SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

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

For the fiscal year ended:  December 31, 1997        Commission File No. 0-22290
-------------------------                            ------------------

                              CENTURY CASINOS, INC.
                              ---------------------
                 (Name of small business issuer in its charter)

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


                200 - 220 E. Bennett Ave., Cripple Creek, CO 80813
               ----------------------------------------------------
               (Address of principal executive offices)  (Zip code)

                                 (719) 689-9100
                                 --------------
                (Issuer's telephone number, including area code)

   Securities Registered Pursuant to Section 12(b) of the Exchange Act: None.
      Securities Registered Pursuant to Section 12(g) of the Exchange Act:

             Common Stock, $.01 Par Value, and 1994 Class I Warrants
             -------------------------------------------------------
                               (Title of classes)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.  Yes [X] No [ ]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B contained in this form and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]

State the issuer's revenues for its most recent fiscal year:  $19,660,018

The aggregate market value of the voting common stock held by  non-affiliates of
the registrant on March 13, 1998, was  approximately  $12,236,000 based upon the
average of the reported closing bid and asked price of such shares on Nasdaq for
that date. As of March 13, 1998,  there were  15,861,885  shares of common stock
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: Part III incorporates by reference from the
Registrant's   Definitive  Proxy  Statement  for  its  1998  Annual  Meeting  of
Stockholders  to be filed with the  Commission  within 120 days of December  31,
1997.

                                       1

<PAGE>


Item 1. Business.
----------------

General

      Century  Casinos,  Inc.  and its  subsidiaries  (the  "Company"),  own and
operate a  limited-stakes  gaming  casino in  Cripple  Creek,  Colorado  and are
pursuing a number of additional gaming opportunities  internationally and in the
United States.  Prior to July 1, 1996, the Company's operations in Cripple Creek
consisted of Legends Casino ("Legends"), which the Company had acquired on March
31, 1994, through a merger with Alpine Gaming, Inc. ("Alpine"). On July 1, 1996,
the  Company  acquired  the net assets of Gold  Creek  Associates,  L.P.  ("Gold
Creek"),  the owner of Womack's  Saloon & Gaming Parlor  ("Womacks"),  which was
adjacent to Legends.  Following the acquisition of Womacks, both properties were
renovated to facilitate  operation  and marketing of the combined  properties as
one  casino  under  the name  "Womacks/Legends  Casino."  In 1997,  the  Company
acquired  additional  property  adjacent  to  Womacks/Legends  Casino for future
expansion.  The  Company's  operating  revenue  for 1997  and  1996 was  derived
principally  from its casino  operations in Cripple Creek.  See the Consolidated
Financial Statements included herein.

      The Company was formed in 1992 to acquire  ownership  interests in, and to
obtain management contracts with respect to, gaming establishments. The Company,
formerly  known as Alpine,  is a result of a business  combination  completed on
March 31, 1994,  pursuant to which Century Casinos  Management,  Inc.  ("Century
Management")  shareholders  acquired  approximately  76% of the then  issued and
outstanding voting stock of the Company,  and all officer and board positions of
the Company were assumed by the management team of Century Management. Effective
June 7, 1994,  the Company  reincorporated  in Delaware  under the name "Century
Casinos,  Inc."  Because  the  Company  is the result of this  transaction,  the
Company's  business  has been  combined  with that of  Century  Management,  and
references  herein to the Company  refer to the  combined  entities,  unless the
context otherwise requires.

      Century  Management  was  founded  in  1992  by a team  of  career  gaming
executives  who had worked  primarily for an Austrian  gaming company that owned
and operated casinos  throughout the world.  These persons held the positions of
chief  executive  officer,  deputy  to the  chief  executive  officer,  managing
director and head of international finance and control. See Item 9 herein.

      In connection with its expansion  activities,  the Company generally seeks
to enter into gaming operations in areas with attractive demographic attributes,
high population  densities,  local tourism and/or predictable  traffic patterns,
with the long-term objective of establishing geographic project diversification.
The  Company's  primary  economic  analysis  covers the  potential  market  area
surrounding a proposed gaming location, although it takes into consideration the
economic  conditions  in any community in which it intends to establish a gaming
facility, as many gaming jurisdictions  consider gaming as a means to revitalize
local economies.  At the present time,  management  believes that there are more
growth  opportunities  internationally  than in the United States;  however, the
Company will evaluate opportunities in any area which, in management's judgment,
may provide attractive returns.

                                       2

<PAGE>


      Information  contained  in  this  Form  10-KSB  contains   forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995,  which  can be  identified  by the use of  words  such as  "may,"  "will,"
"expect,"  "anticipate,"  "estimate" or  "continue,"  or  variations  thereon or
comparable  terminology.  In addition,  all statements  other than statements of
historical  facts  that  address  activities,  events or  developments  that the
Company expects,  believes or anticipates  will or may occur in the future,  and
other such matters, are forward-looking statements.

      The  future  results  of  the  Company  may  vary  materially  from  those
anticipated  by  management,  and may be affected by various trends and factors,
which are beyond the control of the Company. These risks include the competitive
environment in which the Company  operates,  the Company's  dependence  upon the
Cripple Creek,  Colorado gaming market,  the effects of governmental  regulation
and other risks described herein.


Property and Project Descriptions

      Womacks/Legends Casino, Cripple Creek, Colorado.

      On July 1, 1996, the Company  purchased  substantially  all of the assets,
and assumed  substantially  all of the liabilities,  of Gold Creek, the owner of
Womacks in Cripple Creek,  Colorado.  The total purchase price was approximately
$14.2  million,  consisting of cash and the  assumption  of debt.  The agreement
further  provided  that two years  after the  closing,  the  Company  will issue
1,060,000  shares of its common stock,  valued at $1.8 million based on the July
1, 1996 trading price, to two principals of the seller.  The number of shares to
be issued is  subject to upward  adjustment,  determined  by a  formula,  to the
extent that the trading price of the  Company's  stock is less than $1.58 at the
time of  issuance,  and  subject to downward  adjustment  to the extent that the
trading price exceeds $4.00.  Based upon the 20-day average closing price of the
Company's  common stock preceding  December 31, 1997, the number of shares to be
issued would have been 1,595,048. At the Company's option, it may elect to issue
1,060,000  shares  together with a cash payment equal to the difference  between
$1,674,800  and 1,060,000  shares valued at the 20-day  closing price  preceding
date of issuance. The cash payment under this option would have been $561,800 at
December 31, 1997.

      Following the Company's  acquisition of Gold Creek,  the Womacks  property
was consolidated with the Company's Legends Casino, and the combined  properties
have  been  operated  and  marketed  since  then as one  casino  under  the name
"Womacks/Legends  Casino."  Management has  implemented  certain  consolidation,
expansion and capital improvement programs.  The Company (i) created openings in
the common walls in order to open up and  integrate  the gaming areas of Legends
and Womacks;  (ii) expanded the existing  player  tracking  system of Womacks to
include all of the Legends  gaming  devices;  (iii)  added and  promoted  gaming
activities on second floor areas; (iv) made general interior  enhancements;  and
(v) installed additional gaming devices and replaced older generation equipment.

                                       3

<PAGE>


      Womacks/Legends  Casino is  located at 200 to 220 East  Bennett  Avenue in
Cripple Creek,  Colorado. The lots comprising 200 to 210 East Bennett Avenue are
owned by wholly-owned  subsidiaries of the Company and are  collateralized  by a
first  mortgage  held  by  Wells  Fargo  Bank.  See  Note 5 to the  Consolidated
Financial Statements for further information.

      The  Company  holds  a  leasehold   interest  in  the  real  property  and
improvements located at 220 East Bennett Avenue. An unaffiliated third party, as
fee  owner of the  property,  granted  first and  second  deeds of trust for the
benefit of Park State Bank  ("Park")  and  Community  Banks of Colorado  Cripple
Creek ("Community"),  respectively.  The third party then leased the property to
Teller  Realty,  Inc.  ("Teller") and granted to Teller an option to acquire the
fee interest in the  property.  Teller  subsequently  executed a sublease to the
property with Gold Creek,  and granted to Gold Creek a suboption to purchase the
property through Teller's purchase option. The Company's wholly-owned subsidiary
which purchased the assets of Gold Creek, WMCK Acquisition Corp.  ("WMCK"),  has
executed separate subordination,  non-disturbance and attornment agreements with
each of Park and Community,  pursuant to which WMCK has agreed that its interest
in the sublease is subordinate to the liens arising out of the deeds of trust in
the fee estate in favor of Park and  Community.  In return,  Park and  Community
have each  agreed  (i) not to  disturb  WMCK's  possessory  rights in and to the
property, and (ii) to honor the sublease and suboption,  should either foreclose
on their  respective lien, so long as WMCK is not in default under the sublease,
and  so  long  as  WMCK  attorns  to  Park,  Community  or  any  purchaser  at a
foreclosure.  The  sublease,  as assigned to WMCK,  provides for monthly  rental
payments of $16,000,  and expires on June 20, 2005 unless terminated  earlier by
WMCK with 12 months' notice. The suboption may be exercised at the expiration of
the sublease at an exercise price of $1,500,000.  Teller,  the third party, Gold
Creek and WMCK have executed a four-party agreement evidencing the assignment of
the sublease and suboption, as well as the consent to these assignments. None of
the above entities other than WMCK is affiliated with the Company.

      On March 31,  1997,  the Company  entered  into a  four-year,  $13 million
reducing  revolving  line of credit  facility  (the "RCF") with Wells Fargo Bank
("Wells Fargo").  The initial borrowing  drawdown under the RCF of $12.2 million
on April 3, 1997, was used to retire  approximately $9.2 million of secured debt
relating to Womacks/Legends Casino. The Company also exercised a purchase option
and  acquired  a portion  of  Womacks/Legends  Casino,  previously  subject to a
long-term  operating lease, for $1.85 million.  Remaining proceeds were used for
bank fees, other costs paid at closing and for general operating  purposes.  The
RCF is  secured  by  substantially  all of the real  and  personal  property  of
Womacks/Legends Casino. On January 28, 1998, the RCF was amended to increase the
maximum  available  borrowings  to $15 million,  subject to the  completion of a
proposed property acquisition,  and provides for improved financial terms. Under
the RCF,  the Company is required to comply  with  certain  customary  financial
covenants,  and Womacks/Legends Casino is subject to certain capital expenditure
requirements  and  restrictions  on  investments.  At  December  31,  1997,  the
Company's  outstanding  borrowings under the RCF were approximately $2.8 million
less than available borrowing capacity.

      In August 1997, the Company exercised its purchase option to acquire three
lots (formerly known as the "Wright Property"),  consisting of 8,250 square feet
of land across the street from  Womacks/Legends  Casino,  for  $785,000 in cash.
This acquisition provides the Company with 30 long-term parking spaces, with the
future  potential to construct a multi-level  parking  structure and  additional
hotel rooms.

                                       4

<PAGE>


      In November 1997, the Company entered into a definitive purchase agreement
to acquire 22,000 square feet of land adjacent to Womacks/Legends  Casino, zoned
for gaming,  (formerly  known as the "Hicks  Property") for $3.6 million in cash
and  restricted  stock,  or all cash, at the Company's  option.  Closing on this
transaction  is set for the  second  quarter of 1998.  The prime  parcel of land
under contract includes a partially  constructed casino and hotel and is located
directly  to  the  rear  of  Womacks/Legends  Casino.  After  completion  of the
acquisition,  the Company will have  ownership of a total of 50,000  square feet
(or 1.15  acres)  of land  zoned for  gaming  that is  separated  only by public
throughways.  While plans for use of the property have not been  finalized,  the
recent  acquisition  enables  the  Company to proceed  with the  development  of
additional,  conveniently located parking, the addition of up to 100 hotel rooms
and the possible expansion of existing gaming space.

      Womacks/Legends Casino currently has a total of 534 slot and video devices
and five  gaming  tables  with the  potential  to add  approximately  80  gaming
positions  without  conducting  any  substantial  construction.  Womacks/Legends
Casino has 150 feet of frontage on Bennett Avenue, the main gaming  thoroughfare
in Cripple Creek, and 110 feet of frontage on Second Street,  with approximately
40,000 square feet of floor space.

      Management  believes that, in addition to providing an adequate  number of
hotel rooms, an integral component in attracting gaming patrons to Cripple Creek
is the availability of adequate, nearby parking spaces. Management believes that
it has secured or will be able to secure adequate  parking for the operations of
Womacks/Legends Casino. The Company presently controls approximately 240 parking
spaces.  Of this  number,  110 spaces are held  pursuant  to an  agreement,  see
"Parking Lease and Option to Purchase."  Approximately thirty spaces are located
on the recently acquired Wright Property and approximately 35 spaces are located
on  the  Hicks   Property.   The  remaining   parking   spaces  are  subject  to
month-to-month  lease  agreements.  Management  believes  that it  could  obtain
satisfactory  parking spaces if existing  arrangements were terminated or became
inadequate.

      Marketing  Strategy.  The  marketing  strategy of  Womacks/Legends  Casino
highlights  promotion  of  Womacks  Gold  Club,  a players  club with a database
containing  profiles on over 40,000 members.  Gold Club members receive benefits
from membership, such as cash, merchandise,  food and lodging. Those who qualify
for  VIP  status  receive  additional  benefits  in  addition  to  regular  club
membership.  Status is  determined  through  player  tracking.  Members  receive
monthly  newsletters of upcoming  events and parties,  and,  depending on player
ranking, also receive invitations to special events and monthly coupons.

      In 1996 the Company entered into a three-year  advertising  agreement with
Western  Pacific  Airlines,  Inc.  ("WestPac"),  which  provided  for WestPac to
promote the Company's  Womacks/Legends  Casino as well as other joint  marketing
and advertising activities.  In 1997, WestPac significantly revised its business
strategy  by  relocating  its hub  from  Colorado  Springs  to  Denver.  Shortly
thereafter,  WestPac  filed for  protection  under Federal  bankruptcy  laws and
completely  ceased  operations.  The  Company  believes  that  the  contract  is
terminated  and it does not expect to receive  any  further  benefits  nor incur
further  liabilities  in connection  therewith.  See Note 7 to the  Consolidated
Financial Statements of the Company for further information.

      On February 1, 1997,  Womacks/Legends  Casino  became a co-sponsor  of the
Ramblin'  Express  shuttle  bus service to Cripple  Creek.  This  agreement  was
terminated  by the Company on December 31, 1997.  Management  believes  that the
cost of the program did not generate  sufficient  incremental revenue to justify
its  continuation.  Management  has  determined  to  reallocate a portion of the
marketing budget to various other, more cost-effective campaigns.

                                       5

<PAGE>


      The Cripple Creek Market.  Cripple Creek is a small  mountain town located
approximately  45 miles southwest of Colorado Springs on the western boundary of
Pikes Peak. Cripple Creek is an historic mining town,  originally founded in the
late 1800's  following a large gold strike.  Cripple Creek is a tourist town and
its heaviest traffic is in the summer months. Traffic generally decreases to its
low point in the winter months.

      Cripple  Creek is one of three  Colorado  historical  cities  where casino
gaming is legal,  the others being Black Hawk and Central  City.  Cripple  Creek
operated  approximately  33% of the gaming  devices and  generated 25% of gaming
revenues for these three cities  during the year ended  December 31, 1997. As of
December 31, 1997, there were 21 casinos operating in Cripple Creek.

      The tables below set forth information obtained from the Colorado Division
of Gaming  regarding  gaming revenue by market and slot machine data for Cripple
Creek from calendar 1994 through 1997.  This data is not intended by the Company
to imply,  nor should  the reader  infer,  that it is any  indication  of future
Colorado or Company gaming revenue.

                            GAMING REVENUE BY MARKET
                                   (in $'000)
<TABLE>
<CAPTION>

                                   % change              % change             % change              % change
                                     Over                  Over                  Over                 Over
                           1994   Prior Year    1995    Prior Year    1996   Prior Year    1997    Prior Year
                       ---------   --------   --------   --------  ---------  ---------  --------   --------
<S>                    <C>         <C>        <C>        <C>       <C>        <C>        <C>       <C>
    CRIPPLE CREEK       $82,319      19.8%    $ 94,019     14.2%    $103,373     9.9%    $108,628     5.1%
    Black Hawk         $173,704      71.0%    $195,857     12.8%    $219,911    12.3%    $234,631     6.7%
    Central City        $69,702     -11.7%    $ 94,468     35.5%    $ 88,870    -5.9%    $ 87,391    -1.7%
                       ---------   --------   --------   --------  ---------  ---------  --------   --------
    COLORADO TOTAL     $325,725      30.7%    $384,344     18.0%    $412,154     7.2%    $430,650     4.5%

</TABLE>

<TABLE>
<CAPTION>

                             CRIPPLE CREEK SLOT DATA

                                   % change              % change              % change             % change
                                     Over                  Over                  Over                 Over
                          1994    Prior Year   1995    Prior Year    1996     Prior Year   1997    Prior Year
                       ---------   --------   --------   --------  ---------  ---------  --------   --------
<S>                     <C>          <C>       <C>        <C>        <C>        <C>      <C>        <C>
    Total Slot Revenue  $75,979      20.2%     $87,311     14.9%     $97,024    11.1%    $102,798     6.0%
    (in $'000)
    Average Number
    Of Slots              3,285      -4.4%       3,843     17.0%       4,175     8.6%       4,507     8.0%
    Average Win Per
    Slot Per Day            $63      25.8%         $62     -1.8%         $63     2.0%         $62    -1.6%
</TABLE>

                                       6

<PAGE>


      Gaming in Colorado is "limited  stakes," which  restricts any single wager
to a maximum of $5.00.  While this limits the revenue  potential of table games,
management believes that slot machine play, which accounts for over 95% of total
gaming revenues, is currently impacted only marginally by the $5.00 limitation.

      The Company faces intense competition from other casinos in Cripple Creek,
including a handful of casinos of similar size and many other  smaller  casinos.
There can be no assurance that other casinos in Cripple Creek will not undertake
expansion  efforts  similar  to those  recently  taken by the  Company,  thereby
further increasing competition, or that large, established gaming operators will
not enter the Cripple Creek market.  The Company seeks to compete  against these
casinos through  promotion of Womacks Gold Club and superior service to players.
Management  believes that the casinos likely to be more successful and best able
to take  advantage of the market  potential of Cripple  Creek will be the larger
casinos that have reached a certain critical mass.

                   CENTURY CASINOS' PROPERTY IN CRIPPLE CREEK
                      (presently "Womacks/Legends Casino")

<TABLE>
<CAPTION>
                                           % change            % change            % change
                                             Over                Over                Over
                         1994      1995   Prior Year   1996   Prior Year    1997  Prior Year
                       --------- --------  --------  --------  --------   -------- --------
<S>                      <C>      <C>     <C>         <C>       <C>        <C>       <C>  
    Total Slot Revenue   $2,079   $3,266    57.1%     $10,078   208.6%     $18,102   79.6%
    (in $'000)
    Average Number
    Of Slots                141      172    22.0%         342    98.8%         547   59.9%
    Average Win Per
    Slot Per Day         $53.62   $52.02    -3.0%      $80.51    54.8%      $90.67   12.6%
    Market Share in %      2.8%     3.8%    34.3%       10.1%   165.8%       17.2%   70.0%
</TABLE>

      The  Company  competes,  to a far lesser  extent,  with  approximately  19
casinos in Black Hawk and  approximately  12 casinos in Central City. Black Hawk
and Central City are also small mountain tourist towns,  which adjoin each other
and are  approximately  30 miles from Denver and a two and  one-half  hour drive
from Cripple  Creek.  The main market for Cripple Creek is the Colorado  Springs
metropolitan  area,  and the main market for Black Hawk and Central  City is the
Denver metropolitan area.

      In addition,  there is intense  competition  among companies in the gaming
industry generally,  and many gaming operators have greater name recognition and
financial and marketing  resources than the Company.  The Company  competes with
many  established  operators in gaming venues other than Cripple Creek.  Many of
these operators have greater financial, operational and personnel resources than
the  Company.  There can be no  assurance  that the  number of casino  and hotel
operations  will not exceed  market  demand or that  additional  hotel  rooms or
casino capacity will not adversely affect the operations of the Company.

                                       7

<PAGE>


      Description  of  Property.  The  Company's   Womacks/Legends  Casino  is
described in Item 1 "Business".

      Parking Lease and Option to Purchase.  In October  1995,  an  unaffiliated
third party entered into an agreement with a subsidiary of the Company,  Century
Casinos Cripple Creek, Inc. ("CCC"),  to assign to CCC a parking lease ("Lease")
with an option to purchase  ("Option")  relating to approximately 110 contiguous
parking  spaces in Cripple  Creek.  The Lease and Option expire on September 30,
1998. The initial payment to the assignor was $246,000, with CCC agreeing to pay
an additional $88,400 if the Option is exercised. Lease payments are $15,000 per
quarter. The Option exercise price is $3,250,000.

Additional Projects of the Company

      In addition to  Womacks/Legends  Casino in Cripple  Creek,  Colorado,  the
Company  has a  number  of  potential  gaming  projects  in  various  stages  of
development. In addition to the capital needs of these potential projects, there
are various other risks which, if they materialize,  could materially  adversely
affect a proposed project or eliminate its feasibility altogether.  For example,
in order to conduct gaming  operations in most  jurisdictions,  the Company must
first  obtain  gaming  licenses or receive  regulatory  clearances.  To date the
Company has obtained gaming licenses or approval to operate gaming facilities in
Colorado,  Louisiana and on an American Indian reservation in California.  While
management  believes that the Company is licensable  in any  jurisdiction,  each
licensing  process is unique  and  requires  a  significant  amount of funds and
management time. The licensing  process in any particular  jurisdiction can take
significant time and expense through  licensing fees,  background  investigation
costs, fees of counsel and other associated preparation costs. Moreover,  should
the Company proceed with a licensing  approval  process with industry  partners,
such  industry  partners  would be subject  to  regulatory  review as well.  The
Company  seeks to satisfy  itself 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 the Company is licensable,  other factors such as the
economic  impact  of  gaming  and  financial  and  operational  capabilities  of
competitors  must be  analyzed  by  regulatory  authorities.  All of these risks
should be viewed in light of the Company's limited staff and limited capital.

      Also, the Company's ability to expand to additional  locations will depend
upon a number of factors,  including, but not limited to: (i) the identification
and  availability  of suitable  locations,  and the  negotiation  of  acceptable
purchase,  lease,  joint  venture or other terms;  (ii) the securing of required
state and local licenses, permits and approvals, which in some jurisdictions are
limited in number; (iii) political factors;  (iv) the risks typically associated
with any new construction project; (v) the availability of adequate financing on
acceptable  terms;  and (vi) for locations  outside the United  States,  all the
risks of foreign  operations,  including  currency  controls,  unforeseen  local
regulations,   political   instability   and  other   related   risks.   Certain
jurisdictions  issue  licenses or  approval  for gaming  operations  by inviting
proposals from all interested parties,  which may increase  competition for such
licenses or approvals.  The  development  of dockside and riverboat  casinos may
require  approval  from  the Army  Corps of  Engineers  and will be  subject  to
significant  Coast Guard  regulations  governing  design and operation.  Most of
these factors are beyond the control of the Company.  As a result,  there can be
no assurance that the Company will be able to expand to additional locations or,
if such  expansion  occurs,  that it will be  successful.  Further,  the Company
anticipates  that  it  will  continue  to  expense  certain  costs,  which  were

                                       8

<PAGE>


substantial  in 1996 and 1997 and may continue to be  substantial in the future,
in  connection  with the pursuit of expansion  projects,  and may be required to
write off any capitalized  costs incurred in connection with these ventures.  In
1996 the  Company  terminated  its  pursuit  of a  previously  disclosed  gaming
development  project in Louisiana due to the rejection of a gaming initiative by
local citizenry.

      The following describes other activities of the Company.

      Casino Management Agreement-Rhodes,  Greece. In 1995, the Company executed
a casino management  consulting agreement with Rhodes Casino, S.A., a consortium
including Playboy Enterprises,  Inc., under which the Company, as an independent
contractor,  will supply services and assistance in establishing a casino on the
island of Rhodes,  Greece. The consortium has been awarded the exclusive license
for casino  gaming on Rhodes  for a 12-year  period  commencing  when the casino
begins  operations.  The  Company's  management  consulting  agreement  with the
consortium,  which has an initial term running through the third  anniversary of
the casino opening, provides for fees to the Company of $200,000 for services to
be rendered in the pre-opening  phase,  $300,000 per year during the first three
years of operation and $50,000 per year thereafter,  if renewed.  The Company is
not required to commit any capital in  connection  with the proposed  activities
under the agreement. In the fourth quarter of 1996, the Company received $50,000
with respect to pre-opening  phase services.  Because the consortium has revised
target  opening dates for the casino on several  occasions,  the Company  cannot
predict whether the casino opening will occur in 1998.

      South Africa.  Recently  enacted  legislation in South Africa provides for
the award of up to 40 casino  licenses  throughout the country.  The Company has
entered into agreements with four local consortia to provide consulting services
during the application  phase, as well as casino management  services should the
Company's partners be awarded one or more licenses. The first application was by
the Company's  partners in the province of  Mpumalanga  and was  eventually  not
successful in being awarded a license.  The second application was by Green Oaks
Trading (Pty) Ltd., which withdrew its application during the process. The third
application  was filed on June 17, 1997 with the Gambling  and Betting  Board in
the province of Gauteng for a  hotel/casino  resort in the greater  Johannesburg
area. The Gauteng  Gambling and Betting board has awarded four of a possible six
casino  licenses  and has made  known  its  intent to award  the  remaining  two
licenses by the end of March 1998.  Silverstar  Development Ltd., the consortium
to which the  Company  is the  contracted  casino  management  partner,  was not
awarded one of the four licenses but is continuing  its efforts to secure one of
the two  remaining  licenses for the province of Gauteng.  If successful in this
application,   the  Company   would  be  required  to  make  an   investment  of
approximately $2 million for a 3.8% equity interest in the licensee.  The fourth
application was filed on January 31, 1998, by the Company's partner, Great North
Resorts Limited, for a casino license in Pietersburg,  the provincial capital of
the  Northern  Province.  The Company has been  selected by Great North  Resorts
Limited as its contracted management/consulting gaming partner and holds a small
equity  position  in the  applicant.  A final  decision on this  application  is
expected late in the second quarter or in the third quarter of 1998. The Company
cannot predict  whether any licenses will ultimately be awarded to the Company's
partners.

                                       9

<PAGE>


      Kamloops,  British  Columbia . On November 28, 1997,  the Kamloops  Indian
Band of British Columbia,  Canada, in cooperation with the Company,  presented a
proposal  for a $40 million  destination  casino  resort  complex to the British
Columbia  Lottery  Advisory  Committee.  The Company has reached an agreement in
principle to become the casino management/consulting  partner in case of license
award. The Company was paid a fee for its consulting services in connection with
the  application  process,  and final terms of the management  agreement will be
negotiated in the event licensing details become available. The British Columbia
Lottery Advisory  Committee has indicated that they intend to announce awards of
licenses late in the second quarter of 1998.

      Cruise  Vessels -  Concession  Agreements.  The Company has been acting as
casino  concessionaire  for Silver Seas Cruises,  Ltd. ("Silver Seas"), a cruise
vessel  operator  which  presently  operates  two luxury  vessels.  Silver  Seas
commenced  operating  the vessel known as the Silver Cloud in April 1994 and the
vessel known as the Silver Wind in January  1995.  The  Company's  concession to
provide unlimited-stakes gaming on the Silver Cloud and the Silver Wind, expired
in April 1997 and January 1998, respectively.

      Nonoperating  Casino in Wells,  Nevada. In 1994, the Company purchased the
Ranch House Casino in Wells, Elko County, Nevada from an unaffiliated party. The
total purchase price of $850,000,  including a note secured by the property, was
determined based on arm's length  bargaining with the seller. In April 1997, the
Company paid off all amounts  owed to the seller and now owns the property  free
and clear.  The  property,  closed since 1992 but in operable  condition,  is an
18,000  square foot  building  with  approximately  6,000  square feet of gaming
space.  Management  currently  does not intend to pursue a gaming  license  with
respect to the facility, and is seeking a sale or lease of the casino and land.

      Sale of Interest in  Riverboat  Project in Indiana - In December  1995 the
Company sold its 80% interest in Pinnacle Gaming Development Corp.  ("Pinnacle")
to  an   affiliate   of   Hilton   Gaming   Corporation   and   Boomtown,   Inc.
("Hilton/Boomtown").  Pinnacle  had been  pursuing a  riverboat  gaming  license
application  in Switzerland  County,  Indiana.  Upon signing the agreement,  the
Company  received a cash payment of $80,000 and recognized a gain on the sale of
its investment of $26,627. The agreement provides for additional payments to the
Company of up to  approximately  $3.3  million  upon the  occurrence  of certain
events.  The Company will recognize future  payments,  if any, from the buyer as
income when earned.  In December  1997 the Indiana  Gaming  Commission  voted to
delay a decision on the award of any additional riverboat gaming licenses for at
least one year, until the economic impact of the four existing licenses could be
more fully evaluated.

      Indian  Tribal  Management  Agreement  -  California  - In August 1995 the
Company  terminated  its  management  agreement  with the Soboba Band of Mission
Indians (the "Tribe") with respect to the Legends  Casino at Soboba in Riverside
County,  California.  In connection with the termination,  an unaffiliated third
party issued a promissory note to the Company for $3,100,000  payable over three
years in monthly  installments,  based on a  percentage  of gross  revenue  from
certain  operations of the facility.  Through December 31, 1997, the Company has
received  cumulative  payments on the promissory note totaling  $1,922,475.  The
Company  has  applied   payments   received  as  recovery  of  costs  previously
capitalized  under  the  management  agreement.  Capitalized  costs  were  fully
recovered in the fourth quarter of 1997. Subsequent payments have been, and will
continue to be,  recognized  as income  when  received.  The Company  recognized
income of $81,971 in 1997 from payments received.

                                       10

<PAGE>


      There continues to be a dispute within the State of California between the
state  government  and Indian tribes  regarding the types of gaming devices that
may be operated at casinos on Indian  tribal  lands.  An outcome  adverse to the
Indian  tribes could  affect the ability of the note obligor to earn  sufficient
revenue to satisfy the  remaining  amount due under the  promissory  note to the
Company,  which  amount was  $1,177,525  at December 31,  1997,  excluding  late
payment interest on amounts already received.  The Company, at this time, cannot
predict the likelihood of an outcome adverse to the Company.  The Company cannot
predict the amount of remaining payments that will be received under the note.

      Portage des Sioux, Missouri. In 1994, the Company entered into a riverboat
development  agreement  with  the  City of  Portage  des  Sioux,  Missouri.  The
agreement  provided that the Company would be the developer and operator for the
development  of a  riverboat  gaming  enterprise,  and that the City  would  not
actively pursue additional or alternative casino operations. The Company elected
not to renew this  agreement,  which expired on February 25, 1997.  Although the
Company maintains  current a gaming  application filed in November 1994 with the
Missouri  Gaming  Commission,  management  believes  that  consideration  of the
Company's application is unlikely in the foreseeable future.

Employees

      The Company employs  approximately 200 persons on an equivalent  full-time
basis,  including  cashiers,  dealers,  food  and  beverage  service  personnel,
facilities  maintenance staff, and accounting and marketing personnel.  No labor
unions represent any employee group. A standard package of employee  benefits is
provided  to  full-time  employees  along  with  training  and  job  advancement
opportunities. In March 1998 the Company adopted a 401(k) Savings and Retirement
Plan for its employees.

Seasonality

      The  Company's  business is not  considered to be seasonal;  however,  the
anticipated  highest  levels of business  activity,  at least in Colorado,  will
occur in the tourist season (i.e., from May through  September).  Its base level
(i.e.,  November  through May) is expected to remain  fairly  constant  although
weather  conditions  during  this  period  could  have a  significant  impact on
business levels in Colorado.

                           GOVERNMENTAL REGULATION

      The  Company's  gaming  operations  are  subject  to  strict  governmental
regulations at state and local levels.  Statutes and regulations can require the
Company to meet various  standards  relating to, among other  matters,  business
licenses,  registration of employees,  floor plans, background investigations of
licensees and employees, historic preservation, building, fire and accessibility
requirements,  payment of gaming taxes,  and regulations  concerning  equipment,
machines,  tokens,  gaming  participants,  and  ownership  interests.  Civil and
criminal  penalties can be assessed  against the Company  and/or its officers or
stockholders to the extent of their individual  participation in, or association
with, a violation of any of the state and local gaming  statutes or regulations.
Such laws and regulations apply in all jurisdictions within the United States in
which the Company may do business.  Management  believes  that the Company is in
compliance with applicable  gaming  regulations.  For purposes of the discussion
below, the term "the Company" includes its applicable subsidiaries.

                                       11

<PAGE>


Colorado Regulation

      The Colorado Limited Gaming Control Commission  ("Commission") has adopted
regulations  regarding the ownership of gaming  establishments  by publicly held
companies (the  "Regulations").  The Regulations  require the prior clearance or
notification  of the Commission  before any public offering of any securities of
any gaming  licensee or any  affiliated  company.  The  Regulations  require all
publicly  traded or publicly  owned  gaming  licensees  to comply with  numerous
regulatory gaming requirements.  These requirements include, but are not limited
to, those listed below.

      A publicly  traded gaming licensee that sends to the holders of its voting
securities  any proxy  statements  subject to Regulation  14A of the  Securities
Exchange Act of 1934, as amended (the "1934 Act"),  or an information  statement
subject to  Regulation  14C of the 1934 Act,  must file such  material  with the
Colorado Division of Gaming (the "Colorado Division").

      Whenever any document is furnished to the holders of voting  securities of
a publicly  traded gaming licensee or filed by a publicly traded gaming licensee
with the SEC, the  publicly  traded  gaming  licensee is required to file a true
copy of that document  with the Colorado  Division.  Whenever a publicly  traded
gaming licensee  receives any material  document filed with the SEC by any other
person relating to the publicly traded gaming licensee, it must file a true copy
of the document with the Colorado Division. Each publicly traded gaming licensee
must file with the Colorado Division,  on an annual basis, a list of the holders
of its voting securities.

      Each publicly traded gaming licensee is required to report promptly to the
Colorado  Division the election or  appointment  of any director,  any executive
officer  and  any  other   officers   actively  and  directly   engaged  in  the
administration  or supervision of the gaming  activities at any licensed  gaming
establishment.

      The following provisions are required to be included in the certificate of
incorporation for every publicly traded gaming licensee or holding company which
has a gaming license in the State of Colorado.

    (i)   The entity is precluded from issuing any voting  securities  except in
          accordance  with the  provisions  of the Colorado  Limited  Gaming Act
          ("Gaming  Act")  and  the  regulations  promulgated  thereunder.   The
          issuance of any voting  securities  in  violation of the Gaming Act is
          ineffective and such voting securities are deemed not to be issued and
          outstanding  until  (a)  the  entity  ceases  to  be  subject  to  the
          jurisdiction of the Commission,  or (b) the Commission, by affirmative
          action, validates the issuance or waives any defect in the issuance.

    (ii)  No voting  securities  issued by the  entity  and no  interest  in the
          entity can be transferred in any manner except in accordance  with the
          provisions  of the Gaming Act and its  regulations.  Any  transfer  in
          violation of the Gaming Act is ineffective until (a) the entity ceases
          to be  subject  to the  jurisdiction  of the  Commission,  or (b)  the
          Commission,  by affirmative  action,  validates the transfer or waives
          the defect in the transfer.

    (iii) If the  Commission  at any time  determines  that a holder  of  voting
          securities of the entity is unsuitable  to hold the  securities,  then
          the issuer of the securities  may, within 60 days after the finding of
          unsuitability, purchase the securities of the unsuitable person at the
          lesser of (i) the cash  equivalent of such person's  investment in the

                                       12

<PAGE>


          entity,  or (ii) the  current  market  price of the date of finding of
          unsuitability,  unless the  securities  are  transferred to a suitable
          person,  as  determined  by the  Commission,  within 60 days after the
          finding of  unsuitability.  Until the  securities are owned by persons
          found by the  Commission to be suitable to own them, (a) the entity is
          not required or permitted to pay any dividend or interest  with regard
          to the securities, (b) the holder of the securities is not entitled to
          vote on any matter as the holder of the securities and such securities
          shall not for any purpose be included in the voting  securities of the
          entity,  and (c) the entity is precluded from paying any  remuneration
          in any form to the holder of the securities.

      The Company has the above provisions in its Certificate of Incorporation.

      The  Colorado  regulations  for  publicly  traded  gaming  licensees  (the
"Regulations")  also require each person who individually or in association with
others acquires,  directly or indirectly,  beneficial ownership of 5% or more of
any class of voting  securities of a publicly  traded gaming  licensee to notify
the Colorado Division within 10 days after the person acquired 5% or more of the
securities.  The person who acquires 5% or more of the securities  shall provide
any additional  information requested by the Colorado Division and be subject to
a finding of suitability as required by the Colorado  Division.  Publicly traded
gaming  licensees  are also  required  to  notify  each  person  subject  to the
Regulations  of the  Colorado  Division's  requirements  as soon  as the  gaming
licensee becomes aware of the acquisition.

      Each person who,  individually  or in association  with others,  acquires,
directly or indirectly,  the beneficial ownership of 10% or more of any class of
voting  securities of a publicly traded gaming licensee  required to contain the
above charter provisions is required to apply to the Commission for a finding of
suitability  within 10 days after  acquiring  10% or more of the  securities.  A
publicly  traded gaming  licensee is also required to notify each person subject
to the Regulations of its  requirements  as soon as the gaming licensee  becomes
aware of the acquisition.  However, the obligations of the person subject to the
Regulations are independent of and unaffected by the gaming  licensee's  failure
to give the notice.

      Any person found  unsuitable by the Commission is not permitted  ownership
of any voting  security of a publicly  traded  gaming  licensee,  subject to the
provisions of the Regulations, and must be removed immediately from any position
as a director, officer or employee of the publicly traded gaming licensee.

      The State of Colorado created the Colorado  Division within the Department
of Revenue to license, implement,  regulate and supervise the conduct of limited
gaming.  The  Director of the  Colorado  Division,  under the  supervision  of a
five-member  Colorado  Commission,  has  been  granted  broad  power  to  ensure
compliance with the law, and regulations  adopted  thereunder.  The Director may
inspect, without notice, premises where gaming is being conducted; he may seize,
impound or remove any gaming  device.  He may  examine  and copy any  licensee's
records,  may  investigate  the  background  and conduct of licensees  and their
employees,  and may bring  disciplinary  actions.  He may also conduct  detailed
background checks of persons who loan money to the Company.

      The  Commission  is  empowered  to issue  five  types of gaming and gaming
related licenses. The Colorado Division has broad discretion to revoke, suspend,
condition,  limit or restrict a license at any time.  The license of the Company
must be renewed  each year.  All licenses are  revocable,  non-transferable  and
valid only for the particular location initially authorized.  No person, such as
the Company,  can have an ownership interest in more than three retail licenses.

                                       13

<PAGE>


Hence,  the  Company's  business  opportunities  in  Colorado  could be  limited
accordingly. All of the Company's employees must apply for and receive a support
gaming  license  prior to  commencing  employment.  The  Commission  has adopted
comprehensive  rules and  regulations  which  require  the  Company to  maintain
adequate  books and records and these rules also  prescribe  minimum  operating,
security and payoff procedures. The Commission has the power to deny any license
or renewal  thereof  to any person it  considers  to be  "unsuitable,"  a broad,
discretionary  standard.  The Commission has also promulgated a list of excluded
persons;  it is unlawful for any person on this list to enter licensed  premises
or to hold shares in a licensee.  Rules  regarding  gaming,  cheating  and other
fraudulent  practices  have also  been  adopted,  which  rules  the  Company  is
obligated to police and enforce.

      Other state  regulatory  agencies  also impact the  Company's  operations,
particularly its license to serve alcoholic beverages.  Rules and regulations in
this  regard  are  strict,  and loss or  suspension  of a liquor  license  could
significantly  impair,  if not ruin, a  licensee's  operation.  Local  building,
parking and fire codes and similar  regulations  could also impact the Company's
operations and proposed development of its properties.

Item 2. Properties.
------------------

      The Company moved its corporate offices to its  Womacks/Legends  Casino at
200 - 220 East Bennett Avenue, Cripple Creek, Colorado, and rents a small office
at 999 18th Street,  Suite 1810,  Denver,  Colorado  pursuant to a lease with an
unaffiliated  party.  The lease term runs through April 2001,  and monthly lease
payments are $1,470.  The Company remains  obligated under two office leases for
its former corporate offices in Denver and Colorado Springs.  Both leases expire
in September  1998. The Company has sublet the space in the former Denver office
to an unaffiliated  third party for the remainder of the lease term. The Company
pays  monthly rent of $6,162 and  receives  monthly  payments of $6,200 from the
subtenant.  In January  1998,  coincident  with  vacating its  Colorado  Springs
office, the Company recognized a liability of $35,000 for the remaining payments
due under the lease. The Company is seeking a suitable subtenant for this space.
See Item 1.  "Business  --  Property  and  Project  Descriptions"  herein  for a
description of the Company's other properties.

Item 3. Legal Proceedings.
-------------------------

      The Company is not a party to any litigation,  which is individually or in
the aggregate material to the Company.

Item 4. Submission of Matters to a Vote of Securityholders.
----------------------------------------------------------

      No matters  were  submitted  to a vote of security  holders of the Company
during the quarter ended December 31, 1997.

                                       14

<PAGE>


Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
-----------------------------------------------------------------------------

      The common  stock of the  Company  began  trading  in the Nasdaq  SmallCap
Market on November 10, 1993. The following table sets forth the low and high bid
price per share  quotations  as  reported on the NASDAQ  SmallCap  Market of the
common stock for the periods indicated.  These quotations  reflect  inter-dealer
prices,  without retail markup,  mark down or commission and may not necessarily
represent actual transactions. Actual prices may vary.

Quarter Ended            Low         High
------------------------------------------

March 31, 1996           $1.50       $2.13
June 30, 1996            $1.13       $2.00
September 30, 1996       $1.25       $1.69
December 31, 1996        $1.06       $1.81
March 31, 1997           $0.97       $1.47
June 30, 1997            $0.91       $1.31
September 30, 1997       $0.38       $0.94
December 31, 1997        $0.72       $1.38

      At December 31, 1997, the Company had  approximately  100  shareholders of
record of its common stock;  management  estimates that the number of beneficial
owners is approximately 1,000.

      At the present time, management of the Company intends to use any earnings
which  may be  generated  to  finance  the  growth  of the  Company's  business.
Accordingly, while payment of dividends rests within the discretion of the Board
of Directors,  no dividends  have been  declared or paid by the Company,  and it
does not presently intend to pay dividends.

Item 6. Management's Discussion and Analysis of Financial Condition and  Results
--------------------------------------------------------------------------------
        of Operations.
        -------------


Business Environment and Risk Factors

      The following  discussion should be read in conjunction with the Company's
consolidated  financial  statements and related notes included elsewhere herein.
The Company's  future  operating  results may be affected by various  trends and
factors,  which are beyond the Company's  control.  These  include,  among other
factors,  the  competitive  environment in which the Company  operates,  present
dependence upon the Cripple Creek, Colorado gaming market,  changes in the rates
of  gaming-specific  taxes,  shifting public attitudes toward the  socioeconomic
costs and benefits of gaming, actions of regulatory bodies,  dependence upon key
personnel,  the  speculative  nature of gaming  projects the Company may pursue,
risks associated with expansion,  and other uncertain  business  conditions that
may affect the Company's business.

                                       15

<PAGE>


      With the exception of historical information,  the matters discussed below
under the headings "Results of Operations" and "Liquidity and Capital Resources"
may include forward-looking statements that involve risks and uncertainties. The
Company cautions the reader that a number of important factors discussed herein,
and in other reports filed with the  Securities and Exchange  Commission,  could
affect  the  Company's  actual  results  and  cause  actual  results  to  differ
materially from those discussed in forward-looking statements.

Results of Operations

      As  discussed  more  fully  in  Note  3  to  the  consolidated   financial
statements,  on July 1,  1996,  the  Company  acquired  the assets of Gold Creek
Associates,  L.P.  ("Gold  Creek"),  owner of  Womack's  Saloon & Gaming  Parlor
("Womacks") in Cripple Creek,  Colorado.  Following the Company's acquisition of
Gold Creek,  the Womacks property was  consolidated  with the Company's  Legends
casino.  Subsequent to June 30, 1996, the combined properties have been operated
and  marketed  as  one  casino  under  the  name  Womacks/Legends   Casino.  The
accompanying  financial  statements  include the results of operations  acquired
from Gold  Creek  for the  period  subsequent  to June 30,  1996.  Consequently,
results of operations for 1997 cannot be readily compared with those of 1996.

      Net operating revenue increased to $19,660,018 in 1997 from $11,478,042 in
1996,  primarily as a result of the  acquisition  of Gold Creek on July 1, 1996.
Casino revenue was  $19,096,857 in 1997 and  $10,984,499 in 1996, an increase of
74%. The  Company's  share of the Cripple Creek market  increased  from 17.8% in
December 1996 to 19.5% in December  1997,  with an average market share of 17.4%
for all of 1997.  On a pro  forma  basis,  casino  revenue  for  Womacks/Legends
increased  13.1% from 1996 to 1997,  compared  with growth of the Cripple  Creek
market of 5.1%.  Womacks/Legends Casino operated approximately 12% of the gaming
devices in the Cripple Creek market in 1997.  Casino  revenue from the Company's
cruise ship  concessions  decreased from $546,958 to $446,841 as a result of the
expiration of the Silver Cloud agreement in April 1997. The concession agreement
for the second ship, the Silver Wind, expired in January 1998. Gross margin from
company-wide  casino activities  decreased from 58% in 1996 to 45%. The decrease
in margin is principally  attributable to a higher average  effective gaming tax
rate, as well as the costs of the Womacks/Legends  Casino busing program and the
WestPac  logojet  marketing  program  in  1997.  Both  marketing  programs  were
discontinued at the end of 1997. The increased  gaming taxes and marketing costs
were partially offset by proportionately lower payroll costs.

      Food and  beverage  revenue  increased  70%  from  1996 to 1997 due to the
larger scale of operations  resulting from the Gold Creek acquisition.  The cost
of food and beverage promotional allowances, which are included in casino costs,
increased to $973,609 in 1997 from  $439,811 in 1996.  Hotel  revenue  increased
from  $31,443 to $57,167,  principally  as a result of the  inclusion  of a full
year's results in 1997 compared with a half year in 1996.

      Other revenue primarily consists of  Womacks/Legends  Casino's parking lot
revenue and gift shop  sales.  The  decrease in other  revenue was mainly due to
receipt of nonrecurring consulting and licensing fees in 1996.

                                       16

<PAGE>


      General and  administrative  expenses increased from $4,254,666 in 1996 to
$5,247,763 in 1997, but as a percentage of net operating  revenue decreased from
37% to 27%.  Contributing to the percentage decrease were proportionately  lower
payroll,  rent and  travel  expenses  in 1997.  The 1996  amount  also  includes
$150,000 of  up-front  costs  related to the  Company's  three-year  advertising
agreement with WestPac.

      Depreciation  increased  from  $894,561  in  1996  to  $1,607,148  in 1997
primarily  as the result of a full year's  depreciation  on the assets  acquired
from Gold  Creek and,  to a lesser  extent,  due to the  exterior  and  interior
renovations  undertaken in the latter half of 1996 and continuing into 1997. The
increase in  amortization  expense of $300,000  from 1996 to 1997 results from a
full year of goodwill amortization related to the Gold Creek acquisition.

      Interest expense  increased from $577,914 to $1,039,147 as a result of the
debt incurred to partially finance the Gold Creek  acquisition.  The other items
included in the caption "Other expense,  net" in the consolidated  statements of
operations,  for both 1997 and 1996, are described in Note 9 to the consolidated
financial statements.

      As  more  fully  discussed  in  Note  8  to  the  consolidated   financial
statements,  the Company  recognized  income tax expense,  before  extraordinary
item,  of $95,000 in 1997 versus  $49,000 in 1996.  In both years the income tax
expense consists of alternative  minimum tax ("AMT"),  with the higher provision
in 1997 being primarily attributable to the utilization of proportionately lower
net operating loss carryforwards for AMT purposes in 1997. As a result, a larger
portion of AMT taxable income was subject to AMT in the current year.

      The Company recognized an extraordinary charge, net of income tax benefit,
of $171,860 in 1997 resulting from a prepayment  premium on a secured  borrowing
that was retired in connection with the refinancing consummated with Wells Fargo
Bank.

Liquidity and Capital Resources

      At December  31, 1997 the Company had cash and cash  equivalents  totaling
$4,227,978 and a net working capital  position of $2,074,799.  Net cash provided
by operations  was  $2,983,195 in 1997 as compared with  $2,635,788 in 1996. The
Company used cash of $3,432,985 for purchases of property and equipment in 1997.
The major acquisitions were the purchase, for $1.85 million, of a portion of the
Womacks/Legends Casino property previously subject to a long-term lease, and the
purchase of a parcel of land for $785,000 for customer parking.

      As  more  fully  described  in  Note  5  to  the  consolidated   financial
statements,  the  Company  refinanced  substantially  all  of the  secured  debt
associated with its Cripple Creek operations through a revolving credit facility
with Wells Fargo Bank.  The  refinancing  resulted in the Company  lowering  its
average cost of borrowed funds to approximately 9.5%. The original facility,  in
the amount of $13 million,  was increased in early 1998 to $15 million,  subject
to  the   completion  of  a  proposed   purchase  of  a  property   adjacent  to
Womacks/Legends   Casino  for  approximately  $3.6  million.  The  Company  also
negotiated a more favorable  interest rate structure,  which further reduces its
cost of  borrowed  funds  beginning  March 1, 1998.  At  December  31,  1997 the
Company's outstanding borrowings under the facility were $9.4 million.

                                       17

<PAGE>


      The Company is presently  pursuing  several gaming  opportunities in South
Africa. The Company is the contracted casino management partner to a consortium,
Silverstar Development Ltd.  ("Silverstar"),  which is an applicant for a gaming
license in the province of Gauteng. The Company also has a small equity position
in  Silverstar.  In late  February  1998,  the Gambling  and Betting  Board (the
"Board") for the province of Gauteng,  which  includes the greater  Johannesburg
area,  awarded four of a possible six casino  licenses.  The Westrand  region of
Gauteng,  for which  Silverstar has submitted its  application and competes with
one other  applicant,  did not receive one of the four  licenses.  The Board has
indicated  that it expects to award the  remaining  two  licenses  by the end of
March 1998.  In the event  Silverstar  receives a license,  the Company would be
required to make an additional  equity  investment of approximately  $2,000,000.
The  equity  investment  would be funded  from the  Company's  existing  working
capital. The Company cannot predict the likelihood of Silverstar being awarded a
gaming license.

      The Company  also holds a small  equity  position  in Great North  Resorts
Limited which has submitted a license  application for Pietersburg,  the capital
of the Northern  Province.  If  successful  in receiving a license,  the Company
would  manage the casino  operations  of a proposed $40 million  casino,  hotel,
entertainment and resort complex pursuant to a five-year agreement.  The Company
would earn fees based on a percentage  of annual gaming  revenue.  A decision on
this  application  is expected no sooner than late second  quarter of 1998.  The
Company has no significant  additional capital  obligations with respect to this
application.

      In late  February  1998,  the  Company's  Board of  Directors  approved  a
discretionary   program  to  repurchase  up  to  $1  million  of  the  Company's
outstanding  common  stock.  The  Board  believes  that the  Company's  stock is
undervalued in the trading market in relation to both its present operations and
its future prospects. Repurchases will be made, subject to market conditions, in
open market transactions using available cash and cash equivalent resources.

      The Company believes that its present cash and working capital  positions,
together with expected cash flows from  operations,  are  sufficient to meet its
near- and medium-term  obligations and contemplated  capital  expenditures.  The
Company is subject to customary  financial  covenants  associated  with its debt
instruments  which could  restrict  the  Company's  ability to pursue  other new
gaming opportunities that require significant capital investment.

Information Systems and the Year 2000

      The  inability  of  computers,  software  and  other  equipment  utilizing
microprocessors  to  recognize  and properly  process  data fields  containing a
two-digit year is generally  referred to as the Year 2000  compliance  issue. As
the year 2000  approaches,  such  systems  may be unable to  accurately  process
certain date-based or date-sensitive information.

                                       18

<PAGE>


      The Company is in the process of identifying all significant  applications
that will  require  modification  to ensure Year 2000  compliance.  Internal and
external resources will be used as necessary to make the required  modifications
and to test and verify  Year 2000  compliance.  Most of the  Company's  computer
applications have been purchased, and will continue to be purchased,  from third
party  vendors.  Accordingly,  a significant  part of the  Company's  efforts to
ensure Year 2000  compliance  will be to obtain  assurances  from  vendors  that
timely  upgrades will be made  available to make  previously-purchased  software
Year 2000 compliant,  and to obtain assurances that newly-purchased  software is
Year 2000 compliant.  Additionally, the Company will contact companies with whom
it does  business,  and upon whose systems the Company may  indirectly  rely, to
obtain  assurances  that such systems will be timely  modified.  There can be no
guarantee that the Company's systems,  applications supplied by vendors, and the
systems of other companies on which the Company relies, will be timely converted
or that a failure to convert  would not have a  material  adverse  effect on the
Company.

      The Company  anticipates that it will complete this process in early 1999,
leaving  adequate time to assess and resolve any significant  remaining  issues.
The cost of Year 2000 compliance is not expected to be material to the Company's
financial position or results of operations in any one year, however,  since the
Company is early in the Year 2000  compliance  process there can be no assurance
that such costs would not become material as more information becomes available.

Item 7. Financial Statements.
----------------------------

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

Item 8. Changes  In   and  Disagreements  With  Accountants  on  Accounting  and
--------------------------------------------------------------------------------
        Financial Disclosure.
        --------------------

      Not applicable.

                                       19

<PAGE>



                             CENTURY CASINOS, INC.
                         INDEX TO FINANCIAL STATEMENTS


                                                                     Page Number
                                                                     -----------

         Independent Auditors' Report                                    F2
         Consolidated Balance Sheet as of December 31, 1997              F3
         Consolidated Statements of Operations for the Years Ended       F4
         December 31, 1997 and 1996
         Consolidated Statements of Shareholders' Equity for the         F5
         Years Ended December 31, 1997 and 1996
         Consolidated Statements of Cash Flows for the Years Ended       F6
         December 31, 1997 and 1996
         Notes to Consolidated Financial Statements                      F8

                                       F1

<PAGE>


INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholders
     of Century Casinos, Inc.

We have audited the accompanying  consolidated balance sheet of Century Casinos,
Inc. and  subsidiaries  as of December 31,  1997,  and the related  consolidated
statements of operations,  shareholders' equity and cash flows for the two years
in the period then ended.  These financial  statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial  statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits  provide a reasonable  basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,   the  financial  position  of  Century  Casinos,  Inc.  and
subsidiaries at December 31, 1997, and the results of their operations and their
cash  flows  for the two  years in the  period  then  ended in  conformity  with
generally accepted accounting principles.


DELOITTE & TOUCHE LLP

Denver, Colorado
February 27, 1998

                                       F2

<PAGE>


CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                December 31, 1997
                                                                -----------------
ASSETS

<S>                                                               <C>
Current Assets:
  Cash and cash equivalents                                       $     4,227,978
  Prepaid expenses and other                                              536,260
                                                                  ---------------
     Total current assets                                               4,764,238

Property and Equipment, net                                            14,626,489
Goodwill, net of accumulated amortization of $3,727,781                12,598,634

Other Assets                                                              797,312
                                                                  ===============
Total                                                             $    32,786,673
                                                                  ===============
</TABLE>
<TABLE>
<CAPTION>

LIABILITIES AND SHAREHOLDERS'  EQUITY

<S>                                                               <C>
Current Liabilities:

  Current portion of long-term debt, including $420,360 to
   related party                                                  $       525,311
  Accounts payable and accrued liabilities                              2,164,128
                                                                  ---------------
        Total current liabilities                                       2,689,439

Long-Term Debt, less current portion                                   10,068,614

Commitments and  Contingencies (Note 7)

Shareholders' 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; 15,861,885 shares issued and outstanding                158,619
  Additional paid-in capital                                           24,907,543
  Foreign currency translation                                           (27,777)
  Accumulated deficit                                                 (5,009,765)
                                                                  ---------------
           Total shareholders' equity                                  20,028,620
                                                                  ---------------
Total                                                             $    32,786,673
                                                                  ===============
</TABLE>


See notes to consolidated financial statements.

                                       F3

<PAGE>


CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                         For the Year Ended December 31,
                                                         -------------------------------
                                                             1997              1996
                                                             ----              ----
<S>                                                      <C>                <C>
Operating Revenue:
  Casino                                                 $  19,096,857      $ 10,984,499
  Food and beverage                                            922,449           543,379
  Hotel                                                         57,167            31,443
  Other                                                        336,608           350,728
                                                         --------------     -------------
                                                            20,413,081        11,910,049
  Less promotional allowances                                (753,063)         (432,007)
                                                         --------------     -------------
           Net operating revenue                            19,660,018        11,478,042
                                                         --------------     -------------

Operating Costs and Expenses:
  Casino                                                    10,410,532         4,660,482
  Food and beverage                                            393,670           323,454
  Hotel                                                         17,590             8,326
  General and administrative                                 5,247,763         4,254,666
  Depreciation and amortization                              2,948,652         1,936,065
                                                         --------------     -------------
           Total operating costs and expenses               19,018,207        11,182,993
                                                         --------------     -------------

Income from Operations                                         641,811           295,049

  Other expense, net                                         (917,575)       (1,541,191)
                                                         --------------     -------------

Loss before Income Taxes and Extraordinary Item              (275,764)       (1,246,142)

  Provision for income taxes                                    95,000            49,000
                                                         --------------     -------------

Loss before Extraordinary Item                               (370,764)       (1,295,142)

  Extraordinary item - debt prepayment premium,
   net of income tax benefit of $40,000                      (171,860)
                                                         --------------     -------------

Net Loss                                                 $   (542,624)      $(1,295,142)
                                                         ==============     =============

Loss Per Share, Basic and Diluted:
  Before extraordinary item                              $      (0.02)      $     (0.09)
  Extraordinary item                                     $      (0.01)
                                                         --------------     -------------
  Net loss                                               $      (0.03)      $     (0.09)
                                                         ==============     =============
Weighted Average Common Shares Outstanding                  15,861,885        13,902,150
                                                         ==============     =============
</TABLE>

   See notes to consolidated financial statements.

                                       F4

<PAGE>


CENTURY CASINOS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                      Common Stock        Additional  Foreign
                                   ------------------      Paid-in    Currency    Accumulated
                                    Shares     Amount      Capital   Translation    Deficit         Total
                                   --------   -------     ---------  ----------- -------------  ------------

<S>                               <C>        <C>        <C>           <C>        <C>            <C>
BALANCE AT DECEMBER 31, 1995      10,789,652 $ 107,897  $ 17,232,907  $ (8,423)  $ (3,171,999)  $ 14,160,382
Private placement                  1,000,000    10,000     1,365,665                               1,375,665
Private placement                  4,072,233    40,722     4,428,898                               4,469,620
Contingent shares to be
 issued July 1, 1998 in
 connection with Gold
 Creek acquisition                                         1,788,750                               1,788,750
Warrants issued to consultant                                  4,055                                   4,055
Foreign currency translation                                            (5,431)                       (5,431)
Net loss                                                                           (1,295,142)    (1,295,142)
                                  ---------- ---------  ------------  ---------  -------------  -------------
BALANCE AT DECEMBER 31, 1996      15,861,885   158,619    24,820,275   (13,854)    (4,467,141)    20,497,899
Warrants issued to consultant                                 48,660                                  48,660
Warrants repriced in connection
 with debt refinancing                                        38,608                                  38,608
Foreign currency translation                                           (13,923)                      (13,923)
Net loss                                                                             (542,624)      (542,624)
                                  ========== =========  ============  =========  =============  =============
BALANCE AT DECEMBER 31, 1997      15,861,885 $ 158,619  $ 24,907,543  $(27,777)  $ (5,009,765)  $  20,028,620
                                  ========== =========  ============  =========  =============  =============
</TABLE>

See notes to consolidated financial statements.

                                       F5

<PAGE>


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

<TABLE>
<CAPTION>

                                                          For the Year Ended December 31,
                                                         -------------------------------
                                                             1997              1996
                                                             ----              ----

<S>                                                     <C>                <C>
Cash Flow from Operations:
  Net loss                                              $   (542,624)      $(1,295,142)

  Adjustments to reconcile net loss to net
   cash provided by operations:
     Depreciation                                           1,607,148           894,561
     Amortization                                           1,341,504         1,041,504
     Extraordinary item - debt prepayment premium             211,860
     Income from terminated management agreement             (81,971)
     Noncash consulting fees                                   60,035           140,555
     Loss on note receivable                                                    422,476
     Costs associated with terminated debt offering                              65,800
     Loss on disposition of assets and other noncash charges  110,111           413,094
     Deferred tax provision                                                      32,000
     Gain from foreign currency transactions                                      (741)
     Changes in operating assets and liabilities:
      Prepaid expenses and other assets                       242,786            46,671
      Accounts payable and accrued liabilities                 34,346           875,010
                                                         -------------      ------------

      Net cash provided by operations                       2,983,195         2,635,788
                                                         -------------      ------------

Cash Flow from Investing Activities:
  Acquisition of Gold Creek, net of cash acquired                           (5,309,027)
  Expenditures for gaming development projects and other    (379,761)         (104,923)
  Purchases of property and equipment                     (3,432,985)       (1,554,115)
  Redemptions of short-term investment securities                               747,588
  Purchase of note receivable                                               (1,337,500)
  Sale of note receivable                                                     1,231,119
  Principal payments received on note receivable                                 24,668
  Proceeds from terminated gaming development projects        926,338           947,954
  Proceeds received from disposition of assets                 15,000            33,761
                                                         -------------      ------------
      Net cash used in investing activities               (2,871,408)       (5,320,475)
                                                         -------------      ------------
</TABLE>

                          -Continued on following page-

                                       F6

<PAGE>


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

<TABLE>
<CAPTION>

                                                         For the Year Ended December 31,
                                                         -------------------------------
                                                             1997              1996
                                                             ----              ----
<S>                                                      <C>               <C>
Cash Flow from Financing Activities:
  Proceeds from borrowings                                 17,748,856           800,000
  Principal repayments and prepayment premium on
   borrowings                                            (17,869,138)       (1,449,029)
  Deferred debt costs                                       (320,067)
  Proceeds from sales of common stock                                         5,856,785
                                                         -------------     -------------
    Net cash provided by (used in) financing activities     (440,349)         5,207,756
                                                         -------------     -------------
Increase (Decrease) in Cash and Cash Equivalents            (328,562)         2,523,069

Cash and Cash Equivalents at Beginning of Year              4,556,540         2,033,471
                                                         -------------     -------------
Cash and Cash Equivalents at End of Year                 $  4,227,978      $  4,556,540
                                                         =============     =============
</TABLE>

<TABLE>
<CAPTION>
Supplemental Disclosure of Noncash Investing and Financing Activities:

                                                             1997              1996
                                                             ----              ----
<S>                                                        <C>               <C>
    Equipment acquired through long-term financing         $  293,911        $  355,615
    Warrants repriced in connection with
     debt refinancing                                      $   38,608
</TABLE>

    See  Note  3 for  details  of  noncash  transactions  related  to Gold Creek
acquisition.

Supplemental Disclosure of Cash Flow Information:

    Interest  paid by the  Company was  $847,658  in 1997 and  $563,698 in 1996.
    Income  taxes paid by  (refunded  to) the Company  were  $24,090 in 1997 and
     $(1,125) in 1996.

See notes to consolidated financial statements.

                                       F7

<PAGE>


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

1.   DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

     Century Casinos,  Inc. and  subsidiaries  (the "Company") own and operate a
     limited-stakes gaming casino in Cripple Creek, Colorado, and are pursuing a
     number of additional gaming opportunities internationally and in the United
     States.  Prior to July 1, 1996, the Company's  operations in Cripple Creek,
     Colorado,  consisted  of  Legends  Casino  ("Legends"),  which the  Company
     acquired  on March 31,  1994,  through a merger with  Alpine  Gaming,  Inc.
     ("Alpine").  On July 1, 1996,  the Company  acquired the net assets of Gold
     Creek  Associates,  L.P.  ("Gold  Creek"),  the owner of Womack's  Saloon &
     Gaming Parlor  ("Womacks"),  which is immediately  adjacent to Legends (see
     Note  3).  Following  the  Company's   acquisition  of  Womacks,   interior
     renovations  were undertaken on both properties to facilitate the operation
     and  marketing  of the  combined  properties  as one casino  under the name
     Womacks/Legends  Casino. The accompanying  financial statements include the
     results of operations acquired from Gold Creek for the period subsequent to
     June 30, 1996.

     The Company's operating revenue for 1997 and  1996 is  derived  principally
     from its casino operations in Cripple Creek.

2.   SIGNIFICANT ACCOUNTING POLICIES

     Consolidation - The accompanying  consolidated financial statements include
     the  accounts  of the  Company  and its  majority-owned  subsidiaries.  All
     significant intercompany transactions and balances have been eliminated.

     Use of Estimates - The preparation of the accompanying financial statements
     in accordance with generally accepted  accounting  principles  requires the
     use of estimates  by  management  in  determining  the  reported  amount of
     certain assets,  liabilities,  revenues and expenses.  Actual results could
     differ from those estimates.

     Cash  Equivalents - All highly liquid  investments with a maturity of three
     months  or  less  at  the  time  of  purchase  are  considered  to be  cash
     equivalents.

     Fair Value of Financial  Instruments - In accordance with the reporting and
     disclosure  requirements  of Statement of  Financial  Accounting  Standards
     ("SFAS") No. 107, "Disclosures about Fair Value of Financial  Instruments,"
     the Company calculates the fair value of financial instruments and includes
     this additional  information in the notes to its financial  statements when
     the fair value does not  approximate  the carrying value of those financial
     instruments.  Fair value is determined  using quoted market prices whenever
     available.  When quoted market prices are not  available,  the Company uses
     alternative  valuation  techniques such as calculating the present value of
     estimated  future cash flows utilizing  risk-adjusted  discount rates.  The
     Company's carrying value of financial  instruments  approximates fair value
     at December 31, 1997.

     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 or the  applicable  lease term, if
     shorter.

                                       F8

<PAGE>


     Goodwill  -  Goodwill  represents  the  excess of  purchase  price over net
     identifiable  assets  acquired.  Goodwill  recognized  in the  1994  Alpine
     acquisition,  which is not  deductible  for  income  tax  purposes,  has an
     unamortized  balance of  $4,605,444  at  December  31,  1997,  and is being
     amortized on a straight-line  basis over 10 years.  Goodwill  recognized in
     the 1996 Gold Creek acquisition has an unamortized balance of $7,993,190 at
     December 31, 1997,  is being  amortized  on a  straight-line  basis over 15
     years, and is deductible for tax purposes.

     Impairment 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,  which is estimated as the  difference  between
     anticipated undiscounted future cash flows and carrying value, the carrying
     amount of the asset is written down to its estimated fair value by a charge
     to operations. Estimates of future cash flows are inherently subjective and
     are based on management's best assessment of expected future conditions.


     Revenue Recognition - Casino revenue is the net win from gaming activities,
     which is the difference between gaming wins and losses. Consulting fees are
     recognized  as revenue as services are provided.

     Promotional  Allowances - Food and  beverage  furnished  without  charge to
     customers is included in gross revenue at a value which approximates retail
     and then deducted as complimentary  services to arrive at net revenue.  The
     estimated  cost  of  such  complimentary  services  is  charged  to  casino
     operations and was $973,609 in 1997 and $439,811 in 1996.

     Foreign Currency  Translation - Adjustments  resulting from the translation
     of the  accounts  of the  Company's  Austrian  subsidiary  from  the  local
     functional currency to U.S. dollars are recorded as a separate component of
     shareholders'  equity.   Adjustments  resulting  from  the  translation  of
     transactions  which are  denominated in a currency other than U.S.  dollars
     are recognized in the statement of operations.

     Income  Taxes - The Company  follows SFAS No. 109,  "Accounting  for Income
     Taxes," which requires the liability  approach to computing deferred income
     taxes.   The  liability  method  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.

     Stock-Based  Compensation - The Company  follows the intrinsic  value based
     method for valuing stock options or similar equity  instruments  granted to
     employees,  as  permitted  by SFAS  No.  123,  "Accounting  for  Awards  of
     Stock-Based  Compensation."  The  intrinsic  value based  method  generally
     provides  that no  compensation  expense  is  recognized  when  the  option
     exercise  price is equal to or greater than the trading  price of the stock
     on the date of grant.  The Company  follows the fair value based method for
     valuing   stock   options  or  similar   equity   investments   granted  to
     non-employees.

     Earnings Per Share - In February 1997, the Financial  Accounting  Standards
     Board ("FASB") issued SFAS No. 128,  "Earnings per Share," which supersedes
     Accounting  Principles  Board Opinion No. 15 and establishes new guidelines
     for the computation  and  presentation of earnings per share. A measurement
     designated  "basic  earnings  per share"  replaces  "primary  earnings  per
     share." Basic earnings per share considers only outstanding common stock in
     the  computation.  A measurement  designated  "diluted  earnings per share"
     replaces "fully diluted  earnings per share," although the computations are
     similar in that both give effect to all  potentially  dilutive  securities.
     The  provisions of SFAS No. 128 became  effective in the fourth  quarter of
     1997. There was no effect on the loss per share amounts for 1996 previously
     reported.

     Reclassifications  - Certain  reclassifications  have been made in the 1996
     financial statements to conform with the 1997 presentation.

                                       F9

<PAGE>


     Recently Issued  Accounting  Pronouncements  - In June 1997 the FASB issued
     SFAS No. 130, "Reporting Comprehensive Income," which establishes standards
     for reporting and display of  comprehensive  income and its components.  It
     requires that all changes in equity during a period, except those resulting
     from investments by owners and  distributions  to owners,  be reported as a
     component  of  comprehensive   income  and  that  comprehensive  income  be
     displayed  in a  financial  statement  with  the same  prominence  as other
     financial statements that constitute a full set of financial statements.

     In June 1997 the FASB issued SFAS No. 131,  "Disclosures  about Segments of
     an Enterprise and Related  Information,"  which  establishes  standards for
     reporting  information  about  operating  segments,  products and services,
     geographic areas and major customers.

     The  Company  will be  required to adopt both SFAS No. 130 and SFAS No. 131
     for the year ending  December 31, 1998.  The Company has not  completed the
     process  of  evaluating  the  impact,  if any,  that will  result  from the
     adoption of the new pronouncements.

3.   ACQUISITION OF WOMACKS

     On July 1, 1996, the Company purchased substantially all of the assets, and
     assumed  substantially all of the liabilities,  of Gold Creek, the owner of
     Womacks  in  Cripple  Creek,   Colorado.   The  total  purchase  price  was
     approximately  $14.2  million,  consisting  of a base  cash  payment  of $5
     million plus  $425,000 for the amount of working  capital as of the closing
     date,  a  promissory  note of  $5.2  million  issued  to  Gold  Creek,  the
     assumption of existing debt of Gold Creek of approximately $3 million,  and
     direct out-of-pocket costs of approximately  $600,000.  The promissory note
     to Gold Creek and  substantially  all of the assumed debt  obligations were
     refinanced  in April  1997 (see Note 5).  The  purchase  agreement  further
     provided that two years after the closing of the  transaction,  the Company
     will issue  1,060,000  shares of its common  stock,  valued at $1.8 million
     based on the July 1, 1996 trading  price,  to two  principals of the seller
     who entered  into  consulting  contracts  with the Company at closing.  The
     number of shares to be issued is subject to upward  adjustment,  determined
     by a formula,  to the extent that the trading price of the Company's  stock
     is less  than  $1.58 at the  time of  issuance,  and  subject  to  downward
     adjustment to the extent that the trading price exceeds  $4.00.  Based upon
     the 20-day average  closing price of the Company's  common stock  preceding
     December  31,  1997,  the  number of shares  to be issued  would  have been
     1,595,048.  At the Company's option, it may elect to issue 1,060,000 shares
     together with a cash payment equal to the difference between $1,674,800 and
     1,060,000  shares  valued at the 20-day  closing  price  preceding  date of
     issuance.  The cash payment  under this option would have been  $561,800 at
     December 31, 1997.

     The Company has accounted for the Gold Creek acquisition using the purchase
     method of accounting,  whereby the total purchase price,  including  direct
     out-of-pocket costs of the acquisition,  has been allocated to identifiable
     assets  acquired and  liabilities  assumed  based on their  estimated  fair
     market  value.  The  excess of the  purchase  price  over the fair value of
     identifiable net assets  ("goodwill") is being amortized to expense ratably
     over 15 years.

                                      F10

<PAGE>


4.    PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
      Property and equipment at December 31, 1997 consist of the following:

                                                                        Estimated
                                                                         Service
                                                                           Life
                                                                         in Years
                                                                        ----------
<S>                                                       <C>              <C>
        Land                                              $   4,616,437
        Buildings and improvements                            5,679,250    7 - 31
        Gaming equipment                                      4,401,793    3 - 7
        Furniture and office equipment                        1,034,346    5 - 7
        Other                                                   955,503    3 - 7
                                                          --------------
                                                             16,687,329
        Less:  accumulated depreciation                     (2,981,344)
                                                          --------------
                                                             13,705,985
        Nonoperating casino and land                            920,504
                                                          --------------
        Property and equipment, net                       $  14,626,489
                                                          ==============
</TABLE>

5.    LONG-TERM DEBT
      Long-term debt at December 31, 1997, consists of the following:
<TABLE>
<S>                                                                    <C>
       Borrowings under revolving line of credit facility with bank     $ 9,401,466
       Notes payable secured by gaming and other equipment                  262,474
       Note payable, unsecured; payable in monthly installments of
        $1,660, including interest at 12%; maturing in June 1998              9,625
       Convertible debenture                                                500,000
       Note payable to founding shareholder, unsecured;
        noninterest-bearing                                                 420,360
                                                                        ------------
       Total long-term debt                                              10,593,925
       Less current portion                                               (525,311)
                                                                        ============
                                                                        $10,068,614
                                                                        ============
</TABLE>

                                      F11

<PAGE>


     On March 31,  1997,  the  Company  entered  into a  four-year,  $13 million
     reducing  revolving  line of credit  facility  (the "RCF") with Wells Fargo
     Bank ("Wells Fargo"). The initial borrowing drawdown under the RCF of $12.2
     million on April 3, 1997, was used to retire  approximately $9.2 million of
     secured debt relating to Womacks/Legends Casino. The Company also exercised
     a  purchase  option  and  acquired  a portion  of  Womacks/Legends  Casino,
     previously subject to a long-term  operating lease, for $1.85 million.  The
     remaining proceeds were used for bank fees and other costs paid at closing,
     and for general operating purposes. The RCF is secured by substantially all
     of the real and personal property of Womacks/Legends Casino. On January 28,
     1998, the RCF was amended to increase the maximum  available  borrowings to
     $15 million,  subject to the completion of a proposed property acquisition.
     An annual commitment fee of one-half percent, payable quarterly, is charged
     on the unused  portion of the RCF.  Through  February 28, 1998,  borrowings
     bear interest at Wells Fargo's  prime rate plus one-half  percent,  payable
     quarterly.  Beginning March 1, 1998, the interest rate will be reduced to a
     maximum of prime plus  three-quarters  percent and a minimum of prime, with
     the  rate  based  on  the  Company's  leverage  ratio,  as  defined,  on  a
     trailing-four-quarters  basis. At the Company's option, all or a portion of
     the outstanding  balance may be converted to a LIBOR-based  borrowing.  The
     borrowing  capacity  under the RCF is reduced by  $375,000  quarterly.  The
     total borrowing capacity at December 31, 1997, was $12,250,000, with unused
     borrowing  capacity of approximately  $2.8 million at that date.  Quarterly
     repayments  of  principal  are  required  to the  extent  that  outstanding
     borrowings exceed borrowing capacity at the beginning of any quarter. Based
     upon the balance of  outstanding  borrowings at December 31, 1997,  and the
     scheduled  reductions in borrowing  capacity  over the next 12 months,  the
     entire balance of outstanding  borrowings has been  classified as long-term
     in the accompanying  balance sheet.  Under the RCF, the Company is required
     to comply with certain customary financial  covenants,  and Womacks/Legends
     Casino  is  subject  to  certain  capital   expenditure   requirements  and
     restrictions  on  investments.  In  connection  with  securing the RCF, the
     Company  incurred and capitalized  approximately  $360,000 of out-of-pocket
     costs,  comprising  principally  nonrefundable  bank  commitment  fees  and
     attorneys' fees, including costs incurred prior to closing.  These deferred
     costs are being  charged to operations  on a  straight-line  basis over the
     term of the RCF. An extraordinary charge, net of income taxes, of $171,860,
     constituting  a prepayment  premium on one of the retired  borrowings,  was
     recognized in the second quarter of 1997.

     On May  30,  1996,  the  Company  issued  a  convertible  debenture  in the
     principal amount of $500,000 to a private investor.  The proceeds were used
     in financing the Gold Creek  acquisition.  The debenture  bears interest at
     10.5%,  payable quarterly.  The holder has the option to convert, in one or
     more transactions,  all or a portion of the outstanding  principal into the
     Company's  common  stock at $1.84  per  share,  subject  to a  minimum  per
     conversion transaction of $50,000. The Company has the option to prepay the
     debenture, in whole or in part, after the first anniversary date at 132% of
     the outstanding principal. The prepayment amount declines to 127% after the
     second  anniversary  date, 122% after the third  anniversary  date and 116%
     after the fourth  anniversary  date. The entire unpaid  principal is due on
     May 30, 2001.

     The Company has acquired certain of its gaming and other equipment  subject
     to vendor financing at fixed rates of 10% to 10.5%.

                                      F12

<PAGE>


      Scheduled maturities of long-term debt are as follows:

                1998                                   $    525,311
                1999                                      3,844,701
                2000                                      1,572,447
                2001                                      4,651,466
                                                       =============
                Total                                  $ 10,593,925
                                                       =============

6.   SHAREHOLDERS' EQUITY

     In connection  with a purchase of the Company's  common stock in 1994,  the
     Company granted to an  unaffiliated  third party options to acquire 230,000
     shares of common stock at $3.00 per share in the event the trading price of
     the common stock  reaches  $10.00  (115,000  shares may be  purchased)  and
     $13.00 (the remaining 115,000 shares may be purchased). The Company has the
     right  to  require  the  third  party  to  exercise  the  options  if these
     conditions are met. The options expire in March 1999.

     In  connection  with the business  combination  with Alpine,  warrants were
     granted to certain  key Alpine  employees  to  purchase  235,000  shares of
     common stock at an exercise price of $3.49.  In 1997, the exercise price on
     warrants  covering  150,000 shares was reduced to $1.50 as an inducement to
     two former  principals of Alpine to cure certain  property  title issues in
     connection  with the Company's  April 1997 debt  refinancing.  The warrants
     expire in March 1999.

     Warrants to purchase  1,000,000 shares of common stock at an exercise price
     of $2.25 were  issued in  conjunction  with a private  placement  of common
     stock in July 1994 and expire June 30, 1999.

     In early 1995 the Company  completed a private placement of 1,460,000 units
     at $1.50 per unit,  each unit  consisting  of one share of common stock and
     one warrant to purchase one share of common  stock at an exercise  price of
     $2.50 per share,  exercisable until December 31, 1999. The Company,  at its
     option,  may redeem the  warrants in the event its common stock trades at a
     price above $6.00 per share for a minimum of five consecutive  trading days
     for a redemption price of $0.01 per warrant.

     Additionally, in early 1995 the Company entered into a consulting agreement
     with a third party  whereby the  consultant  will assist the Company,  from
     time  to  time,  in  seeking  investors  and  business  opportunities.  The
     agreement provides that, upon the consummation of certain transactions, the
     Company will issue to the  consultant  warrants to purchase  the  Company's
     common stock.  The number of shares and exercise price are determined based
     on a  formula,  which  depends  upon  the  type  and  size  of  transaction
     consummated and the recent trading price of the common stock. In connection
     with the 1995 private  placement  discussed above, the Company on March 20,
     1995 issued  warrants to the  consultant  for 71,428 shares  exercisable at
     $1.05 per share. The warrants have a five-year term from the date of issue.
     The  consulting  agreement  may be  terminated by either party upon 30 days
     notice.

     In January  1996 the Company  completed a private  placement  of  1,000,000
     shares of its common stock at $1.50 per share.  Net proceeds to the Company
     were $1,375,665.

     In June 1996 the Company  completed a private placement of 4,072,233 shares
     of its common stock at an average price of $1.43 per share,  with proceeds,
     net of selling commissions, of approximately $4,470,000. In connection with
     this private placement, the Company issued warrants to a placement agent to
     purchase  150,000  shares  of its  common  stock at $2.36  per  share.  The
     warrants expire in June 2001.

                                      F13

<PAGE>


     In December 1996 the Company issued warrants to purchase  450,000 shares of
     its  common  stock  to a  consulting  firm in  connection  with a  two-year
     agreement,  whereby the  consulting  firm will  provide  the  Company  with
     institutional  and  individual  contacts in the investment  community.  The
     warrants were issued in increments of 150,000  shares with exercise  prices
     of $1.75,  $2.25 and $2.75 per share and expiration dates of December 1997,
     June 1998 and December 1998, respectively.  The estimated fair value of the
     warrants  at  issuance  was  $97,327,  which is being  charged  ratably  to
     earnings,  with a corresponding credit to additional paid-in capital,  over
     the term of the consulting contract.

     In April 1994 the Board of Directors of the Company  adopted the Employee's
     Equity Incentive Plan (the "Plan"),  which was amended  effective  November
     22, 1995, and further amended  November 25, 1996. The Plan provides for the
     grant of  awards to  eligible  employees  in the form of stock,  restricted
     stock,  stock options,  stock  appreciation  rights,  performance shares or
     performance  units,  all as defined in the Plan.  The Plan provides for the
     issuance  of up to  3,500,000  shares of common  stock  through the various
     forms of award  permitted.  Through  December 31,  1997,  only stock option
     awards  had been  granted  under  the  Plan.  Stock  options  may be either
     incentive  stock  options,  for which the option price may not be less than
     fair market value at the date of grant, or nonstatutory options,  which may
     be granted at any option  price.  All options must have an exercise  period
     not to exceed ten years.  Options  granted to date have either  one-year or
     two-year vesting periods. Transactions regarding the Plan are as follows:

<TABLE>
<CAPTION>
                                                 1997                   1996
                                         ---------------------  ---------------------
                                                    Weighted-              Weighted-
                                                     Average                Average
                                                    Exercise               Exercise
                                           Shares     Price       Shares     Price
        Incentive Stock Options:           ------   ---------     ------   ---------
        ------------------------
<S>                                      <C>          <C>       <C>          <C>
           Outstanding at January 1       2,371,400   $  1.50    2,266,000   $  1.50
           Granted                          265,800   $  0.85      105,400   $  1.54
           Cancelled or forfeited          (21,800)   $  1.50
                                         -----------            -----------
           Outstanding at December 31     2,615,400   $  1.44    2,371,400   $  1.50
                                         ===========            ===========

           Options exercisable at         2,460,834   $  1.47    2,321,133   $  1.50
          December 31                    ===========            ===========
</TABLE>


      Summarized information regarding options outstanding at December 31, 1997,
      is as follows:

<TABLE>
<CAPTION>
                                               Weighted-
                                   Number       Average                Number
                 Exercise       Outstanding    Remaining             Exercisable
                   Price        At Year End  Term in Years           at Year End
                 --------       -----------  -------------           -----------
<S>                <C>         <C>                <C>           <C>
                   $0.75            230,000       9.8                   115,000
                   $1.50          2,345,900       7.7                 2,306,334
                   $1.63             30,000       8.0                    30,000
                   $2.25              9,500       7.4                     9,500
                               =============                    ================
                                  2,615,400       7.9                 2,460,834
                               =============                    ================
</TABLE>

                                      F14

<PAGE>


      The Company applies Accounting Principles Board Opinion No. 25 and related
      interpretations   in  accounting  for  options  granted  under  the  Plan.
      Accordingly,  no compensation cost has been recognized in the accompanying
      financial  statements.  Had compensation cost for the Plan been determined
      based on the fair  value at the  grant  dates for  awards  under the Plan,
      consistent with the method recommended,  but not required, by SFAS No.123,
      the  Company's net loss and loss per share would have been adjusted to the
      pro forma amounts indicated below:

                                                 1997             1996
                                                 ----             ----

       Net loss                As reported    $  (542,624)     $(1,295,142)
                               Pro forma      $  (649,772)     $(1,660,324)

       Loss per share          As reported    $     (0.03)     $     (0.09)
                               Pro forma      $     (0.04)     $     (0.12)

      The fair value of options granted under the Plan was estimated on the date
      of grant using the  Black-Scholes  option pricing model with the following
      assumptions:
                                                      1997             1996
                                                      ----             ----
       Weighted-average fair value of
          options granted during the year         $   0.58         $   1.16
       Weighted-average risk-free interest rate       5.7%             6.1%
       Weighted-average expected life              10 yrs.          10 yrs.
       Weighted-average expected volatility            59%              74%
       Weighted-average expected dividends             $ 0              $ 0

7.   COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

     Concession Agreement - The Company's concession to provide unlimited-stakes
     gaming on a luxury cruise ship, the Silver Wind, expired in January 1998.

     Proposed Property Acquisition - In November 1997 the Company entered into a
     definitive  purchase agreement to acquire 22,000 square feet of land, zoned
     for gaming,  adjacent  to Womacks  Casino.  The prime  parcel of land under
     contract includes a partially  constructed building structure.  The Company
     anticipates developing the property to include a covered parking structure,
     hotel rooms and possibly  additional gaming facilities.  The purchase price
     is $3,200,000,  plus either 400,000 shares of Century's  restricted  common
     stock or $400,000, at the Company's option. The Company has made an earnest
     money  deposit of $150,000.  Closing of the  purchase is scheduled  for the
     second quarter of 1998.

                                      F15

<PAGE>


     WestPac  Advertising  Agreement - In late 1996 the Company  entered  into a
     three-year  advertising  agreement,  which  commenced in January 1997, with
     Western Pacific Airlines, Inc. ("WestPac"),  whereby the entire exterior of
     one of WestPac's aircraft prominently  displayed the logos and color scheme
     of Womacks/Legends  Casino and its corporate parent,  Century Casinos.  The
     agreement also provided for various other joint  marketing and  advertising
     activities.  At the time,  WestPac operated  flights  nationwide out of its
     sole hub in Colorado  Springs,  which is located in the primary market area
     for   Womacks/Legends   Casino  in  Cripple  Creek.  During  1997,  WestPac
     significantly  revised  its  business  strategy,  selecting  Denver  as its
     primary hub, and began to operate a majority of its flights into and out of
     the Denver hub.  Due to the change in  WestPac's  strategy  and its reduced
     emphasis on the Colorado  Springs market,  the Company  informally  advised
     WestPac  that the  latter's  change  in  business  strategy  constituted  a
     material  breach of the agreement and that the Company  sought to terminate
     the  agreement  as well as  reimbursement  of monies  previously  paid.  In
     October 1997 WestPac filed a Chapter 11 bankruptcy  petition and in January
     1998 completely ceased  operations.  Consequently,  the Company believes it
     has no further obligations under the advertising agreement and, in light of
     WestPac's  cessation of operations,  does not expect to recover any amounts
     previously paid.

     Casino  Management  Agreement-Rhodes,  Greece - The Company has  executed a
     casino  management   consulting  agreement  with  Rhodes  Casino,  S.A.,  a
     consortium  including Playboy  Enterprises,  under which the Company, as an
     independent contractor, will supply services and assistance in establishing
     a casino on the island of Rhodes,  Greece.  The consortium has been awarded
     the exclusive license for casino gaming on Rhodes for a 12-year period. The
     Company's management consulting agreement with the consortium, which has an
     initial term running  through the third  anniversary of the casino opening,
     provides for fees to the Company of $200,000 for services to be rendered in
     the  pre-opening  phase,  $300,000 per year during the first three years of
     operation and $50,000 per year thereafter,  if renewed.  The Company is not
     required to commit any capital in connection  with the proposed  activities
     under the agreement.  In the fourth  quarter of 1996, the Company  received
     $50,000 with respect to  pre-opening  phase  services.  The  consortium had
     previously  indicated  a target  opening  date for the casino of late 1997,
     which it did not achieve, and has not announced a revised opening date.

     South Africa - Recently  enacted  legislation in South Africa  provides for
     the award of up to 40 casino licenses  throughout the country.  The Company
     has filed  applications  with two  consortia  for  casino  licenses  in the
     province of Gauteng.  The Company has signed long-term management contracts
     with both consortia,  with one of the agreements  providing that,  should a
     license be granted,  the Company would make a minority equity investment of
     approximately  $2,000,000.  The Company cannot  reasonably  predict whether
     either license will ultimately be awarded to the Company's partners.

     Riverboat Development Agreement-Indiana - In December 1995 the Company sold
     its 80% interest in Pinnacle Gaming  Development  Corp.  ("Pinnacle") to an
     affiliate   of   Hilton   Gaming    Corporation    and    Boomtown,    Inc.
     ("Hilton/Boomtown").  Pinnacle had been pursuing a riverboat gaming license
     application in Switzerland County. Upon signing the agreement,  the Company
     received a cash payment of $80,000 and recognized a gain on the sale of its
     investment of $26,627.  The agreement  provides for additional  payments to
     the Company of up to  approximately  $3.3  million upon the  occurrence  of
     certain  events.  The  agreement  may  be  terminated  by the  buyer  under
     specified  circumstances,  without further  obligation to the Company.  The
     Company will recognize  future  payments,  if any, from the buyer as income
     when earned.  In December 1997 the Indiana Gaming Commission voted to delay
     a decision on the award of any additional  riverboat gaming licenses for at
     least one year,  until the economic  impact of the four  existing  licenses
     could be more fully evaluated.

                                      F16

<PAGE>


     Indian Tribal Management  Agreement-California - In August 1995 the Company
     terminated its management agreement with the Soboba Band of Mission Indians
     (the  "Tribe")  with  respect to the Legends  Casino at Soboba in Riverside
     County,  California.  In connection with the  termination,  an unaffiliated
     third party issued a promissory note to the Company for $3,100,000  payable
     over three years in monthly  installments,  based on a percentage  of gross
     revenue  from  certain  operations  of the  facility  through  August 1998.
     Through December 31, 1997, the Company has received  cumulative payments on
     the promissory note totaling  $1,922,475.  The Company has applied payments
     received as recovery of costs previously  capitalized  under the management
     agreement.  Capitalized costs were fully recovered in the fourth quarter of
     1997. Subsequent payments have been, and will continue to be, recognized as
     income when received. The Company recognized income of $81,971 in 1997 from
     payments received.

     There continues to be a dispute within the State of California  between the
     state  government  and Indian tribes  regarding the types of gaming devices
     that may be operated at casinos on Indian tribal lands.  An outcome adverse
     to the Indian  tribes  could affect the ability of the note obligor to earn
     sufficient revenue to satisfy the remaining amount due under the promissory
     note to the Company,  which amount was $1,177,525 at December 31, 1997. The
     Company,  at this time, cannot predict the likelihood of an outcome adverse
     to the Company.  In addition,  in late 1997 the third party  negotiated  an
     amendment to its agreement  with the Tribe which reduces the  percentage of
     revenue to be earned by the third  party.  The Company  cannot  predict the
     amount of remaining payments that will be received under note.

     Operating  Lease  Commitments  -  The  Company  has  entered  into  certain
     noncancelable  operating leases for real property,  equipment and vehicles.
     Future  minimum  lease  payments  under these  leases are $451,753 in 1998,
     $401,287 in 1999,  $289,920 in 2000, $247,332 in 2001, $235,594 in 2002 and
     $480,000  thereafter.  Rental  expense was $630,353 in 1997 and $387,410 in
     1996.

     Stock  Redemption  Requirement - Colorado  gaming  regulations  require the
     disqualification  of any  shareholder who may be determined by the Colorado
     Division  of  Gaming to be  unsuitable  as an owner of a  Colorado  casino.
     Unless  a sale of  such  common  stock  to an  acceptable  party  could  be
     arranged,  the Company would repurchase the common stock of any shareholder
     found to be unsuitable under the regulations.  The Company could effect the
     repurchase with cash, Redemption Securities, as such term is defined in the
     Company's Certificate of Incorporation, or a combination thereof.

8.   INCOME TAXES

     The provision for income taxes, before  extraordinary item, consists of the
     following:

                                                        1997           1996
                                                        ----           ----
       Federal - currently payable                  $     95,000   $     17,000
       Utilization of acquired net operating
        loss carryforward recorded as a
        reduction to goodwill                                            32,000
                                                    -------------  -------------
                                                    $     95,000   $     49,000
                                                    =============  =============

                                      F17

<PAGE>


      The provision for income taxes,  before  extraordinary  item, differs from
      the amount of income tax benefit calculated by applying the U.S. statutory
      federal income tax rate (34% for the income tax bracket  applicable to the
      Company) to pretax loss, before extraordinary item, as follows:

                                                        1997           1996
                                                        ----           ----

       Expected federal income tax benefit at       $   (93,759)   $  (423,688)
       Increase (decrease) due to:
            Goodwill amortization                        252,111        252,111
            Income of foreign subsidiary                  17,702       (24,507)
            State income taxes, net of federal benefit    17,500       (18,681)
            Alternative minimum tax, before benefit
             associated with extraordinary item
             of $40,000 in 1997                           95,000         17,000
            Other nondeductible expenses                   4,252          3,612
            Change in valuation allowance              (197,806)        243,153
                                                    -------------  -------------
       Provision for income taxes                   $     95,000   $     49,000
                                                    =============  =============

      Deferred income taxes reflect the net tax effects of temporary differences
      between  the  carrying  amounts of assets and  liabilities  for  financial
      reporting purposes and the amounts used for income tax purposes.  Deferred
      tax assets and liabilities at December 31, 1997, consist of the following:

        Deferred tax assets:
          Net operating loss carryforward                     $      94,431
          Alternative minimum tax credit carryforward                94,547
          Property, plant and equipment                              92,363
          Deferred costs from terminated management contract        268,304
          Unrealized loss on note receivable                        157,584
          Accrued liabilities and other                             335,545
                                                              --------------
                                                                  1,042,774
        Deferred tax liabilities:
           Prepaid expenses                                        (39,194)
                                                              --------------

        Net deferred tax assets                                   1,003,580
        Valuation allowance                                     (1,003,580)
                                                              --------------
                                                              $           -
                                                              ==============

      At December 31, 1997 the Company has a net operating loss carryforward for
      income tax purposes of approximately $255,000,  which expires in 2009, and
      has no remaining net operating loss carryforwards for alternative  minimum
      tax purposes. A valuation allowance has been recorded to offset the amount
      of net deferred tax assets due to the uncertainty of realizing the related
      tax benefits.

                                      F18

<PAGE>


9.    OTHER EXPENSE, NET
<TABLE>
<CAPTION>
      Other expense, net, consists of the following:
                                                              1997           1996
                                                              ----           ----

<S>                                                       <C>            <C>
       Interest income                                    $    152,912   $    188,411
       Interest expense                                    (1,039,147)      (577,914)
       Proceeds from terminated management agreement            81,971
       Costs associated with sale of mortgage note
        receivable                                                           (97,909)
       Costs associated with terminated debt offering                       (318,502)
       Amortization of deferred debt costs                    (65,744)
       Loss on note receivable                                              (422,476)
       Loss on disposal of equipment                          (47,567)      (263,542)
       Other                                                                 (49,259)
                                                          -------------  -------------
                                                          $  (917,575)   $(1,541,191)
                                                          =============  =============
</TABLE>

10.   LOSS PER SHARE

      In accordance with SFAS No. 128, the basic loss per share amounts for 1997
      and 1996  presented  in the  accompanying  statements  of  operations  are
      calculated  by  dividing  the net loss by the  weighted  number  of common
      shares  outstanding  for the  respective  periods.  Contingently  issuable
      shares (see Note 3) have not been  considered  in the basic loss per share
      calculations  as the number of shares to be issued is not  determinable as
      of the balance  sheet dates.  Diluted loss per share  amounts for 1997 and
      1996  are  identical  to the  respective  basic  loss per  share  amounts.
      Contingently  issuable  shares,  options and  warrants to purchase  common
      stock (see Note 6), and the  convertible  debenture  (see Note 5) have not
      been  considered  in the  calculations  of diluted  loss per share for the
      periods presented as their effects would be antidilutive.

                                      F19

<PAGE>


Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
--------------------------------------------------------------------------------
        with Section 16(a) of the Exchange Act.
        --------------------------------------

      The  information  required by this item will be included in the  Company's
Proxy  Statement with respect to its 1998 Annual Meeting of  Stockholders  to be
filed  with the  Commission  within 120 days of  December  31,  1997,  under the
captions   "Information   Concerning   Directors  and  Executive  Officers"  and
"Compliance with Section 16(a) of the Securities Exchange Act."

Item 10. Executive Compensation.
-------------------------------

      The  information  required by this item will be included in the  Company's
Proxy  Statement with respect to its 1998 Annual Meeting of  Stockholders  to be
filed  with the  Commission  within 120 days of  December  31,  1997,  under the
caption "Information Concerning Directors and Executive Officers."

Item 11. Security Ownership of Certain Beneficial Owners and Management.
-----------------------------------------------------------------------

      The  information  required by this item will be included in the  Company's
Proxy  Statement with respect to its 1998 Annual Meeting of  Stockholders  to be
filed  with the  Commission  within 120 days of  December  31,  1997,  under the
caption "Voting Securities."

Item 12. Certain Relationships and Related Transactions.
-------------------------------------------------------

      The  information  in this  item is  incorporated  by  reference  from  the
Company's  Definitive  Proxy  material in respect of the 1998 Annual  Meeting of
Stockholders  to be filed with the  Commission  within 120 days of December  31,
1997, under the caption "Certain Relationships and Related Transactions."

Item 13. Exhibits and Reports on Form 8-K.
-----------------------------------------

     a.   Exhibits  Filed  Herewith or  Incorporated  by  Reference  to Previous
          Filings with the Securities and Exchange Commission:

     1.   The  following  exhibits were included with the filing of the Alpine's
          Form  10-KSB  for the year  ended  December  31,  1993 and are  hereby
          incorporated by reference:

      Exhibit No.       Description
      -----------------------------

      10.14       Plan  of  Reorganization  and  Agreement  Among Alpine Gaming,
                  Inc.,   Alpine   Acquisition,   Inc.   and   Century   Casinos
                  Management,  Inc.  -  Filed with Form 8-K dated  December  24,
                  1993 and incorporated by reference therein.

      10.15       Amendments One,  Two and Three to  Plan of Reorganization  and
                  Agreement  Among  Alpine  Gaming,  Inc.,  Alpine  Acquisition,
                  Inc. and Century Casinos Management, Inc.

      10.16       Consulting Agreement - Dr. Alfred Liebich.

                                       20

<PAGE>


      10.18       Switzerland  County/Vevay  Town  Cooperation  Agreement  dated
                  September 14, 1993.

      10.19       Land Purchase Option - James A. Glatthaar.

      10.20       Option to Lease and Land Lease - James Chaskel.

      10.21       Agreement among  Century Casinos  Management,  Inc.,  Pinnacle
                  Development Group and  The Benefit Group, Inc.  dated December
                  13, 1993.

      10.22       Commercial  Contract  to  Buy  and Sell Real  Estate - Central
                  City,  Colorado  -  C.C.  Traders,  Inc.;   Deed of Trust  and
                  Security Agreement - C.C. Traders,  Inc.;  Secured  Promissory
                  Note  -  C.C.   Traders,   Inc.;   Assignment   of   Right  of
                  Action/Bill  of  Sale  - C.C.  Traders,  Inc.;   Addendum   to
                  Commercial  Contract  to Buy  and  Sell  Real  Estate  -  C.C.
                  Traders, Inc.

      10.23       Concession  Agreement  -  Silver  Cloud   and   Silver  Wind -
                  Silver Sea Cruises.

      10.27       Management  Agreement  - Soboba  Bingo  Hall -  Soboba Band of
                  Mission Indians.

      10.28       Missouri Riverboat Agreement - City of Portage des Sioux.

      10.30       Soboba  Debt  Financing  Commitment  -  Hospitality  Franchise
                  Systems, Inc.

      10.33       Warrant to purchase common stock - Stephan J. Ossello.

      10.34       Warrant to purchase common stock - Andrew J. Bartoletti.

      10.35       Warrants to purchase common stock - Christopher S. Wrolstad.

      10.36       Office  Lease   and   Amendment   Thereto  -  Century  Casinos
                  Management, Inc.

      10.42       Agreement  Among  Century Casinos  Management,  Inc.;  Century
                  Casinos  Missouri,  Inc.  (a corporation to be formed) and The
                  Benefit Group, Inc. dated March 18, 1994.

--------------------

      2.    The  following  exhibits  were  filed  with the Form  10-KSB for the
            Fiscal  Year Ended  December  31,  1994 and are hereby  incorporated
            herein by reference:

      Exhibit No.       Description
      -----------------------------

      10.45       Agreements   regarding   Wells,   Nevada  Nonoperating  Gaming
                  Facility.

      10.47       Amendment  to  Agreement  -  Missouri  -  Casino   Development
                  Corporation.

      10.48       Amended Management Contract - Soboba Indian Tribe,

      10.49       Buyout Agreement - St. Charles Gaming Company.
-------------------

                                       21

<PAGE>


      3.    The  following  exhibits  were  filed  with the Form  10-KSB for the
            Fiscal Year Ended December 31, 1995 and are  incorporated  herein by
            reference:

      Exhibit No.       Description
      -----------------------------

      3.1         Certificate of  Incorporation  (filed with Proxy  Statement in
                  respect   of  1994   Annual   Meeting  of   Stockholders   and
                  incorporated herein by reference).

      3.2         Bylaws  (filed with Proxy  Statement in respect of 1994 Annual
                  Meeting of Stockholders and incorporated herein by reference).

      10.51       Asset Purchase Agreement dated as of September 27, 1995 by and
                  among Gold Creek Associates,  L.P., WMCK Acquisition Corp. and
                  Century Casinos, Inc., including Exhibits and Schedules, along
                  with First Amendment thereto.

      10.52       Agreement  dated August 18, 1995 between SSK Game  Enterprises
                  and Century Casinos Management,  Inc.,  including:  Exhibit A,
                  Gaming  Machine  Lease  and  Purchase  Agreement;  Exhibit  B,
                  Promissory  Note; and Agreement and Release between The Soboba
                  Bank of Missouri Indians and Century Casinos Management, Inc.

      10.53       Assignment  and  Assumption  of Lease  dated  October 12, 1995
                  between   Cripple  Creek   Properties,   Inc.,   Star  Casinos
                  International,  Inc. and Century Casinos Cripple Creek,  Inc.,
                  including  short form  Assignment  and Assumption of Lease and
                  Assignment  and Assumption of Lease made November 1995 between
                  Century Casinos Cripple Creek, Inc. and Gold Creek Associates,
                  L.P., d/b/a Womacks Saloon and Gaming Parlor.

      10.56       Casinos   Management  Consulting   Agreement  by  and  between
                  Rhodes Casino, S.A. and Century Casinos, Inc.

      10.57       Stock  Purchase  Agreement  dated  December 21,  1995  between
                  Switzerland County  Development  Corp.  ("Buyer") and  Century
                  Casinos Management,  Inc. and  Cimarron  Investment Properties
                  Corp. ("Sellers").

      10.58       Consultancy Agreement - Chalkwell Limited.

      -------------------

                                       22

<PAGE>


      4.    The following  exhibits were filed with the Form 8-K Current  Report
            dated July 1, 1996 and are hereby incorporated by reference:

      Exhibit No.       Description
      -----------------------------

      10.59       Second  Amendment to Asset  Purchase  Agreement  dated as of
                  April 10,  1996,  among Gold Creek  Associates,  L.P.,  WMCK
                  Acquisition Corp. and Century Casinos, Inc.

      10.60       Promissory Note dated March 19, 1992,  made by Chrysore,  Inc.
                  in  the  original  amount  of  $1,850,000  payable  to R.  & L
                  Historic Enterprises, together with Assignment dated September
                  14, 1992 of said Promissory Note to TJL Enterprises,  Inc. and
                  Assignment  dated  May 16,  1996 of  said  Promissory  Note to
                  Century Casinos, Inc.

      10.61       Promissory Note dated July 1, 1996,  made by WMCK  Acquisition
                  Corp. in the original  principal amount of $5,174,540  payable
                  to Gold Creek Associates,  L.P.,  together with Guaranty dated
                  July 1, 1996, of said Promissory Note by Century Casinos, Inc.

      10.62       Building   Lease   dated  as  of  July  1,  1996,   among  TJL
                  Enterprises, Inc., WMCK Acquisition Corp. and Century Casinos,
                  Inc.,  together with  Memorandum of Building Lease with Option
                  to Purchase dated as of July 1, 1996, among the
                  same parties.

      10.63       Four Party  Agreement,  Assignment  and  Assumption  of Lease,
                  Consent  to  Assignment  of  Lease,   Confirmation  of  Option
                  Agreement  and Estoppel  Statements  dated as of July 1, 1996,
                  among Harold William Large,  Teller Realty,  Inc.,  Gold Creek
                  Associates, L.P., and WMCK Acquisition Corp.

      10.64       Consulting  Agreement dated as of July 1,  1996,  between WMCK
                  Acquisition Corp. and James A. Gulbrandsen.

      10.65       Consulting  Agreement dated as of July 1,  1996,  between WMCK
                  Acquisition Corp. and Gary Y. Findlay.

      10.66       Stock Transfer  and  Registration  Rights  Agreement  dated as
                  of July 1, 1996,  between Century Casinos,  Inc. and  James A.
                  Gulbrandsen and Gary Y. Findlay.

      -------------------

                                       23

<PAGE>


      5.    The following  exhibit was filed with the Form 10-KSB for the Fiscal
            Year  Ended  December  31,  1996  and  is  incorporated   herein  by
            reference:
:

      Exhibit No.       Description
      -----------------------------

      10.67       Office  Lease  -  26 South  Tejon  Street,  Colorado  Springs,
                  Colorado.

      -------------------

      6.    The following  exhibit was filed with the Form 10-QSB for the Period
            ended March 31, 1997 and is incorporated herein by reference:

      Exhibit No.       Description
      -----------------------------

      10.68       Credit  Agreement dated as of March 31,  1997,   between Wells
                  Fargo Bank,  N.A.  ("Lender");   WMCK Venture Corp.,   Century
                  Casinos  Cripple  Creek,  Inc.,  and  WMCK  Acquisition  Corp.
                  ("Borrowers"); and Century Casinos, Inc. ("Guarantor").


      7.    The following exhibits are filed herewith:

      Exhibit No.       Description
      -----------------------------

      10.69       First  Amendment to the Credit  Agreement  dated  as  of March
                  31, 1997,  between Wells Fargo Bank,  N.A.  ("Lender");   WMCK
                  Venture Corp., Century Casinos Cripple Creek,  Inc.,  and WMCK
                  Acquisition Corp.  ("Borrowers");  and  Century Casinos,  Inc.
                  ("Guarantor"), dated November 11, 1997.

      10.70       Second  Amendment  to the  Credit  Agreement dated as of March
                  31, 1997,  between  Wells Fargo Bank,  N.A.  ("Lender");  WMCK
                  Venture Corp., Century Casinos Cripple Creek,  Inc.,  and WMCK
                  Acquisition Corp.  ("Borrowers");   and Century Casinos,  Inc.
                  ("Guarantor"), dated January 28, 1998.

      21          Subsidiaries of the Registrant.

      23.1        Consent of Independent Accountants.

      27          Financial Data Schedule

      b.          Reports  on  Form 8-K Filed  During  the  Registrant's  Fourth
                  --------------------------------------------------------------
                  Fiscal Quarter:
                  --------------

      No reports on Form 8-K were filed by the Company  during the last  quarter
      of its fiscal year ended December 31, 1997.

                                       24

<PAGE>


      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, in the City of Denver,
State of Colorado on March 18, 1998.

                                    CENTURY CASINOS, INC.

                                  By: /s/ James D. Forbes
                                          --------------------------------------
                                          James D. Forbes, President

                                      /s/ Norbert Teufelberger
                                          --------------------------------------
                                          Norbert Teufelberger,  Chief Financial
                                          Officer (Principal Financial Officer)

                                      /s/ Brad Dobski
                                          --------------------------------------
                                          Brad Dobski, Chief Accounting Officer
                                          (Principal Accounting Officer)

                              POWER OF ATTORNEY

      KNOW ALL MEN BY THESE PRESENTS,  that each person whose signature  appears
below  constitutes  and appoints James D. Forbes and Norbert  Teufelberger,  his
true and lawful  attorneys-in-fact  and agents,  with full power of substitution
and  resubstitution,  for him and in his name,  place and stead,  in any and all
capacities,  to sign any and all amendments to this Form 10-KSB, and to file the
same,  with  all  exhibits  thereto,   and  other  documentation  in  connection
therewith,  with the  Securities  and Exchange  Commission,  granting  unto said
attorneys-in-fact  and agent full power and authority to do and perform each and
every  act and  thing  requisite  and  necessary  to be done  in and  about  the
premises,  as  fully  to all  intents  and  purposes  as he might or could do in
person,  hereby  ratifying and  confirming all that said  attorneys-in-fact  and
agent, or his substitute or substitutes,  may lawfully do or cause to be done by
virtue hereof.

      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
report has been signed by the following  persons on behalf of the Registrant and
in the capacities indicated on March 18, 1998.

<TABLE>
<CAPTION>

Signature                  Title                        Signature                    Title

<S>                        <C>                          <C>                          <C>
/s/ Erwin Haitzmann        Chairman of the Board        /s/ Gottfried Schellmann     Director
    ---------------------                                   ---------------------
    Erwin Haitzmann                                         Gottfried Schellmann

/s/ Peter Hoetzinger       Vice Chairman of the Board   /s/ Robert Eichberg          Director
    ---------------------                                   ---------------------
    Peter Hoetzinger                                        Robert Eichberg

/s/ James D. Forbes        President and Director
    ---------------------
    James D. Forbes

/s/ Norbert Teufelberger   Chief Financial Officer and Director
    ---------------------
    Norbert Teufelberger
</TABLE>

                                       25

<PAGE>


                                  EXHIBIT INDEX

Exhibit No.       Description
-----------------------------

10.69     First  Amendment to the Credit  Agreement  dated as of March 31, 1997,
          between Wells Fargo Bank, N.A. ("Lender"); WMCK Venture Corp., Century
          Casinos Cripple Creek, Inc., and WMCK Acquisition Corp. ("Borrowers");
          and Century Casinos, Inc. ("Guarantor"), dated November 11, 1998.

10.70     Second  Amendment to the Credit  Agreement dated as of March 31, 1997,
          between Wells Fargo Bank, N.A. ("Lender"); WMCK Venture Corp., Century
          Casinos Cripple Creek, Inc., and WMCK Acquisition Corp. ("Borrowers");
          and Century Casinos, Inc. ("Guarantor"), dated January 28, 1998.

21        Subsidiaries of the Registrant.

23.1      Consent of Independent Accountants.

27        Financial Data Schedule

                                       26