      costs
            
            
            7,132,667
            
            
            
            71
            
            
            
            46,116
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            46,187Options
      exercised
            
            
            950,000
            
            
            
            10
            
            
            
            927
            
            
            
            -
            
            
            
            -
            
            
            
            (603,000
            )
            
            
            1,376
            
            
            
            2,313Change
      in fair value of interest rate swap, net of income tax
    expense
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            166
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            166Reclassification
      of interest expense on interest rate swap
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (102
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (102
            )Foreign
      currency translation adjustment
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (2,093
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (2,093
            )Net
      earnings
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            4,481
            
            
            
            -
            
            
            
            -
            
            
            
            4,481BALANCE
      AT DECEMBER 31, 2005
            
            
            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
            )
            
            $
            111,989





See notes
to consolidated financial statements.


-F6-
 CENTURY
CASINOS, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF CASH FLOWS




Amounts in thousands
            
            For
      the Year Ended December 31,2007
            
            
            2006
            
            
            2005Cash
      Flows from Operating Activities:Net
      earnings
            
            $
            4,933
            
            
            $
            7,629
            
            
            $
            4,481Adjustments to reconcile net
      earnings to net cash provided by operating activitiesDepreciation
            
            
            8,631
            
            
            
            4,747
            
            
            
            3,349Imputed
      interest
            
            
            134
            
            
            
            160
            
            
            
            -Amortization
      of stock-based compensation
            
            
            879
            
            
            
            373
            
            
            
            -Amortization
      of deferred financing costs
            
            
            479
            
            
            
            200
            
            
            
            448Deferred
      tax benefit
            
            
            (1,583
            )
            
            
            (2,303
            )
            
            
            (147
            )Minority
      interest in subsidiary earnings (losses)
            
            
            254
            
            
            
            (1,461
            )
            
            
            (788
            )(Earnings)
      loss from equity investments
            
            
            (563
            )
            
            
            -
            
            
            
            109Impairment
      of goodwill – Century Casino Millennium
            
            
            -
            
            
            
            237
            
            
            
            -Net
      proceeds on sale of Gauteng interest
            
            
            -
            
            
            
            (5,231
            )
            
            
            -Loss
      (gain) on disposition of assets
            
            
            155
            
            
            
            22
            
            
            
            (74
            )(Recovery)
      write-offs of fixed assets
            
            
            (158
            )
            
            
            1,028
            
            
            
            32Other
            
            
            4
            
            
            
            -
            
            
            
            -Excess
      tax benefits from stock-based payment arrangements
            
            
            (205
            )
            
            
            (403
            )
            
            
            -Changes in operating assets and liabilities, net of effects of
      acquisitionsReceivables
            
            
            156
            
            
            
            (380
            )
            
            
            (151
            )Prepaid
      expenses and other assets
            
            
            814
            
            
            
            (658
            )
            
            
            (888
            )Accounts
      payable and accrued liabilities
            
            
            (1,613
            )
            
            
            3,566
            
            
            
            798Accrued
      payroll
            
            
            44
            
            
            
            872
            
            
            
            (177
            )Taxes
      payable
            
            
            1,175
            
            
            
            1,096
            
            
            
            546Net cash provided by operating
      activities
            
            
            13,536
            
            
            
            9,494
            
            
            
            7,538





Cash
      Flows from Investing Activities:Purchases
      of property and equipment
            
            $
            (9,440
            )
            
            $
            (57,295
            )
            
            $
            (21,190
            )Investment
      in Century Resorts Alberta, Inc., net of cash acquired
            
            
            (1,428
            )
            
            
            (5,135
            )
            
            
            (753
            )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
            
            
            (3,290
            )
            
            
            -
            
            
            
            -Investment
      in G5 Sp. z o.o.
            
            
            (3,822
            )
            
            
            (4,752
            )
            
            
            -Net
      proceeds on sale of Gauteng interest
            
            
            -
            
            
            
            5,231
            
            
            
            -Decrease
      (increase) in restricted cash
            
            
            220
            
            
            
            (416
            )
            
            
            -Proceeds
      from disposition of assets
            
            
            138
            
            
            
            229
            
            
            
            264Net cash used in investing
      activities
            
            
            (18,202
            )
            
            
            (67,621
            )
            
            
            (21,679
            )







-Continued
on following page-




-F7-


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





Amounts
      in thousands
            
            For
      the Year Ended December 31,2007
            
            
            2006
            
            
            2005Cash
      Flows from Financing Activities:Proceeds
      from borrowings
            
            $
            29,051
            
            
            $
            84,077
            
            
            $
            58,680Principal
      repayments
            
            
            (42,367
            )
            
            
            (30,580
            )
            
            
            (59,467
            )Excess
      tax benefits from stock-based paymentarrangements
            
            
            205
            
            
            
            403
            
            
            
            -Distribution
      to minority interest
            
            
            -
            
            
            
            -
            
            
            
            (1,000
            )Deferred
      financing costs
            
            
            (61
            )
            
            
            (155
            )
            
            
            (2,419
            )Decrease
      (increase) in restricted cash
            
            
            1,184
            
            
            
            -
            
            
            
            (387
            )Proceeds
      from exercise of options
            
            
            707
            
            
            
            513
            
            
            
            2,313Proceeds
      from issuance of Austrian DepositaryCertificates,
      net of $3.0 million in issuance costs
            
            
            -
            
            
            
            (22
            )
            
            
            46,187Other
            
            
            -
            
            
            
            -
            
            
            
            4Net
      cash (used in) provided by financing activities
            
            
            (11,281
            )
            
            
            54,236
            
            
            
            43,911Effect
      of exchange rate changes on cash
            
            
            (1,172
            )
            
            
            1,693
            
            
            
            (1,014
            )(Decrease)
      Increase in Cash and Cash Equivalents
            
            
            (17,119
            )
            
            
            (2,198
            )
            
            
            28,756Cash
      and Cash Equivalents at Beginning of Year
            
            
            34,969
            
            
            
            37,167
            
            
            
            8,411Cash
      and Cash Equivalents at End of Year
            
            $
            17,850
            
            
            $
            34,969
            
            
            $
            37,167





Supplemental
Disclosure of Cash Flow Information:





Amounts
      in thousands
            
            For
      the Year Ended December 31,2007
            
            
            2006
            
            
            2005Interest
      paid, net of capitalized interest of$2,105
      in 2006 and $582 in 2005
            
            $
            7,117
            
            
            $
            4,159
            
            
            $
            1,890Income
      taxes paid
            
            $
            1,875
            
            
            $
            787
            
            
            $
            1,083





Supplemental
Disclosure of Noncash, Investing and Financing Activities:








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 Note 3 of the Company’s consolidated financial statements for details
of the Company’s recent acquisitions.





See notes
to consolidated financial statements.


-F8-
 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, 2007, the Company owns and/or manages casino
operations in North America, South Africa, the Czech Republic and international
waters through various entities that are wholly-owned or in which we have 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
            Ownership
      PercentageCentury
      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 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
      Casinos Europe GmbH
            CCE
            CCI
            100%Century
      Casino Millennium, a.s.
            CM
            CCE
            100%G5
      Sp. z o.o.
            G5
            CCE
            100%Casinos
      Poland Ltd.
            CPL
            G5
            33%Century
      Casinos Management, Inc.
            CCM
            CCI
            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.





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, as of January 12, 2006, owns 100% of
CRA (See Note 3). CRA owns and operates the Century Casino & Hotel in
Edmonton, Alberta, Canada.





-F9-










CCE owns CM, a full-stakes
casino located within the Marriott Hotel in Prague, Czech Republic (See Note 3).
On March 12, 2007, CCE acquired G5 (See Note 3). G5 owns 33.3% of all shares
issued by CPL.





CCE also
provides administrative support for CCI executive management in
Europe.





CCM provides management
services to CTL.





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 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 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 at December 31, 2007 consisted 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. Restricted cash at December 31,
2006 consisted of minimum deposits of $1.1 million (€0.8 million) that were
required in connection with our listing on the Vienna Stock Exchange (“VSE”),
$1.1 million (CZK 22.0 million) held with the Ministry of Finance of the Czech
Republic for the Company’s casino in Prague and $0.2 million (CAD 0.3 million)
of cash required to be used for construction expenditures in Edmonton, Alberta,
Canada. The Company has classified $1.1 million (CZK 20.0 million) and $1.0
million (CZK 20.0 million) of restricted cash as a component of long term other
assets for the years ended December 31, 2007 and 2006,
respectively.





Fair Value of
Financial Instruments– We calculate the fair
value of financial instruments and include this additional information in the
notes to our consolidated financial statements when the fair value does not
approximate the carrying value of those financial instruments. Our financial
instruments include cash and cash equivalents, accounts receivable, notes
receivable, accounts payable, long-term debt and, at times, interest rate swap
agreements. The Company had no outstanding interest rate swap agreements as of
December 31, 2007 and 2006. Fair value is determined using quoted market prices
whenever available. When quoted market prices are not available, we use
alternative valuation techniques such as calculating the present value of
estimated future cash flows utilizing risk-adjusted discount rates. Our carrying
value of financial instruments approximates fair value at December 31, 2007 and
2006.





-F10-






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
is amortized over the lives of the respective leases or over the service lives
of the assets, whichever is shorter. The interest cost associated with major
development and construction projects is capitalized and included in the cost of
the project. When no debt is incurred specifically for a project, interest is
capitalized on amounts expended on the project using the weighted-average cost
of our outstanding borrowings. Capitalization of interest ceases when the
project is substantially complete or development activity is suspended for more
than a brief period. 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 and $0.6 million towards our various
construction projects during 2006 and 2005, respectively. No interest was
capitalized during 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 reviews 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
majority owned subsidiary, CTL, wrote off approximately $0.6 million of fixed
assets that were deemed obsolete. No impairment charges were recorded for the
years ended December 31, 2007 and 2005 (See Note 11).





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,” 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 2006, the Company recorded a charge of $0.2 million
(CZK 5.0 million) to eliminate the goodwill associated with CM. No impairments
were indicated as a result of the annual impairment reviews for goodwill in 2007
or 2005.





-F11-


Casino Licenses– In evaluating the Company’s capitalized casino license costs,
management considered all of the criteria set forth in SFAS 142 for determining
useful life. 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 our evaluation, the
Company deemed that casino license costs have an indefinite life.





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, 2007
              December 31, 2006
              December 31, 2005Canadian
      Dollars (CAD)
              0.9881
              1.1653
              1.1659Czech
      Koruna (CZK)
              18.2240
              20.8500
              24.5810Euros
      (€)
              0.6849
              0.7578
              0.8446Polish
      Zloty (PLN)
              2.4703
              2.9016
              N/ASouth
      African Rand (ZAR)
              6.8618
              7.0496
              6.3399


Source:
Pacific Exchange Rate Service





Comprehensive
Income – Comprehensive income includes the effect of fluctuations in
foreign currency rates on the values of our foreign investments and fair value
gains and losses on the interest rate swap agreements we maintain from time to
time to hedge against interest rate increases on our credit
facilities.





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 now believes that its properties can be aggregated together in
accordance with SFAS 131, “Disclosures about Segments of an Enterprise and
Related Information.” Based on a review of SFAS 131, the Company has determined
that it operates primarily in one segment, the operation of casino facilities,
which includes the provision of gaming, hotel accommodations, dining facilities
and other amenities. As a gaming company, the Company’s operating results are
highly dependent on the volume of customers at our 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.





-F12-


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 01-9, “Accounting for
Consideration Given by a Vendor to a Customer (Including a Reseller of the
Vendor’s products)”. EITF 01-9 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.





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.





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) 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 our 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 2007, 2006
and 2005 include the following:





Amounts
      in thousands
            
            2007
            
            
            2006
            
            
            2005Food
      & Beverage and Hotel Comps
            
            $
            3,187
            
            
            $
            1,806
            
            
            $
            1,373Free
      Plays or Coupons
            
            
            3,037
            
            
            
            1,663
            
            
            
            1,573Player
      Points
            
            
            2,670
            
            
            
            1,985
            
            
            
            1,308Total
      Promotional Allowances
            
            $
            8,894
            
            
            $
            5,454
            
            
            $
            4,254





Stock-Based
Compensation – Prior to January 1, 2006, the Company accounted for stock
options under the recognition and measurement provisions of APB Opinion No. 25,
“Accounting for Stock Issued to Employees,” and related interpretations.
Effective January 1, 2006, the Company adopted the provisions of SFAS 123
(Revised 2004), “Share-Based Payment” (“SFAS 123R”), and 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.





-F13-


Advertising
Costs – The Company expenses advertising costs when incurred. Advertising
expense was $2.3 million, $1.6 million and $0.7 million for the years ended
December 31, 2007, 2006 and 2005, 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 2007. The Company incurred approximately $4.0
million of preopening expenses for the year ended December 31, 2006 towards its
projects in Central City, Colorado, Edmonton, Canada, and Newcastle, South
Africa. The Company incurred approximately $0.4 million of preopening expenses
in 2005 towards its project in Central City, Colorado. By agreement, the entire
loss was allocated to the minority partner in this project.





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.





Earnings Per
Share– Basic earnings per share considers only weighted-average
outstanding common shares in the computation. Diluted earnings per share gives
effect to all potentially dilutive securities. Diluted earnings per share is
based upon the weighted average number of common shares outstanding during the
period, plus, if dilutive, the assumed exercise of stock options using the
treasury stock method and the assumed conversion of other convertible securities
(using the “if converted” method) at the beginning of the year, or for the
period outstanding during the year for current year
issuances.





Recent Accounting
Pronouncements –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
Company is currently evaluating the potential impact, if any, of the adoption of
SFAS 141R on its consolidated financial statements.





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, 2007
balance sheet, the impact of adopting SFAS 160 would be to reclassify $5.8
million in minority interests in consolidated subsidiaries from total
liabilities to a separate component of shareholders’ equity.






-F14-





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 Company does not expect this statement to have a material impact
      on the Company’s results of operations or financial position upon
      adoption.





In
September 2006, the FASB issued SFAS 157, “Fair Value Measurements” (“SFAS
157”). SFAS 157 defines fair value, establishes a framework for measuring fair
value and expands disclosure regarding fair value measurements. This statement
applies to other accounting pronouncements that require or permit fair value
measurements for which the FASB has previously concluded in those announcements
that fair value is the relevant measurement attribute. Accordingly, this
statement does not require any new fair value measurements. The effective date
of SFAS 157 is for fiscal years beginning after November 15, 2007, with the
ability to defer the adoption of the provisions pertaining to nonfinancial
assets and liabilities for one year. The Company does not expect this statement
to have a material impact on the Company’s results of operations or financial
position upon adoption.





3.
            ACQUISITIONS





Century Resorts Alberta,
Inc.





On
February 24, 2005, CRI purchased a 56.4% equity interest in CRA for the purpose
of developing and operating a proposed casino and hotel in Edmonton, Alberta,
Canada by contributing $2.4 million in cash to CRA. The following table
summarizes the estimated fair values of the assets acquired and liabilities
assumed at the date of acquisition:





Amounts
      in thousandsCash
            
            $
            1,679Property
      and equipment, net
            
            
            2,631Amount
      credited to minority partner
            
            
            (1,878
            )Cash
      paid
            
            $
            2,432Less:
      cash acquired
            
            
            (1,679
            )Net
      cash paid
            
            $
            753





On
January 12, 2006, CRI purchased the remaining 43.6% equity interest in CRA for
approximately $6.5 million (CAD 7.2 million). At closing, CRI paid $5.1 million
(CAD 5.8 million). 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) towards
the purchase. 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.





-F15-


Century Casino
Newcastle





On April
1, 2006, our subsidiary 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, we 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. The Sellers informed CCA that they
would not be able to sell the facility for 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). We 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. 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 the Company’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.





Century Casino
Millennium





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.





-F16-


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. The assets acquired
and liabilities assumed are reported in the consolidated balance
sheets.





Casinos Poland
Ltd





On June
13, 2006, CCE entered into an agreement to acquire 100% of all of the issued and
outstanding shares of G5, 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 G5 approximately $4.8 million (PLN 15.0 million) to repay existing loans
between G5 and its creditors. On February 1, 2007, CCE loaned G5 an additional
$1.0 million (PLN 3.0 million) to repay additional amounts to creditors. As a
result of the loan, 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). 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 an additional $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 sheet as of December 31, 2007.





-F17-


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 CTL
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 Company is in the process of finalizing its
purchase accounting for this transaction. The following table summarizes the
estimated 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
sheet. 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
            
            $
            91,654
            
            
            $
            58,893Earnings
      from Operations
            
            $
            11,027
            
            
            $
            3,028Net
      Earnings
            
            $
            4,802
            
            
            $
            6,075Earnings
      Per Share:Basic
            
            $
            0.21
            
            
            $
            0.27Diluted
            
            $
            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.





4.             EQUITY
INVESTMENT IN UNCONSOLIDATED SUBSIDIARY





Prior to
April 13, 2006, we had a 50% ownership in CM and we accounted for this
investment under the equity method. For the year ended December 31, 2005, CM had
net operating revenues of $2.1 million and a net loss of $0.4 million. The
Company only recorded its portion of CM’s losses that reduced its net investment
to zero.





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





-F18-


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





Amounts
      in thousands
            
            As
      ofDecember 31, 2007Balance
      Sheet:Current
      assets
            
            $
            3,225Noncurrent
      assets
            
            $
            20,978Current
      liabilities
            
            $
            17,757Noncurrent
      liabilities
            
            $
            1,825





March
      12, 2007
              through
              December 31, 2007Operating
      Results:Net
      operating revenue
            
            $
            39,710Net
      earnings
            
            $
            1,689





The
Company’s maximum exposure to losses at December 31, 2007 is $12.0 million, the
value of  its equity investment in CPL.





5.             PROPERTY
AND EQUIPMENT





Property and equipment at December 31,
2007 and 2006 consist of the following:





Amounts
      in thousands
            
            2007
            
            
            2006Land
            
            $
            24,894
            
            
            $
            23,833Buildings
      and improvements
            
            
            94,940
            
            
            
            86,144Gaming
      equipment
            
            
            22,016
            
            
            
            23,328Furniture
      and non-gaming equipment
            
            
            18,590
            
            
            
            16,209Capital
      projects in process
            
            
            1,829
            
            
            
            797162,269
            
            
            
            150,311Less
      accumulated depreciation
            
            
            (30,392
            )
            
            
            (25,673
            )Property
      and equipment, net
            
            $
            131,877
            
            
            $
            124,638





Depreciation
expense for the years ended December 31, 2007, 2006 and 2005 was $8.6 million,
$4.7 million and $3.3 million, respectively.





-F19-


6.
              GOODWILL
      AND OTHER INTANGIBLE ASSETS





Changes
in the carrying amount of goodwill for the years ended December 31, 2007 and
2006 are as follows:





Amounts
      in thousandsBalance
      – January 1, 2006
            
            $
            8,662Additional
      investment in CRA
            
            
            4,342Additional
      investment in CM
            
            
            (345
            )Impairment
            
            
            (237
            )Foreign
      currency translation
            
            
            (160
            )Balance
      – December 31, 2006
            
            $
            12,262Additional
      investment in CTL
            
            
            2,050Purchase
      price adjustment – CCAL
            
            
            126Foreign
      currency translation
            
            
            779Balance
      – December 31, 2007
            
            $
            15,217





During
2007, in accordance with EITF 93-7, “Uncertainties Related to Income Taxes in a
Purchase Business Combination” (“EITF 93-7”), the Company adjusted the
allocation of CCAL’s purchase price resulting from the derecognition of a
deferred tax asset established at the time of acquisition. The adjustment
decreased deferred income taxes – foreign by $0.1 million and increased goodwill
by $0.1 million.





Changes
in the carrying amount of intangible assets not subject to amortization, which
includes casino licenses, for the years ended December 31, 2007 and 2006 are as
follows:





Amounts
      in thousandsBalance
      – January 1, 2006
            
            $
            1,820Acquisition
      of CNEW
            
            
            8,911Foreign
      currency translation
            
            
            (1,390
            )Balance
      – December 31, 2006
            
            $
            9,341Purchase
      price adjustment – CNEW
            
            
            1,264Foreign
      currency translation
            
            
            175Balance
      – December 31, 2007
            
            $
            10,780





During
2007, in accordance with EITF 93-7, the Company adjusted the allocation of
CNEW’s purchase price resulting from the derecognition of a deferred tax asset
established at the time of acquisition. The adjustment decreased deferred income
taxes – foreign by $1.3 million and increased casino licenses by $1.3
million.





-F20-


7.           LONG-TERM
DEBT





Long-term
debt at December 31, 2007 and 2006 consists of the following:


Amounts
      in thousands
              
              2007
              
              2006Revolving
      Credit Facility – Cripple Creek
              $
              10,834
              $
              7,084Term
      Loan and Revolving Credit Facility – Central City
              
              19,800
              
              34,495Term
      Loan – Newcastle
              
              6,028
              
              7,146Term
      Loan – Caledon
              
              5,357
              
              6,743Term
      Loan – Edmonton
              
              20,144
              
              16,364Notes
      payable and other
              
              2,501
              
              4,873Total
      long-term debt
              
              64,664
              
              76,705Less
      current portion
              
              (8,745)
              
              (20,669)Long-term
      portion
              $
              55,919
              $
              56,036





Revolving
Credit Facility – Cripple Creek





On April21, 2000, the Company and Wells
Fargo Bank (the “Bank”) entered into an Amended and Restated Credit
Agreement, which
has since been further amended(the “Amended WomacksAgreement”).The Amended Womacks Agreement
provided the Company with an original aggregateborrowing commitment from
the Bank under a Revolving Line of Credit Facility (“WomacksRCF”)of$26 million.Based on WMCK’s maximum
leverage ratio (as defined in the Amended Womacks Agreement), there is no
remaining availability on the Womacks RCF as of December 31, 2007.The Amended Womacks
Agreement is guaranteed by the Company and permits the Company to enter into a
management agreement with WMCK, subject to certain limitations. The Amended
Womacks Agreement permitted the Company to make capital contributions to Womacks
for a specified period of time for the repayment of the outstanding obligations
under the Womacks RCF, and subsequently permits Womacks to make cash
distributions to the Company up to the amount of the Company’s capital
contributions (maximum of $7.9 million as of December 31, 2007, subject to
covenant limitations) made during the specified period.Interest on theAmended WomacksAgreement is variable based
on theLIBOR or
primeinterest
rate option selected by the Company, plus an applicable margin based onWMCK’sconsolidatedleverage ratio.TheAmended WomacksAgreement also requires a
nonusage fee based onWMCK’s
consolidatedleverage ratio on the unused portion of the commitment.The principal balance
outstanding under theAmended Womacks
Agreementas of
December 31,2007 and2006was$10.8 million and $7.1
million,
respectively.On March 14, 2008, the
maturity date was extended to December 31, 2009 and theaggregate commitment
available to the Companywas reduced to $10.0 million
by agreement.As of March 14, 2008, the
principal balance outstanding under the Amended Womacks Agreement was $7.4
million.





TheAmended Womacks
Agreementincludes certain restrictive covenants on financial ratios of WMCK.The most significant
covenants include i) a maximum leverage ratio no greater than2.00 to 1.00, ii) a minimum interest
coverage ratio no less than 2.00 to 1.00and iii) a minimum quarterly
EBITDA requirement.In the event that WMCK does
not comply with the minimum quarterly EBITDA requirement, the Company will have
the ability to make a cash payment to reduce the principal balance outstanding
under the Amended Womacks Agreement. This additional payment will be considered
EBITDA for purposes of calculating the minimum quarterly EBITDA requirement.The Company is
in compliance with the restrictive covenants on the financial ratios of WMCK
contained in theWomacksRCF as of December
31,2007
and2006.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.The interest rate at
December 31, 2007 was 7.25% for the balance of the loan
outstanding under the prime based provisions of the Amended Womacks
Agreement.





-F21-


In May
2000, we entered into a five-year interest rate swap agreement on $4.0 million
notional amount of debt under the Womacks RCF, whereby we paid a LIBOR-based
fixed rate of 7.95% and received a LIBOR-based floating rate reset quarterly
based on a three-month rate. This swap agreement expired on July 1, 2005. We
have not entered into any new swap agreements as of December 31, 2007. Our
objective for entering into the interest rate swap agreement, a derivative
instrument designated as a cash flow hedging instrument, was to eliminate the
variability of cash flows in the interest payments for a portion of the Womacks
RCF. Net additional interest expense to us under the swap agreement was $0.1
million in 2005. Including the impact of the swap and the amortization of the
deferred financing cost, the effective rate on the borrowings under the Womacks
RCF was 9.0%, 10.0% and 7.3% for 2007, 2006 and 2005, respectively.





Term
Loan and Revolving Credit Facility – Central City





On
November 21, 2005, CTL entered into a $35 million loan agreement, which has
since been amended (“Amended Tollgate Agreement”), with Wells Fargo Bank and a
syndicate of institutional lenders. The Amended Tollgate Agreement consists of a
$32.5 million construction loan and a $2.5 million revolving line of credit (“CC
Revolver”). The $32.5 million construction loan converted to a 60-month term
loan (“CC Term Loan”) on November 22, 2006 (“Conversion Date”). The CC Term Loan
and the CC Revolver will both mature on November 22, 2011. Effective December
31, 2007, the amount outstanding under the CC Term Loan is subject to quarterly
reductions of $0.6 million. Availability under the CC Revolver is conditional
upon CTL being in compliance with all of the financial and other covenants
contained in the loan agreement at the time of a particular drawdown, and the
Company’s continued ability to satisfy certain representations and warranties,
including representations as to the absence of liens on the Central City
properties other than certain permitted liens, the absence of litigation or
other developments that have or could reasonably be expected to have a material
adverse effect on the Company and its subsidiaries, and continued effectiveness
of the documents granting security for the credit facility. The interest rate on
both loans, as amended, is the greater of 6.5% or the Prime Rate plus 2.0%
(9.25% as of December 31, 2007) and a service fee of 0.5% on the total
outstanding balance, payable monthly. Upon closing, CTL incurred a facility fee
of $1.1 million payable to Wells Fargo Bank which was satisfied from the
proceeds of the loan. The Amended Tollgate Agreement is subject to a prepayment
fee, currently at 7.6%, which decreases annually to 2.3% in the 17th full
quarter after the Conversion Date through maturity; a nonusage fee of 0.75% on
the unused portion of the total commitment; 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.The Company is in compliance
with the restrictive covenants on the financial ratios ofCTLcontained in theAmended Tollgate
Agreementas of
December 31,2007 and 2006.The Amended Tollgate Agreement is secured by all of CTL’s assets and is
guaranteed by the Company. The principal balance
outstanding under theAmended Tollgate
Agreementas of
December 31, 2007 was $19.8 million,of which $17.4 million is considered long-term in the accompanying
December 31, 2007 consolidated balance sheet. During 2007, the Company made
early repayments of $12.1 million of principal towards the CC Term Loan. CTL
incurred prepayment charges of $0.3 million relating to these early repayments.
The prepayment charges have been classified as a component of long-term deferred
financing costs on the December 31, 2007 consolidated balance sheet. These
charges will be payable on the maturity of the Amended Tollgate
Agreement.


-F22-


The
Company believes that it is probable that CTL will not be in compliance with a
financial covenant for the quarter ended March 31, 2008. Prior to March 31,
2008, CTL plans to seek a waiver from Wells Fargo related to this covenant or
possibly seek an amendment to the Amended Tollgate Agreement. There can be no
assurance that Wells Fargo will grant any waiver or agree to any amendment that
might be necessary. If CTL fails to meet any of its debt covenants and Wells
Fargo does not grant a waiver or agree to amend the facility, the lenders would
have the right to declare an event of default and seek remedies, including the
acceleration of all outstanding amounts due under the Amended Tollgate Agreement
or a call for CCI to repay the loan pursuant to its guarantee.





Term Loan –Newcastle





On December 7, 2006, CNEW
received a $7.1 million (ZAR 50.0 million) term loan from Nedbank Limited
(“Nedbank”), the proceeds of which were used to fund the construction of a new
casino and hotel inNewcastle,South Africa. Pursuant to the loan
agreement, monthly principal and interest payments of approximately $0.2 million
(ZAR1.1
million) are due
on the first day of each month. The loan matures on December 7, 2011.Theterm loanbears interest at South
Africa’s prime interest rate less 1.5% (which equates to13.0%as of December 31,
2007) and is
secured by the pledge of 100% of the total outstanding common stock ofCNEW. As of December 31,
2007, $6.0 million of principal is outstanding, of which $4.8 million is
considered long-term in the accompanying December 31, 2007 consolidated balance
sheet.





Term
Loan – Caledon





On August
26, 2005, CCAL received a $9.4 million (ZAR 60.0 million) term loan from
Nedbank, the net proceeds of which were used for the repayment of existing bank
debt and additional working capital needs. In connection with the loan, CCAL and
Nedbank entered into a loan agreement specifying the terms of the loan. Pursuant
to the loan agreement, monthly principal and interest installment payments of
$0.2 million (ZAR 1.3 million) are due on the first day of each month. The loan
matures on September 1, 2010, at which time any outstanding principal and
interest will be due. The term loan bears interest at South Africa’s prime
interest rate less 1.5% (which equates to 13.0% as of December 31, 2007) and is
secured by $1.5 million (ZAR 10.0 million) of CCAL’s assets and 100% of the
issued share capital of CCAL. CCAL has the option to prepay the loan, without
penalty, upon 90 days written notice. As of December 31, 2007, $5.4 million of
principal is outstanding, of which $3.6 million is considered long-term in the
accompanying December 31, 2007 consolidated balance sheet.





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 and is required to maintain a minimum Cash Flow Coverage Ratio
(as defined in theMortgage) of
1.20. The Mortgage is secured by the assets of CRA and guaranteed by the
Company. CRA may elect to prepay up to 10%, or $2.0 million (CAD 2.0 million),
of the original principal amount of the Mortgage annually without penalty or
bonus; prepayment of any additional amounts is subject to three months interest
at the fixed interest rate. The principal balance
outstanding under theMortgageas of December 31,
2007was$20.1 million, of which $18.7 million is
considered long-term in the accompanying December 31, 2007 consolidated
balance sheet.





-F23-


The
Company has two 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. These letters of credit
guarantee to the City of Edmonton, Alberta, Canada the completion of certain
landscaping requirements at the casino. As of December 31, 2007, there were
no  balances outstanding under these letters of credit.





Notes
payable and other





As
mentioned in Note 3, CCA completed the purchase of a 60% controlling interest in
CNEW on April 1, 2006 for approximately $7.4 million (ZAR 45.5 million). The
Company has paid $7.2 million (ZAR 44.2 million) towards the purchase. The
remaining $0.2 million (ZAR 1.3 million), which is payable subject to the
finalization of a South Africa Revenue Service tax audit pertaining to periods
prior to the Company’s acquisition of its 60.0% interest, is classified as a
current liability on the December 31, 2007 consolidated balance
sheet.





In conjunction with the
purchase of CNEW, the Company agreed to reimburse the previous ownership of CNEWfor all
professional fees and disbursements incurred bythe previous ownershiprelating to the
development of thenew casino between thedate the agreements were
signed anddate of closing.As agreed, thereimbursementwilltake place when the
directors ofCNEW considerthat the available cash
resources ofCNEWso permitand will be paid from CNEW’s
available funds.As a result of this
agreement, the Company has a current liability of $1.5 million (ZAR 10.3
million) on the December 31, 2007 consolidated balance
sheet.





The remaining debt at
December 31, 2007 consists primarily of capital leases at ourCaledonandEdmontonproperties.





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





Amounts
      in thousands
            
            2007
            
            
            2006Deferred
      financing charges – current
            
            $
            426
            
            
            $
            898Deferred
      financing charges – long-term
            
            
            1,525
            
            
            
            1,168Total
            
            $
            1,951
            
            
            $
            2,066





Amortization
expenserelating
to these deferred financing charges for the years endedDecember 31,2007,2006and2005 totaled$0.5 million,$0.2millionand $0.4 million,
respectively.In 2006, the Company
capitalized approximately $0.3 million of deferred financing charges towards the
construction of our new casinos in Central City,EdmontonandNewcastle.





The consolidated weighted
average interest rate on all borrowings for Century Casinos, Inc. and
subsidiaries was9.0%,11.1% and7.0%for the years ended December
31,2007,2006and2005,respectively, excluding the
amortization of deferred financing charges.





-F24-


As of
December 31, 2007 scheduled maturities of all long-term debt are as
follows:





Amounts
      in thousandsYear ending December 31,
            
            Amount2008
            
            $
            8,7452009
            
            
            18,4152010
            
            
            7,5382011
            
            
            6,0472012
            
            
            12,107Thereafter
            
            
            11,812Total
            
            $
            64,664





8.
            ACCOUNTS
      PAYABLE AND ACCRUED LIABILITIES





Accounts
      payable and accrued liabilities are composed of the following at December
      31, 2007 and 2006:





Amounts
      in thousands
            
            2007
            
            
            2006Accounts
      payable
            
            $
            2,292
            
            
            $
            2,719Accrued
      progressive slot liability
            
            
            708
            
            
            
            654Accrued
      property taxes
            
            
            1,602
            
            
            
            417Accrued
      commissions (Alberta Gaming and Liquor Commission)
            
            
            1,057
            
            
            
            407Accrued
      construction expenditures
            
            
            -
            
            
            
            698Other
      accrued liabilities
            
            
            3,730
            
            
            
            5,730Total
            
            $
            9,389
            
            
            $
            10,625





9.
            SHAREHOLDERS’
      EQUITY





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 May 2006, the
Company issued 600,000 new shares of its common stock, at an exercise price of
$0.75 per share, for stock options exercised in cash.





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 in2007
or2006.The total remaining
authorization under the repurchase program was $1.2 million as of December 31,
2007.The repurchase program has no
set expiration or termination date.





There were11,376shares in treasury as of
December 31, 2007, at an average cost per
share of $2.26.We re-issued 153,000 shares
of treasury stock in 2007 for stock options exercised in cash, 28,000 of which
were to satisfy directors’ options. In 2006, a total of23,500 shares
were re-issued to satisfy option exercises, 16,000 of which were to satisfy
directors’ options.





Subsidiary
Preference Shares -In connection with the
granting of a gaming license to CCAL by the Western Cape Gambling and Racing
Board in April 2000, CCAL issued a total of 200 preference shares, 100 shares
each to two minority shareholders, each of whom has one seat on the board of
directors of CCAL, and neither of whom is an officer, director or affiliate of
CCI. In January 2006, 200 preference shares of a new class (“Class A shares”)
were authorized for issuance. The Class A shares are neither cumulative nor
redeemable. Each Class A share entitles the holder to dividends of 0.009% of the
annual gross gambling revenue of the Caledon Hotel, Spa & Casino after the
deduction of gaming taxes and value added tax. Furthermore, if the casino
business is sold or otherwise dissolved, for each Class A share held, the
shareholder would be entitled to 0.009% of any surplus directly attributable to
the casino business, net of all liabilities attributable to the casino business.
As of December 31, 2006, one preference shareholder accepted the offer to
transfer all 100 of its original preference shares for 100 of the new Class A
shares. In March 2007, the second of the two preference shareholders accepted
the offer to transfer all 100 of its original preference shares for 100 Class A
shares. Each preference shareholder was paid ZAR 5,000 per share as an incentive
to exchange their original preference shares for Class A
shares.





CCAL paid
$0.4 million (ZAR 2.8 million) and $0.1 million (ZAR 1.0 million) of preference
dividends in 2007 and 2006, respectively. Preference dividends were not paid,
nor were they payable, in 2005.
  -F25-


10.
            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, 2007, the
Company has granted under the EEIP and the 2005 Plan restricted common shares,
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 one-year, two-year or four-year vesting periods. Through December 31,
2007, 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, 2007, there were 1,161,210 options outstanding to employees of the
Company, of which 1,108,710 options were issued under the EEIP and 52,500
options were issued under the 2005 Plan.





-F26-


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:





2007
            2006
            2005Weighted-average
      risk-free interest rate
            
            4.99%
            -
            4.50%Weighted-average
      expected life
            
            6.25
      yrs
            -
            10.0
      yrsWeighted-average
      expected volatility
            
            47.5%
            -
            46.3%Weighted-average
      expected dividends
            
            $
      0
            -
            $
      0





The
weighted-average fair value of options granted under the 2005 Plan was $4.87 in
2007 and $4.88 in 2005. A total of 60,000 options and 35,000 options were
granted to employees under the 2005 Plan in 2007 and 2005, 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:





2007
            
            2006
            
            2005Weighted-
            
            
            Weighted-
            
            
            Weighted-Average
            
            
            Average
            
            
            AverageExercise
            
            
            Exercise
            
            
            ExerciseShares
            Price
            
            Shares
            Price
            
            Shares
            PriceEmployee Stock
      Options:Outstanding
      at January 1,
            1,368,710
            $  2.98
            
            1,986,210
            $  2.33
            
            3,464,210
            $  1.92Granted
            60,000
            9.00
            
            -
            -
            
            35,000
            7.68Exercised
            (225,000)
            2.79
            
            (607,500)
            0.78
            
            (1,513,000)
            1.50Cancelled
      or forfeited
            (42,500)
            6.80
            
            (10,000)
            7.68
            
            -
            -Outstanding
      at December 31,
            1,161,210
            $  3.19
            
            1,368,710
            $  2.98
            
            1,986,210
            $  2.33Options
      exercisable at December 31,
            589,226
            $  2.91
            
            419,614
            $  2.85
            
            759,872
            $  1.15Intrinsic
      Value of Options (in millions):Outstanding
            $   3.8
            
            
            $
      11.2
            
            
            $
      12.4Exercisable
            $   2.1
            
            
            $   3.5
            
            
            $   5.7





The
aggregate intrinsic value represents the difference between the Company’s
closing stock price of $6.44, $11.16 and $8.60 as of the last trading day of
2007, 2006 and 2005, 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, 2007 is 6.1 years.





Additionally,
25,000 options with an exercise price of $9.00 per share were issued under the
2005 Plan to independent directors of the Company in 2007. As of December 31,
2007, there were 61,000 options outstanding to independent directors of the
Company with a weighted average exercise price of $5.61.





For the
years ended December 31, 2007 and 2006, the Company recorded $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. The impact to both basic and
diluted earnings per share in 2007 and 2006 was $0.01. There was no capitalized
stock-based compensation expense.





-F27-


At
December 31, 2007, there was $0.2 million of total unrecognized compensation
expense related to unvested stock options remaining to be recognized. Of this
amount, $0.1 million will be recognized during 2008, and $0.1 million will be
recognized in subsequent years through 2011.





Prior to
the adoption of SFAS 123R, the Company presented all tax benefits resulting from
the exercise of stock options as operating cash flows in the consolidated
statement of cash flows. 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, 2007 and 2006, $0.2 million and $0.4 million,
respectively, of such excess tax benefits were classified as financing cash
flows.





In
accordance with the modified prospective transition method, the Company’s
financial statements for prior periods have not been restated to reflect
compensation expense associated with recognizing stock-based compensation under
the fair value method. The Company did not record stock-based compensation
expense related to employee stock options during 2005; however, pro forma
stock-based compensation expense for 2005 was as follows:





Amounts
      in thousands, except for share information
            
            2005Net
      earnings, as reported
            
            $
            4,481Deduct:
      Total stock-based employee compensation expense
      determinedunder
      fair value based method for all awards, net of related tax
      effects
            
            
            515Pro
      forma net earnings
            
            $
            3,966Earnings
      per shareBasic
            As
      reported
            
            $
            0.28Pro
      forma
            
            $
            0.25Diluted
            As
      reported
            
            $
            0.25Pro
      forma
            
            $
            0.22





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 year ended December 31,
2007, compensation expense related to restricted stock awards totaled $0.7
million. At December 31, 2007, there was $2.9 million of total unrecognized
compensation expense related to unvested restricted stock remaining to be
recognized. Of this amount, $1.3 million will be recognized in 2008 and $1.6
million will be recognized in subsequent years through 2011.





-F28-


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





2007Grant
      DateShares
            
            
            Fair
      ValueUnvested
      at January 1,
            
            
            -
            
            
            $
            -Granted
            
            
            400,000
            
            
            
            9.00Vested
            
            
            -
            
            
            
            -Forfeited
            
            
            -
            
            
            
            -Unvested
      at December 31,
            
            
            400,000
            
            
            $
            9.00





11.
            IMPAIRMENTS
      AND OTHER WRITE-OFFS





Impairments
      and other write-offs consist of the
following:





Amounts
      in thousands
            
            For
      the Year Ended December 31,2007
            
            
            2006
            
            
            2005Recoveries
      of receivables and advances
            
            $
            -
            
            
            $
            (402
            )
            
            $
            (30
            )Write-off
      of property held for sale
            
            
            -
            
            
            
            389
            
            
            
            32Goodwill
      impairment
            
            
            -
            
            
            
            237
            
            
            
            -Write-down
      of property and equipment
            
            
            (158
            )
            
            
            639
            
            
            
            -Other
            
            
            189
            
            
            
            31
            
            
            
            (63
            )Total Impairments and Other
      Write-Offs
            
            $
            31
            
            
            $
            894
            
            
            $
            (61
            )





Recoveries
of receivables and advances





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 earnings. In addition, as a part of
the transaction, the Company also received $0.4 million (ZAR 3.0 million)
related to the recovery of a previously written off loan. The Company has
recorded $0.4 million (ZAR 3.0 million) as a recovery to impairments and other
write-offs in the December 31, 2006 consolidated statement of
earnings.





Write-down
of property held for sale





In 2005,
the Company wrote down non-operating casino property and land held for sale
located in Wells, Nevada to its appraised value less estimated costs to sell. In
2006, the Company wrote off the remaining balance of $0.4 million.





Goodwill
impairment





The
Company performs annual tests of its goodwill and indefinite lived intangible
assets in accordance with SFAS 142. As a result of its 2006 testing, CCI
determined that the goodwill at CM was impaired. The value of CM was determined
using the present value of future cash flows, which depends on a number of
significant estimates including long-term revenue growth, CM’s ability to manage
expenses, expected operating margins and the discount rate used to calculate the
present value of cash flows.




-F29-





Write-off
      of property and equipment





For the
year ended December 31, 2006, the Company’s majority owned 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 $0.2 million in losses
primarily associated with thefts at certain of our properties.





12.
            INCOME
      TAXES





The
Company’s provision for income taxes is summarized as follows:




Amounts
      in thousands
              
              2007
              
              
              2006
              
              
              2005U.S.
      Federal – Current
              
              $
              (1,280
              )
              
              $
              (852
              )
              
              $
              (172
              )U.S.
      Federal – Deferred
              
              
              73
              
              
              
              (121
              )
              
              
              42Provision
      for U.S. federal income taxes
              
              
              (1,207
              )
              
              
              (973
              )
              
              
              (130
              )State
      – Current
              
              
              (183
              )
              
              
              (122
              )
              
              
              (54
              )State
      – Deferred
              
              
              10
              
              
              
              (16
              )
              
              
              6Provision
      for state income taxes
              
              
              (173
              )
              
              
              (138
              )
              
              
              (48
              )Foreign
      – Current
              
              
              1,544
              
              
              
              2,096
              
              
              
              720Foreign
      – Deferred
              
              
              109
              
              
              
              (851
              )
              
              
              (195
              )Provision
      for foreign income taxes
              
              
              1,653
              
              
              
              1,245
              
              
              
              525Total
      provision for income taxes
              
              $
              273
              
              
              $
              134
              
              
              $
              347
  The
Company’s effective income tax rate differs from the statutory federal income
tax rate as follows:
  2007
              
              
              2006
              
              
              2005U.S.
      Federal income tax statutory rate
              
              
              34.0
              %
              
              
              34.0
              %
              
              
              34.0
              %Foreign
      income taxes
              
              
              (27.2
              %)
              
              
              (32.4
              %)
              
              
              (21.0
              %)State
      income tax (net of federal benefit)
              
              
              (2.1
              %)
              
              
              (1.4
              %)
              
              
              (0.8
              %)Effect
      of stock option exercises
              
              
              (3.5
              %)
              
              
              (2.3
              %)
              
              
              (10.9
              %)IRS
      audit accrual
              
              
              -
              
              
              
              -
              
              
              
              2.6
              %Permanent
      and other items
              
              
              3.5
              %
              
              
              4.2
              %
              
              
              4.7
              %Total
      effective income tax rate
              
              
              4.7
              %
              
              
              2.1
              %
              
              
              8.6
              %
  -F30-
 Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. The Company’s deferred incomes taxes
at December 31, 2007 and 2006 are summarized as follows:
 
 Amounts
      in thousands
                Deferred
      tax assets (liabilities) – U.S. federal and state:
              
              2007
              
              
              2006Deferred
      tax (liabilities) – non-current:Amortization
      of goodwill for tax
              
              $
              (1,320
              )
              
              $
              (1,102
              )Other
              
              
              (45
              )
              
              
              -Total
      deferred tax (liabilities) – non-current
              
              
              (1,365
              )
              
              
              (1,102
              )Deferred
      tax assets – non-current:Property
      and equipment
              
              
              399
              
              
              
              666NOL
      carryforward
              
              
              2,919
              
              
              
              1,430Write-down
      of non-operating casino property
              
              
              325
              
              
              
              181Excess tax benefits from stock-based payment arrangementss
              
              
              608
              
              
              
              403FAS
      123R stock amortization
              
              
              309
              
              
              
              134Other
              
              
              123
              
              
              
              51Total
      deferred tax assets – non-current
              
              
              4,683
              
              
              
              2,865Net
      deferred tax assets – non-current
              
              
              3,318
              
              
              
              1,763Prepaid
      expenses – current
              
              
              (161
              )
              
              
              (112
              )Accrued
      liabilities and other – current
              
              
              156
              
              
              
              96Net
      deferred tax (liabilities) – current
              
              
              (5
              )
              
              
              (16
              )Total
      deferred tax assets  – U.S. federal and state
              
              $
              3,313
              
              
              $
              1,747
 
 Deferred
      tax assets (liabilities) – foreign:Deferred
      tax (liabilities) – non-current:Property
      and equipment
              
              $
              (1,274
              )
              
              $
              (563
              )Deferred
      tax assets – non-current:NOL
      carryforward
              
              
              611
              
              
              
              1,400Accrued
      liabilities and other
              
              
              1,634
              
              
              
              1,306Total
      deferred tax assets – non-current
              
              
              2,245
              
              
              
              2,706Net
      deferred tax assets – non-current
              
              
              971
              
              
              
              2,143Accrued
      liabilities and other – current
              
              
              339
              
              
              
              209Prepaid
      expenses – current
              
              
              (92
              )
              
              
              (16
              )Net
      deferred tax assets – current
              
              
              247
              
              
              
              193Total
      deferred tax assets – foreign
              
              $
              1,218
              
              
              $
              2,336Net
      deferred tax assets
              
              $
              4,531
              
              
              $
              4,083


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.





-F31-


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





Jurisdiction:
            PeriodsU.S.
      Federal
            
            2005-2007U.S.
      State – Colorado
            
            2003-2007Canada
            
            2005-2007South
      Africa
            
            1999-2007





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 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.





13.           EARNINGS
PER SHARE





Basic and
diluted earnings per share for the years ended December 31, 2007, 2006 and 2005
were computed as follows:





Amounts
      in thousands, except share data
            
            2007
            
            
            2006
            
            
            2005Basic
      Earnings Per Share:Net
      earnings
            
            $
            4,933
            
            
            $
            7,629
            
            
            $
            4,481Weighted
      average common shares
            
            
            23,088,140
            
            
            
            22,777,707
            
            
            
            15,923,585Basic
      earnings per share
            
            $
            0.21
            
            
            $
            0.33
            
            
            $
            0.28Diluted
      Earnings Per Share:Net
      earnings
            
            $
            4,933
            
            
            $
            7,629
            
            
            $
            4,481Weighted
      average common shares
            
            
            23,088,140
            
            
            
            22,777,707
            
            
            
            15,923,585Effect
      of dilutive securities:Stock
      options and warrants
            
            
            806,733
            
            
            
            1,149,042
            
            
            
            2,155,588Dilutive
      potential common shares
            
            
            23,894,873
            
            
            
            23,926,749
            
            
            
            18,079,173Diluted
      earnings per share
            
            $
            0.21
            
            
            $
            0.32
            
            
            $
            0.25




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





2007
            
            
            2006
            
            
            2005Stock
      options and warrants
            
            
            85,000
            
            
            
            25,000
            
            
            
            -




-F32-





14.           GEOGRAPHIC
INFORMATION


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





Long-Lived
      Assets*Amounts
      in thousands
            
            2007
            
            
            2006
            
            
            2005United
      States
            
            $
            75,782
            
            
            $
            74,099
            
            
            $
            52,554International:Canada
            
            $
            37,419
            
            
            $
            31,927
            
            
            $
            8,750Africa
            
            
            42,979
            
            
            
            38,687
            
            
            
            17,926Europe
            
            
            13,668
            
            
            
            1,528
            
            
            
            854Total
      international
            
            
            94,066
            
            
            
            72,142
            
            
            
            27,530Total
            
            $
            169,848
            
            
            $
            146,241
            
            
            $
            80,084


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





Net
      Operating RevenueAmounts
      in thousands
            
            2007
            
            
            2006
            
            
            2005United
      States
            
            $
            37,154
            
            
            $
            24,889
            
            
            $
            17,222International:Canada
            
            $
            19,297
            
            
            $
            2,325
            
            
            $
            57Africa
            
            
            30,134
            
            
            
            24,470
            
            
            
            17,015Europe
            
            
            5,069
            
            
            
            4,601
            
            
            
            3,151Total
      international
            
            
            54,500
            
            
            
            31,396
            
            
            
            20,223Total
            
            $
            91,654
            
            
            $
            56,285
            
            
            $
            37,445





15.           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
Plan – 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 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
2007, 2006 and 2005.





-F33-


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, 2007, 2006 and
2005 was $1.3 million, $0.7 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, we may purchase the property
for $3.3 million, less cumulative lease payments ($0.9 million through December
31, 2007), at any time during the lease term.





Following
is a summary of operating lease commitments as of December 31,
2007:





Amounts
      in thousandsYear ending December
      31,
            
            Amount2008
            
            $
            1,0302009
            
            
            4522010
            
            
            3582011
            
            
            2972012
            
            
            172Thereafter
            
            
            971Total
            
            $
            3,280





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.





Hermanus Road
Construction –On March
27, 2007, CCAL and the Provincial Government of the Western Cape entered into an
agreement whereby CCAL committed a maximum of $1.1 million (ZAR 8.0 million)
towards the construction of a highway between Caledon and Hermanus, South
Africa. Construction of the road was to begin by April 1, 2008. CCAL has learned
that it is more likely than not that construction will not begin by April 1,
2008, thus voiding the terms of the original agreement. As a result, the Company
expects that CCAL will no longer be liable for the road construction costs. In
addition, the Company expects that CCAL will enter into a new agreement at a
later date, the purpose and amount of which cannot presently be determined. The
agreement does not have to be with the Provincial Government, but must be
approved by the Western Cape Gambling and Racing Board.





Guarantee–As of December 31, 2007,
the Company has issued a guarantee of $1.2 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.





-F34-


16.
            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, 2007, 2006 and 2005 are cumulative
charges from Flyfish and Focus of $0.7 million, $0.5 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.





During
2007, the Company entered into an agreement with a company partially owned by
the Chairman of the Board of CNEW (who is also a shareholder of CNEW) whereby
the Company agreed to sell a parcel of land for approximately $0.2 million (ZAR
1.3 million). Pursuant to the terms of the agreement, the purchaser proposes to
develop a shopping mall attached to the Company’s casino in Newcastle, South
Africa. The closing of the agreement is subject to the purchaser satisfying
certain conditions, which the Company does not control.





17.           UNAUDITED
SUMMARIZED QUARTERLY DATA





Summarized
quarterly financial data for 2007 and 2006 is as follows:





Amounts
      in thousands,except
      share information:
            
            1st
      Quarter
            
            
            2nd
      Quarter
            
            
            3rd
      Quarter
            
            
            4th
      QuarterYear
      ended December 31, 2007Net
      operating revenue
            
            $
            21,061
            
            
            $
            22,673
            
            
            $
            24,724
            
            
            $
            23,196Earnings
      from operations
            
            $
            2,578
            
            
            $
            2,384
            
            
            $
            3,575
            
            
            $
            2,490Net
      earnings
            
            $
            1,542
            
            
            $
            1,041
            
            
            $
            1,949
            
            
            $
            401Basic
      earnings per share (1)
            
            $
            0.07
            
            
            $
            0.05
            
            
            $
            0.08
            
            
            $
            0.02Diluted
      earnings per share (1)
            
            $
            0.06
            
            
            $
            0.04
            
            
            $
            0.08
            
            
            $
            0.02





Amounts
      in thousands,except
      share information:
            
            1st
      Quarter
            
            
            2nd
      Quarter
            
            
            3rd
      Quarter
            
            
            4th
      QuarterYear
      ended December 31, 2006Net
      operating revenue
            
            $
            9,474
            
            
            $
            11,869
            
            
            $
            16,978
            
            
            $
            17,964Earnings
      (loss) from operations
            
            $
            1,528
            
            
            $
            1,056
            
            
            $
            2,666
            
            
            $
            (2,000
            )Net
      earnings (2)
            
            $
            1,690
            
            
            $
            1,331
            
            
            $
            1,851
            
            
            $
            2,757Basic
      earnings per share (1)
            
            $
            0.08
            
            
            $
            0.06
            
            
            $
            0.08
            
            
            $
            0.12Diluted
      earnings per share (1)
            
            $
            0.07
            
            
            $
            0.06
            
            
            $
            0.08
            
            
            $
            0.12


(1)
            Sum
      of quarterly results may differ from annual results presented in the
      consolidated statement of earnings and Note 13, Earnings per Share, due to
      rounding.


(2)
            During
      the 4th quarter of 2006, the Company recorded revenue associated with the
      sale of 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).




-F35-