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, 1998       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 Identification No.)
   incorporation or organization)

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:  $19,458,852

The aggregate market value of the voting common stock held by  non-affiliates of
the registrant on March 12, 1999, was  approximately  $10,944,000 based upon the
average of the reported closing bid and asked price of such shares on Nasdaq for
that date. As of March 12, 1999,  there were  14,659,785  shares of common stock
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: Part III incorporates by reference from the
Registrant's   Definitive  Proxy  Statement  for  its  1999  Annual  Meeting  of
Stockholders  to be filed with the  Commission  within 120 days of December  31,
1998.

                                       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." The  Company's  operating
revenue for 1998 and 1997 was derived  principally from its casino operations in
Cripple Creek. See the Consolidated  Financial  Statements and the notes thereto
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.

     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.

     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.

     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.

                                       2

<PAGE>

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  would 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.  In 1998 the Company
reached  agreement  with the two  principals to pay them a total of  $1,629,000,
consisting of cash of $534,000 and two promissory notes totaling $1,095,000,  in
lieu  of  issuing  common  stock.  See  Note  4 to  the  Consolidated  Financial
Statements for further information.

     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   implemented   certain   consolidation,
expansion and capital improvement programs.  The Company created openings in the
common walls in order to open up and  integrate  the gaming areas of Legends and
Womacks;  expanded the existing player tracking system of Womacks to include all
of the Legends gaming devices;  added and promoted  gaming  activities on second
floor areas; made general interior enhancements; and installed additional gaming
devices  and  replaced  older  generation  equipment.  See Item 6,  Management's
Discussion  and Analysis of Financial  Condition and Results of  Operations  for
further information.

     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 4 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.

                                       3

<PAGE>

     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.

     On June 3, 1998,  the  Company  acquired  22,000  square  feet of land (the
"Hicks Property") from an unaffiliated third party. The property, which is zoned
for  gaming,  is  adjacent  to  Womacks/Legends  Casino.  A  partially-completed
building  structure that occupied a portion of the land was subsequently  razed,
and the entire  property has been  improved to provide the first paved  customer
parking  spaces in the Cripple Creek market.  The purchase price of $3.6 million
was financed  through the Company's  revolving  credit facility with Wells Fargo
Bank.

     Womacks/Legends  Casino  currently  has  approximately  570 slot and  video
devices and eight  gaming  tables with the  potential  to add  approximately  60
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 290 parking
spaces. Of this number,  99 paved spaces are held pursuant to an agreement.  See
"Parking  Lease and Option to  Purchase." An additional 35 spaces are located on
the  recently  acquired  Wright  Property and 68 paved spaces are located on the
Hicks  Property.  The  remaining  parking  spaces are  subject to a  three-year,
cancelable lease that expires in August 2001.  Management believes that it could
obtain satisfactory  parking spaces if existing  arrangements were terminated or
became inadequate.

     In November 1998, Womacks/Legends Casino entered into an agreement with the
operator  of a new local  hotel  whereby  the casino is leasing a block of rooms
from the  hotel.  The casino  makes  these  rooms  available  to its  customers,
sometimes on a complimentary  basis, and provides a free shuttle service between
the casino and the hotel.


Revolving Credit Facility

     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
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.  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.

                                       4

<PAGE>

     Various provisions of the RCF were amended subsequent to March 31, 1997. At
December  31, 1998,  the maximum  available  under the RCF was $20  million.  An
annual commitment fee of between  three-eighths  and one-half  percent,  payable
quarterly, is charged on the unused portion of the RCF. The RCF also contains an
interest  rate  matrix  that  ties the  interest  rate  charged  on  outstanding
borrowings to the Company's  leverage ratio, as defined.  Largely as a result of
an  improvement  in the Company's  leverage  ratio,  the Company's  consolidated
weighted-average interest rate on all borrowings decreased from 9.58% in 1997 to
8.74% in 1998. At December 31, 1998,  the Company's  unused  borrowing  capacity
under the RCF was  approximately  $8.9 million.  See Note 4 to the  Consolidated
Financial Statements for further information.

     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.  In  1997  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.

     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 24% of gaming
revenues for these three cities  during the year ended  December 31, 1998. As of
December 31, 1998, there were 18 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 1995 through 1998.  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.


                                       5

<PAGE>
<TABLE>
<CAPTION>

                            GAMING REVENUE BY MARKET
                                   (in $'000)

                                   % change             % change                % change                % change
                                     Over                 Over                    Over                     Over
                           1995   Prior Year    1996    Prior Year    1997     Prior Year     1998      Prior Year
                        --------  ----------  --------  ----------  --------   ----------   --------    ----------
<S>                     <C>          <C>      <C>        <C>       <C>           <C>       <C>           <C> 
CRIPPLE CREEK ......... $ 94,019     14.2%    $103,373     9.9%     $108,628      5.1%      $113,230       4.2%

Black Hawk ............ $195,857     12.8%    $219,911    12.3%     $234,631      6.7%      $272,008     15.9%

Central City .......... $ 94,468     35.5%    $ 88,870    -5.9%     $ 87,391     -1.7%      $ 93,980       7.5%
                        --------  ----------  --------  ----------  --------   ----------   --------    ----------
COLORADO TOTAL ........ $384,344     18.0%    $412,154     7.2%     $430,650      4.5%      $479,218      11.3%
</TABLE>
<TABLE>


                             CRIPPLE CREEK SLOT DATA

                                   % change              % change               % change              % change
                                     Over                  Over                  Over                   Over
                          1995    Prior Year     1996    Prior Year    1997    Prior Year    1998    Prior Year
                         -------  ----------   -------   ----------  --------  ----------  --------  ----------
<S>                      <C>        <C>       <C>         <C>       <C>         <C>      <C>          <C> 
Total Slot Revenue       $87,311     14.9%     $97,024     11.1%     $102,798     6.0%     $107,690     4.8%
(in $'000)

Average Number
Of Slots .........         3,843     17.0%        4,175      8.6%        4,507     8.0%        4,369    -3.1%

Average Win Per
Slot Per Day .....       $    62    -1.8%      $    63      2.0%     $     62    -1.6%     $     68     8.1%

</TABLE>

     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.

                                       6

<PAGE>
<TABLE>
<CAPTION>

                   CENTURY CASINOS' PROPERTY IN CRIPPLE CREEK
                      (presently "Womacks/Legends Casino")
                    
                                 % change             % change                % change                   % change
                                  Over                  Over                    Over                       Over
                        1995    Prior Year    1996    Prior Year     1997     Prior Year     1998       Prior Year
                       ------   ----------  -------   ----------  -------     ----------    -------     ----------
<S>                    <C>        <C>       <C>         <C>       <C>           <C>        <C>           <C> 
Total Slot Revenue...  $3,266     57.1%     $10,078     208.6%    $18,102       79.6%      $18,597         2.7%
(in $'000)                                                                                            
                                                                                                      
Average Number                                                                                      
Of Slots.............     172     22.0%         342      98.8%        547       59.9%          565         3.3%

Average Win Per
Slot Per Day.........  $52.02     -3.0%      $80.73      55.2%    $ 90.67       12.3%      $ 90.18        -0.5%

Market Share in %....    3.74%    32.2%       10.39%    177.7%      17.61%      69.5%        17.27%       -1.9%

</TABLE>

     The Company competes, to a far lesser extent, with 19 casinos in Black Hawk
and 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.

     In 1998 the Colorado Division of Gaming (the "Division") conducted an audit
of the Company's two Colorado  gaming  licenses  covering the period August 1995
through  July  1998.  As a result of the audit,  the  Division  alleged  certain
violations of Colorado gaming regulations and internal control  procedures.  The
licensees  have each  entered  into a  Stipulation  and  Agreement  whereby  the
licensees  have agreed to fines  totaling  $120,000  and have  submitted  to the
Division corrective action plans that are responsive to the Division's concerns.
The  corrective  action plans have been  approved by, and will be monitored  for
compliance  by, the  Division.  Management  believes  that the  licensees are in
compliance with the corrective action plans.

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

     Parking  Lease and Option to  Purchase.  The Company  leases 99  contiguous
parking  spaces  from the City of Cripple  Creek.  Annual  rent  payments  total
$90,000 and the lease agreement expires on May 31, 2003. The agreement  contains
a purchase  option whereby the Company may purchase the property for $3,250,000,
less cumulative  lease  payments,  at any time during the remainder of the lease
term.  The Company has paved the  property  and  currently  uses it for customer
parking.

                                       7

<PAGE>

Additional Company Projects 

     In addition  to  Womacks/Legends  Casino in Cripple  Creek,  Colorado,  the
Company  has a  number  of  potential  gaming  projects  in  various  stages  of
development. Along with the capital needs of these potential projects, there are
various  other risks which,  if they  materialize,  could  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 have been
substantial  in the past 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.

     The following describes other activities of the Company.

     Prague,  Czech  Republic.  In January  1999 the  Company  reached a 20-year
definitive  agreement with Casino  Millennium a.s., a Czech company,  and with a
Czech  subsidiary  of  Bau  Holding  AG,  one of the  largest  construction  and
development  companies in Europe, to operate a casino in the five-star  Marriott
Hotel,  currently under construction in Prague, Czech Republic. The Company will
provide casino  management  services in exchange for ten percent of the casino's
gross  revenue,  and will provide  gaming  equipment for 45% of the casino's net
profit. The opening of the hotel and casino is currently  scheduled,  subject to
change, for the second quarter of 1999.
 
                                      8

<PAGE>

     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, 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 provided for additional payments to the Company upon the occurrence of
certain events. On September 14, 1998, the Indiana Gaming  Commission  awarded a
Certificate  of  Suitability  to  Pinnacle  to  conduct   riverboat   gaming  in
Switzerland  County.  In  accordance  with the previous  agreement,  the Company
received a payment in the third quarter of 1998 of $431,000.  Additionally,  the
Company is  entitled to a payment of  $1,040,000  upon  "groundbreaking"  of the
project,  and installment  payments of $32,000 per month for the first 60 months
of the riverboat's operation. The Company may elect to receive, or the owners of
Pinnacle  may  elect  to  prepay,  the  installment  payments  in the  aggregate
discounted  amount of  $1,453,000.  While the  Company  believes  that  Pinnacle
intends to proceed with the development of the riverboat  project,  there can be
no assurance that Pinnacle will do so, or, if the project does proceed, when the
additional  payments  will be earned and  received  by the  Company.  Any future
payments to the Company will be recognized as income when earned.

     Rhodes,  Greece.  In 1995,  the Company  executed a casino  management  and
consulting  agreement with Rhodes Casino,  S.A., a consortium  including Playboy
Enterprises,  Inc., under which the Company, as an independent contractor, would
supply services and assistance in establishing a casino on the island of Rhodes,
Greece.  The consortium  was awarded the exclusive  license for casino gaming on
Rhodes for a 12-year  period  commencing  with the  opening of the  casino.  The
Company's  management  consulting  agreement with the  consortium,  which had an
initial  term  running  through  the third  anniversary  of the casino  opening,
provided  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. In the fourth quarter of 1996, the
Company received $50,000 with respect to certain  preopening phase services.  In
the second quarter of 1998, the Company reached a consulting agreement ("current
agreement")  with Rhodes  Casino  S.A.  and Playboy  Gaming  International  Ltd.
("Playboy")  to  assign  certain  of  the  Company's  rights  and  delegate  its
responsibilities   under  the  previously  executed  management  and  consulting
agreement  ("previous  agreement").  Under the  current  agreement  the  Company
received from Playboy a payment of $25,000 for  additional  preopening  services
performed to date, and will receive  annual  payments of $50,000 for each of the
first three years of the casino's  operations.  The Company will have no further
obligations under the previous  agreement  unless,  subsequent to the opening of
the  casino,  Playboy  is  unwilling  or unable  to  perform  under the  current
agreement. In such event, the previous agreement, and the Company's obligations,
would be reinstated  together with the Company's right to receive up to $300,000
per year for the first  three  years of  casino  operations,  with an  aggregate
minimum guarantee of approximately $250,000.

     South Africa. Recently enacted legislation in South Africa provides for the
award of up to 40 casino licenses  throughout the country.  To date, the Company
has entered into  agreements  with five 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
not successful in being awarded a license.  The second  application was by Green
Oaks Trading (Pty) Ltd., which withdrew its application during the process.

                                       9

<PAGE>

     The third  application  was filed on June 17,  1997 with the  Gambling  and
Betting Board (the "Board") in the province of Gauteng for a hotel/casino resort
in the greater Johannesburg area.  Silverstar  Development Ltd.  ("Silverstar"),
the consortium to which the Company is the contracted casino management partner,
and in which the Company  holds a minority  equity  interest,  had  submitted an
application  for a proposed $70  million,  1,700  gaming  position  hotel/casino
resort development.  The Board had awarded all six casino licenses by the end of
April 1998,  and  Silverstar  was not awarded one of the  licenses.  The Company
recorded  an  impairment  allowance  against  its entire  equity  investment  in
Silverstar  in the amount of $196,022 in the first  quarter of 1998.  Silverstar
subsequently  filed a legal  action with the Supreme  Court of South Africa (the
"Court") challenging the decision of the Board and the provincial  government in
their  failure to award a casino  license to  Silverstar on the grounds that the
decision-making  process was legally  deficient.  On March 11,  1999,  the Court
overturned  the  previous  license  award  for the West Rand  region of  Gauteng
Province,  the region for which  Silverstar  had applied.  The Court's  decision
requires  that the Board and the  provincial  government  redetermine  the award
process for the West Rand region.  Adverse parties have the right to appeal this
ruling.  To date, no timetable for  reconsideration  of the gaming license award
has been  established.  While the Company  believes that  Silverstar's  previous
application will be given proper consideration through the reevaluation process,
there can be no assurance  that a gaming  license will  ultimately be awarded to
Silverstar.

     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.  If  successful  in  receiving a
license, the Company would provide  consulting/management  services with respect
to the casino operations of a proposed $40 million casino, hotel,  entertainment
and resort complex pursuant to a five-year agreement commencing with the opening
of the permanent  casino.  The Company would also provide  consulting/management
services  with  respect  to the  operations  of a  temporary  casino  during the
development phase of the resort complex.  The Company would earn fees based on a
percentage of annual gaming revenue.  The Company has no significant  additional
capital  obligations with respect to this application.  The licensing process in
the Northern  Province has been  suspended by the South  African  Supreme  Court
pending an  investigation  of alleged  improprieties  by the  Northern  Province
Casino and Gaming Board.

     The fifth application,  filed by a consortium ("Black Rhino") that includes
the Company,  was submitted on April 21, 1998,  for a license in the province of
KwaZulu  Natal.  A detailed  application  was filed by Black Rhino on August 10,
1998, in accordance  with the published  timetable.  As announced by the KwaZulu
Natal  Provincial  Cabinet on October 28, 1998,  Black Rhino was not selected as
the Preferred Finalist for the zone for which it applied.

     Kamloops,  British Columbia. On November 28, 1997, the Kamloops Indian Band
of British  Columbia,  Canada,  (the "Band"),  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 reached an agreement in
principle  to become  the casino  management/consulting  partner in the event of
license  award.  The  Company  was  paid a fee for its  consulting  services  in
connection with the application  process.  During the third quarter of 1998, the
Company was informed by the provincial  government of British  Columbia,  Canada
that the  application  by the Band to establish a  destination  casino resort on
their  land was  denied.  The  Company  did not incur any  significant  costs in
connection with the application.

                                       10

<PAGE>

     Cruise Vessels - Concession  Agreements.  The Company  previously  acted as
casino  concessionaire  for two luxury  cruise  ships  operated  by Silver  Seas
Cruises,  Ltd. The Company's concession agreement for the Silver Cloud commenced
April 1994 and expired April 1997.  The agreement for the Silver Wind  commenced
January 1995 and expired January 1998.

     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 $851,504,  including a note secured by the property, was
determined  based on arm's length  bargaining with the seller.  The Company also
purchased in 1994 a seven-acre  parcel of land  directly  across the street from
the casino for $69,000.  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.

     Indian  Tribal  Management  Agreement  -  California  - In August  1995 the
Company  terminated  its  management  agreement  with the Soboba Band of Mission
Indians  with  respect  to the  Legends  Casino at Soboba in  Riverside  County,
California.  In connection with the  termination,  an  unaffiliated  third party
issued a three-year promissory note to the Company for $3,100,000,  with monthly
payments  based on a percentage of gross revenue from certain  operations of the
facility.  In March  1998 the  Company  negotiated  an early  settlement  of the
then-remaining outstanding balance. As a result, the Company received cumulative
payments  through the date of settlement of $2,457,727,  of which $1,825,756 was
applied to  recovery of  capitalized  costs  through the third  quarter of 1997,
$81,971 was  recognized in income in 1997 and $550,000 was  recognized in income
in 1998. No further payments will be received under the note.
         
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.




                                       11

<PAGE>

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.

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 of,
or notification to, the Commission  before any public offering of any securities
of any gaming licensee or any affiliated  company.  The Regulations  require all
publicly  traded or publicly  owned  gaming  licensees  to comply with  numerous
regulatory gaming requirements.  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,  on an annual basis,  a list of the
holders of its voting securities.

     Each publicly  traded gaming lecensee 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.

                                       12

<PAGE>

          (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  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 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.

                                       13

<PAGE>

     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.
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. 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 Security Holders.

     No matters  were  submitted  to a vote of  security  holders of the Company
during the quarter ended December 31, 1998.


                                       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, 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

March 31, 1998 ....................  $   0.88          $   1.25
June 30, 1998 .....................  $   0.88          $   1.31
September 30, 1998 ................  $   0.94          $   1.13
December 31, 1998 .................  $   0.78          $   1.03

     At December 31, 1998, the Company had  approximately  140  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.

     On December 30,  1998,  the NASDAQ  Stock  Market  ("NASDAQ")  notified the
Company that it was not in compliance with the $1 minimum bid  requirement,  one
of eight listing  requirements of the NASDAQ SmallCap Market.  The Company is in
compliance with the other seven  requirements.  If the Company is unable to come
into compliance with the $1 minimum bid requirement on or before March 30, 1999,
the  Company's  securities  could  be  delisted.   To  avoid  delisting  of  its
securities,  the  Company,  in  accordance  with NASDAQ  procedural  guidelines,
intends to (1) request a hearing with NASDAQ  before  March 30, 1999,  to seek a
stay of delisting, and (2) present its proposal of actions it expects to take to
become fully compliant with the $1 minimum bid requirement.  While the Company's
management believes that the Company should be granted a stay of delisting,  the
Company is  concurrently  taking steps which would enable it to effect a reverse
split of its common shares, if required, to come into compliance.


                                       15
<PAGE>


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.

     With the exception of historical  information,  the matters discussed below
under the headings "Results of Operations,"  "Liquidity and Capital  Resources,"
and "Year 2000 Compliance" 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

     Net  operating  revenue  decreased  slightly  to  $19,458,852  in 1998 from
$19,558,648 in 1997.  Casino revenue was  $19,036,621 in 1998 and $19,096,857 in
1997, a decrease of less than 1%. Casino revenue for  Womacks/Legends  Casino in
Cripple Creek, however,  increased from $18,650,017 to $19,002,377,  an increase
of 1.9%. The Company's share of the Cripple Creek market decreased slightly from
17.2% in 1997 to 16.8% in 1998.  Womacks/Legends  Casino operated  approximately
12.9% of the gaming devices in the Cripple Creek market in 1998, with an average
win per day per  machine  of $90  compared  with a market  average  of $68.  The
remaining  portion of casino revenue,  $34,244 in 1998 and $446,840 in 1997, was
derived from the Company's  casino  concession  for the Silver Wind cruise ship.
The concession agreement expired in January 1998. Gross margin from company-wide
casino  activities  increased  from 46% in 1997 to 59% in 1998.  The increase in
margin is attributable to a more focused  management and marketing  approach for
Womacks/Legends  Casino.  Management  eliminated both the busing and the logojet
marketing  programs that were in effect in 1997. At the same time, a significant
number of new  memberships  in the  casino's  Gold Club were  added.  Additional
emphasis was put into  further  refining  the product  mix,  upgrading  both the
interior of the facilities,  as well as the slot machine mix.  Parking  capacity
was expanded and made more  convenient  as the Company  secured an additional 68
spaces directly adjacent to the casino, and the Company paved 167 parking spaces
to provide the first paved casino parking in Cripple Creek. Also contributing to
the casino margin improvement were proportionately  lower payroll costs. Various
other  initiatives  were  undertaken  that  management  believes has resulted in
greater attention to customer service.

     Food and beverage  revenue  decreased  from $922,449 in 1997 to $878,991 in
1998,  or 4.7%,  due to a  reduction  in the  level  of  promotional  meals  and
beverages  given to gaming  patrons.  The cost of food and beverage  promotional
allowances,  which are included in casino costs, decreased from $973,609 in 1997
to $842,305 in 1998. Hotel revenue  increased  slightly from $57,167 to $62,624,
principally  as the result of a  marketing  arrangement  with a local hotel that
commenced  in late 1998.  The  decrease in other  revenue  from 1997 to 1998 was
chiefly due to lower gift shop sales at Womacks/Legends  Casino and a decline in
concession  fees from the Silver Wind cruise ship coincident with the expiration
of the concession agreement.

                                       16

<PAGE>

     General and administrative expense increased from $5,247,763 to $5,850,870,
representing an increase,  as a percentage of net operating revenue,  from 26.8%
in 1997 to 30.1% in 1998,  primarily as a result of higher  payroll  costs.  The
1998 amount also  includes  $120,000 of fines  imposed  against  Womacks/Legends
Casino as a result of audits  conducted by the  Colorado  Division of Gaming for
the period August 1995 through July 1998.

     Depreciation  increased from  $1,607,148 in 1997 to $1,655,176 in 1998. The
increase is attributable to property  improvements and acquisition of new gaming
equipment at Womacks/Legends Casino.  Amortization of goodwill was $1,341,504 in
both years.

     Interest  expense  decreased  from  $1,039,147 to  $1,023,907,  as a higher
average debt balance was more than offset by a lower  weighted-average  interest
rate.  The  weighted-average  interest rate was 8.74% in 1998 and 9.58% in 1997.
The other items included in the caption "Other expense, net" in the consolidated
statements of operations, for both 1998 and 1997, are described in Note 8 to the
consolidated financial statements.

     As more fully discussed in Note 7 to the consolidated financial statements,
the Company  recognized  income tax expense of $123,000 in 1998 versus  $95,000,
before  extraordinary  item,  in  1997.  The  provision  in  1998  is  net  of a
nonrecurring  credit of  $1,003,580  from the reversal of a valuation  allowance
against net deferred tax assets  established  in prior years.  The  provision in
1997  represents  alternative  minimum tax for which the Company  will receive a
credit against its regular tax liability in succeeding years.

     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, 1998 the Company had cash, cash  equivalents and short-term
investments totaling $3,214,100 and net working capital of $681,100.  Additional
liquidity is available under the Company's  revolving  credit  facility  ("RCF")
with Wells Fargo Bank. See Note 4 to the Consolidated  Financial  Statements for
further  information on the RCF. The Company had unused borrowing capacity under
the RCF of approximately $8.9 million at December 31, 1998. Net cash provided by
operations  was  $4,221,872 in 1998 compared with  $2,983,195 in 1997,  with the
increase  primarily  attributable to the improved  operations of Womacks/Legends
Casino.  The Company  used cash of  $5,230,734  for  purchases  of property  and
equipment in 1998, with  approximately  $3.6 million used to purchase a property
adjacent to  Womacks/Legends  Casino that was  subsequently  improved to provide
paved parking for casino patrons.

         As  more  fully  described  in  Note  4 to the  consolidated  financial
statements, during 1998 the Company renegotiated certain terms of the RCF. Among
other provisions, the maximum availability was increased from $13 million to $20
million and the interest rate  structure was amended,  which would further lower
the Company's cost of capital if certain leverage ratios are achieved.

                                       17

<PAGE>

     Management  has  deferred  a  decision  on  whether  to  proceed  with  the
construction of a hotel and parking  structure on its property across the street
from  Womacks/Legends  Casino  until it has had time to assess the impact of new
hotel capacity on the Cripple Creek market.  In November  1998,  Womacks/Legends
Casino  entered into an agreement with the operator of a new local hotel whereby
the casino is leasing a block of rooms from the hotel.  The casino  makes  these
rooms  available to its  customers,  sometimes  on a  complimentary  basis,  and
provides a free shuttle service  between the casino and the hotel.  For the near
term the  Company's  property  located  across the street  from  Womacks/Legends
Casino will be used for customer parking.

     In January 1999 the Company  reached a 20-year  definitive  agreement  with
Casino  Millennium  a.s., a Czech  company,  and with a Czech  subsidiary of Bau
Holding AG, one of the largest construction and development companies in Europe,
to  operate  a  casino  in  the  five-star   Marriott  Hotel,   currently  under
construction  in  Prague,  Czech  Republic.  The  Company  will  provide  casino
management  services in exchange for ten percent of the casino's  gross revenue,
and will provide  gaming  equipment for 45% of the casino's net profit.  Through
December 31, 1998, the Company had made deposits  towards the purchase of gaming
equipment  totaling  $537,400,  with  approximately  $1 million  remaining to be
funded in 1999. The Company expects to meet its remaining  commitment  through a
combination of existing  liquidity and anticipated cash flow. The opening of the
hotel and casino is  currently  scheduled,  subject  to  change,  for the second
quarter of 1999.

     In 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.  In  October  1998 the  Board  voted to  increase  the limit on the stock
repurchase  program  from $1 million to an  aggregate  of $2 million.  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.  Through
December 31, 1998, the Company had  repurchased  1,157,100  shares at an average
cost per share of $1.07.

     Management believes that the Company's cash and working capital at December
31, 1998,  together  with  expected  cash flows from  operations  and  borrowing
capacity  under  the RCF,  will be  sufficient  to  satisfy  its debt  repayment
obligations,  fund its anticipated  capital  expenditures and pursue  additional
business growth opportunities for the foreseeable future.


Year 2000 Compliance

     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  ("Y2K")  compliance
issue.  As the year 2000  approaches,  such systems may be unable to  accurately
process  certain  date-based  or  date-sensitive  information.  The  Company  is
presently  implementing its plan to ensure Y2K compliance.  The Company believes
that it has identified all software applications, hardware components, equipment
and third-party vendors that could pose potential Y2K problems.

Computerized Systems and Components

     The  computerized  systems of most  significance  to the Company's  ongoing
business  operations are those that involve slot reporting,  player tracking and
accounting.  Those systems rely primarily on hardware and software obtained from
third-party  vendors. The Company has contacted the respective vendors for these
systems and has received written confirmation that the software applications and
related  hardware  components  currently  in  use  for  those  systems  are  Y2K
compliant.  Certain of these systems and components  were upgraded  during 1998.
The  Company did not incur any  significant  incremental  costs in making  these
systems Y2K compliant.

                                       18
<PAGE>

Non-IT-Dependent Systems and Equipment

     The Company uses in its business certain systems and equipment that contain
embedded  technology  ("non-IT  dependent  systems")  such as electronic  gaming
devices,  security and surveillance equipment,  copiers and fax machines,  alarm
systems and voicemail  systems,  among others.  The most significant of these to
the Company's  operations are electronic gaming devices,  from which the Company
derives  in  excess  of 95% of its  net  operating  revenue.  Based  on  written
responses from its vendors,  the Company believes that  substantially all of the
electronic gaming devices  presently being used in the Company's  operations are
Y2K  compliant.  The Company has tested its  security and  surveillance  systems
internally   and  determined   that  they  are  Y2K  compliant.   The  remaining
non-IT-dependent  systems  and  equipment  are not  considered  critical  to the
Company's operations. Through its own evaluation or contact with the appropriate
vendors, the Company has determined that the majority of these remaining systems
and  equipment are Y2K  compliant.  Management  believes  that  non-IT-dependent
systems and equipment that have not yet been fully  evaluated for Y2K compliance
would not have a material  adverse  effect on the  Company's  operations  in the
event of non-Y2K compliance.


Third-Party Service Providers

     The Company has identified and contacted certain primary service providers,
including its banks and payroll processor,  to determine whether their potential
Y2K problems could have a material  adverse  effect on the Company.  The Company
has received  responses  that they are  generally  on schedule to achieving  Y2K
compliance.  The Company can make no assurances,  however,  that these providers
will, in fact, become Y2K compliant on a timely basis. The Company relies on its
banks  principally to provide working capital and to process  transactions.  The
failure of the  Company's  banks to provide these  services  would likely have a
material adverse effect on the Company's day-to-day operations.  The Company has
not yet developed a contingency plan to address any Y2K-related  failures by its
banks.  With  respect to payroll  processing,  the  Company  estimates  that the
incremental cost to process its payroll in-house would be approximately  $75,000
on an annual basis. The Company has not,  however,  developed a contingency plan
to process  its  payroll  in-house.  The  Company  will  continue to monitor the
progress of its banks and its payroll  processor in addressing  their  potential
Y2K problems,  and will consider whether to develop and test  contingency  plans
based on the extent of their reported progress.

     The ability of the Company to conduct its  operations is also  dependent on
the  provision of certain  services  such as  electricity,  water,  natural gas,
telecommunications  and the like by third parties,  where there is limited or no
choice of alternative  suppliers.  Failures by such third-party  suppliers would
have a material adverse effect on the Company's  operations.  The Company cannot
reasonably estimate the likelihood of Y2K-related failures by these suppliers to
provide  their  services.  The Company  does not believe  that it is feasible to
develop or test contingency plans to cope with possible  Y2K-related failures by
these third parties.

                                       19

<PAGE>

Current Status

     With the  exception  of certain  services  on which the  Company  relies as
described in the preceding two  paragraphs,  the Company's  information  at this
time does not indicate that Y2K compliance  issues will have a material  adverse
effect upon the financial condition or results of operations of the Company. The
Company's  incremental  cost of its Y2K compliance  program to date has not been
significant and incremental  costs to be incurred by the Company to complete its
Y2K  compliance  program  are not  expected to be  significant.  There can be no
assurance, however, that the cost of Y2K compliance might not become material as
the Company's study progresses and more information becomes available.


Item 7.  Financial Statements.

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




                                       20
<PAGE>
                                                          
                              CENTURY CASINOS, INC.
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


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

Independent Auditors' Report ......................................... F2

Consolidated Balance Sheet
as of December 31, 1998 .............................................. F3

Consolidated Statements of Operations
for the Years Ended December 31, 1998 and 1997 ....................... F4

Consolidated Statements of Comprehensive Income
(Loss) for the Years Ended December
31, 1998 and 1997 .................................................... F5

Consolidated Statements of Shareholders'
Equity for the Years Ended December 31,
1998 and 1997 ........................................................ F6

Consolidated Statements of Cash Flows
for the Years Ended December 31, 1998 and 1997 ....................... F7

Notes to Consolidated Financial Statements ........................... F9






                                       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,  1998,  and the related  consolidated
statements of operations,  comprehensive income (loss), 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, 1998, 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
March 16, 1999

                                       F2
<PAGE>

                     CENTURY CASINOS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>

                                                                          December 31, 1998
                                                                          -----------------
ASSETS

Current Assets:
<S>                                                                          <C>       
   Cash and cash equivalents .............................................   $ 2,175,604
   Short-term investments ................................................     1,038,496
   Prepaid expenses and other ............................................       773,849
                                                                             -----------
       Total current assets ..............................................     3,987,949

Property and Equipment, net ..............................................    18,337,734
Goodwill, net of accumulated amortization of $5,130,877 ..................    11,257,130

Other Assets .............................................................     1,100,893
                                                                             ===========
Total ....................................................................   $34,683,706
                                                                             ===========

LIABILITIES AND SHAREHOLDERS'  EQUITY

Current Liabilities:
   Current portion of long-term debt, including $420,360 to related party    $   822,453
   Accounts payable and accrued liabilities ..............................     2,484,396
                                                                             -----------
        Total current liabilities ........................................     3,306,849

Long-Term Debt, less current portion .....................................    12,229,106
Commitments and Contingencies (Note 6)
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; 14,704,785 shares outstanding       158,619
   Additional paid-in capital ............................................    23,323,155
   Accumulated other comprehensive loss ..................................       (15,308)
   Accumulated deficit ...................................................    (3,081,876)
                                                                             -----------
                                                                              20,384,590
                                                                        
   Treasury stock - 1,157,100 shares, at cost ............................    (1,236,839)
                                                                             -----------
           Total shareholders' equity ....................................    19,147,751
                                                                             -----------
Total ....................................................................   $34,683,706
                                                                             ===========

See notes to consolidated financial statements.
</TABLE>

                                       F3
<PAGE>



                     CENTURY CASINOS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>


                                                             For the Year Ended December 31,
                                                             -------------------------------
                                                                   1998           1997
                                                               ------------   -----------
Operating Revenue:
<S>                                                            <C>            <C>        
   Casino ...................................................  $19,036,621    $19,096,857
   Food and beverage ........................................      878,991        922,449
   Hotel ....................................................       62,624         57,167
   Other ....................................................      152,769        235,238
                                                               -----------    -----------
                                                                20,131,005     20,311,711
   Less promotional allowances ..............................     (672,153)      (753,063)
                                                               -----------    -----------
           Net operating revenue ............................   19,458,852     19,558,648
                                                               -----------    -----------

Operating Costs and Expenses:
   Casino ...................................................    7,755,733     10,309,162
   Food and beverage ........................................      490,290        393,670
   Hotel ....................................................       27,778         17,590
   General and administrative ...............................    5,850,870      5,247,763
   Depreciation and amortization ............................    2,996,680      2,948,652
                                                               -----------    -----------
           Total operating costs and expenses ...............   17,121,351     18,916,837
                                                               -----------    -----------

Income from Operations ......................................    2,337,501        641,811

   Other expense, net .......................................     (286,612)      (917,575)
                                                               -----------    -----------

Income (Loss) before Income Taxes and Extraordinary Item ....    2,050,889       (275,764)

   Provision for income taxes ...............................      123,000         95,000
                                                               -----------    -----------

Income (Loss) before Extraordinary Item .....................    1,927,889       (370,764)

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

Net Income (Loss) ...........................................  $1,927,889     $  (542,624)
                                                               ===========    ===========

Income (Loss) Per Share, Basic and Diluted:
   Before extraordinary item ................................  $      0.13    $     (0.02)
   Extraordinary item .......................................            -          (0.01)
                                                               ===========    ===========
   Net income (loss) ........................................  $      0.13    $     (0.03)
                                                               ===========    ===========

</TABLE>

See notes to consolidated financial statements.

                                       F4
<PAGE>

                     CENTURY CASINOS, INC. AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
<TABLE>
<CAPTION>


                                                              For the Year Ended December 31,
                                                        ----------------------------------------------
                                                               1998                       1997
                                                        --------------------        ------------------
<S>                                                     <C>                         <C>                
Net Income (Loss)                                       $          1,927,889        $         (542,624)
   Foreign currency translation adjustments                           12,469                   (13,923)
                                                        ====================        ==================
Comprehensive Income (Loss)                             $          1,940,358        $         (556,547)
                                                        ====================        ==================

</TABLE>





See notes to consolidated financial statements.





                                       F5


<PAGE>

                              CENTURY CASINOS, INC.
                                      AND
                                  SUBSIDIARIES



                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                 FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997


                                                                              
<TABLE>
<CAPTION>

                                                                        
                                                                       Accumulated
                                     Common Stock       Additional        Other                       Treasury Stock
                                --------------------     Paid -in     Comprehensive  Accumulated   ------------------- 
                                  Shares      Amount      Capital     Income (Loss)    Deficit     Shares       Amount     Total
                                ----------  --------    -----------   ------------- ------------   -------      ------  -----------
<S>                             <C>         <C>         <C>             <C>        <C>             <C>          <C>     <C>        
BALANCE AT DECEMBER 31, 1996 .. 15,861,885  $158,619    $24,820,275     $(13,854)  $(4,467,141)                         $20,497,899
                                                                                                                                   
Amortization of warrants 
    issued to consultant ......                              48,660                                                          48,660
                                                                                                                                   
Warrants repriced in 
    connection with
    debt refinancing ..........                              38,608                                                          38,608 

Other comprehensive loss ......                                          (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 

Amortization of warrants 
    issued to consultant ..                                  44,612                                                          44,612 

Issuance of cash and notes 
    to former principals of 
    Gold Creek Associates .....                          (1,629,000)                                                     (1,629,000)

Purchases of treasury stock ...                                                                  1,157,100 $(1,236,839)  (1,236,839)

Other comprehensive income ....                                           12,469                                             12,469 

Net income ....................                                                      1,927,889                            1,927,889 
                                ----------  --------    -----------   ------------ ------------  ---------  -----------  -----------
BALANCE AT DECEMBER 31, 1998 .. 15,861,885  $158,619    $23,323,155     $(15,308)  $(3,081,876)  1,157,100  $(1,236,839) $19,147,751
                                ==========  ========    ===========   ============ ============  =========  ============ ===========
                                                                                                    
                                                                                                                                   
</TABLE>
                                                                               
See notes to consolidated financial statements.  

                                      F-6
<PAGE>
                     CENTURY CASINOS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>


                                                                                     For the Year Ended December 31,
                                                                                    --------------------------------
                                                                                         1998                1997
                                                                                    -------------         ----------
<S>                                                                                  <C>                  <C>       
Cash Flow from Operations:
   Net income (loss)                                                                 $  1,927,889         $(542,624)

   Adjustments to reconcile net income (loss) to net cash provided by
operations:
       Depreciation                                                                     1,655,176          1,607,148
       Amortization of goodwill                                                         1,341,504          1,341,504
       Amortization of deferred financing costs                                           104,044             65,744
       Extraordinary item - debt prepayment premium                                                          211,860
       Income from terminated projects, net                                             (687,128)           (81,971)
      (Gain) loss on disposition of assets                                               (46,169)             44,367
       Deferred tax benefit                                                             (499,000)
       Other noncash charges                                                              44,612             60,035
       Changes in operating assets and liabilities:
         Prepaid expenses and other assets                                                 60,676            242,786
         Accounts payable and accrued liabilities                                         320,268             34,346
                                                                                    --------------       ------------

         Net cash provided by operations                                                4,221,872          2,983,195
                                                                                    --------------       ------------


Cash Flow from Investing Activities:
    Expenditures for gaming development projects and other                              (638,034)          (379,761)
    Purchases of property and equipment                                               (5,230,734)        (3,432,985)
    Purchases of short-term investment securities, net                                (1,038,496)
    Proceeds from terminated projects                                                     981,000            926,338
    Proceeds received from disposition of assets                                          160,482             15,000
    Payments to former principals of Gold Creek Associates                              (534,000)
                                                                                    --------------       ------------

         Net cash used in investing activities                                        (6,299,782)        (2,871,408)
                                                                                    --------------       ------------
</TABLE>



                          -Continued on following page-


                                      F-7
<PAGE>

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

<TABLE>
<CAPTION>

                                                                                    For the Year Ended December 31,
                                                                                   ---------------------------------
                                                                                       1998                 1997
Cash Flow from Financing Activities:                                               ------------         ------------

<S>                                                                                 <C>                  <C>       
   Proceeds from borrowings                                                         14,477,778           17,748,856
   Principal repayments and prepayment premium on borrowings                       (13,115,144)         (17,869,138)
   Deferred financing costs                                                           (100,259)            (320,067)
   Purchases of treasury stock                                                      (1,236,839)
                                                                                   -------------        -------------

         Net cash provided by (used in) financing activities                             25,536            (440,349)
                                                                                   -------------        -------------

Decrease in Cash and Cash Equivalents                                               (2,052,374)            (328,562)

Cash and Cash Equivalents at Beginning of Year                                        4,227,978            4,556,540
                                                                                                        -------------
                                                                                   -------------

Cash and Cash Equivalents at End of Year                                           $  2,175,604         $  4,227,978
                                                                                   =============        =============

Supplemental Disclosure of Noncash Investing and Financing Activities:
                                                                                         1998                 1997

      Issuance of notes to former principals of Gold Creek Associates               $ 1,095,000
      Equipment acquired through long-term financing                                                    $     293,911
      Warrants repriced in connection with debt refinancing                                             $      38,608

</TABLE>

Supplemental Disclosure of Cash Flow Information:

     Interest paid by the Company was $1,194,268 in 1998 and $847,658 in 1997.
     Income taxes paid by the Company were $669,545 in 1998 and $24,090 in 1997.


See notes to consolidated financial statements.


                                      F-8
<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.  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
          Company's  operating  revenue  for  both  1998  and  1997  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.
          Except for an interest  rate swap (see Note 4),  which has no carrying
          value in the consolidated financial statements, the Company's carrying
          value of financial instruments approximates fair value at December 31,
          1998.

          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.

                                      F-9
<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 $3,863,940 at December 31, 1998,  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
          $7,393,190 at December 31, 1998, is being amortized on a straight-line
          basis over 15 years, and is deductible for income 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 $842,305 in 1998 and $973,609 in 1997.

          Foreign  Currency   Translation  -  Adjustments   resulting  from  the
          translation  of the  accounts  of the  Company's  Austrian  and  South
          African  subsidiaries  from  the  local  functional  currency  to U.S.
          dollars  are  recorded  as other  comprehensive  income or loss in the
          consolidated statements of shareholders' equity. 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 - The Company  follows the  provisions  of SFAS No.
          128,  "Earnings per Share," in calculating  basic and diluted earnings
          per share.  Basic earnings per share considers only outstanding common
          stock in the  computation.  Diluted earnings per share gives effect to
          all potentially dilutive securities.

          Comprehensive  Income - The Company  adopted SFAS No. 130,  "Reporting
          Comprehensive Income," effective January 1, 1998. Comprehensive income
          is a more inclusive  financial  reporting measure than net income, and
          includes  all  changes  in equity  during  the  period,  except  those
          resulting from investments by, and distributions  to,  shareholders of
          the Company.

          Operating  Segments - Management  considers the Company's  business to
          presently comprise a single operating segment, as that term is defined
          by SFAS No. 131,  "Disclosures  about  Segments of an  Enterprise  and
          Related Information," which the Company adopted January 1, 1998.

                                      F-10
<PAGE>

Recently Issued Accounting
          Pronouncements - In June 1998 the Financial Accounting Standards Board
          issued  SFAS No.  133,  "Accounting  for  Derivative  Instruments  and
          Hedging  Activities,"  which  establishes   accounting  and  reporting
          standards  for  derivative  instruments  and hedging  activities.  The
          pronouncement  requires  that a  company  designate  the  intent  of a
          derivative  to which it is a party,  and  prescribes  measurement  and
          recognition  criteria  based on the  intent and  effectiveness  of the
          designation.  The  Company  will be  required to adopt SFAS No. 133 no
          later than the first quarter of 2000. The Company is in the process of
          evaluating  the impact that will result from the  adoption of SFAS No.
          133.  

Reclassifications  -  Certain  reclassifications  have  been  made  in the  1997
          financial statements to conform with the 1998 presentation.

3.       PROPERTY AND EQUIPMENT
         Property and equipment at December 31, 1998, consist of the following:

                                                                    Estimated
                                                                  Service Life
                                                                    in Years
           Land                               $       8,418,607
           Buildings and improvements                 6,825,209      7 - 31
           Gaming equipment                           4,615,246       3 - 7
           Furniture and office equipment             1,091,638       5 - 7
           Other                                        861,488       3 - 7
                                              ------------------
                                                     21,812,188
           Less:  accumulated depreciation          (4,394,958)
                                              ------------------

                                                     17,417,230
           Nonoperating casino and land                 920,504
                                              ------------------
           Property and equipment, net         $     18,337,734
                                              ==================

4.       LONG-TERM DEBT
         Long-term debt at December 31, 1998, consists of the following:

<TABLE>
<S>                                                                                  <C>        
           Borrowings under revolving line of credit facility with bank              $11,073,059
           Notes payable to former principals of Gold Creek                              890,993
           Convertible debenture                                                         500,000
           Note payable to founding shareholder, unsecured; noninterest-bearing          420,360
           Notes payable secured by gaming equipment                                     167,147

                                                                                     ------------
           Total long-term debt                                                       13,051,559
           Less current portion                                                         (822,453)
                                                                                     ============
           Long-term portion                                                         $12,229,106
                                                                                     ============
</TABLE>

                                      F-11
<PAGE>

          At December 31, 1998, the Company had a $20 million reducing revolving
          line of credit  facility  (the "RCF")  with Wells  Fargo Bank  ("Wells
          Fargo")  that  expires  on  April  1,  2001.  The  RCF is  secured  by
          substantially all of the real and personal property of Womacks/Legends
          Casino. An annual commitment fee of between three-eighths and one-half
          percent,  payable  quarterly,  is charged on the unused portion of the
          RCF.  The  Company  has  designated  $10  million  of the  outstanding
          borrowing  as a  LIBOR-based  obligation  for a period of six  months,
          expiring March 16, 1999. The interest rate on the  outstanding  amount
          above $10  million is based on the bank's  prime  rate.  The  interest
          rates  for  both  the  LIBOR-based  and  prime-based  portions  of the
          outstanding  balance are based on the  Company's  leverage  ratio,  as
          defined,  calculated  on a  trailing-four-quarters  basis and adjusted
          quarterly. At December 31, 1998, the weighted-average interest rate on
          the total outstanding  balance was 8.13%. The borrowing capacity under
          the RCF will be  reduced by  $555,600  quarterly,  beginning  April 1,
          1999.  The  unused  borrowing  capacity  at  December  31,  1998,  was
          approximately  $8.9  million.  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,  1998,  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. An extraordinary charge,
          net of income taxes, of $171,860, constituting a prepayment premium on
          one  of the  borrowings  retired  at the  inception  of the  RCF,  was
          recognized in the second quarter of 1997.

          In the third  quarter of 1998,  the Company  entered  into a five-year
          interest rate swap agreement on $7.5 million  notional  amount of debt
          under the RCF,  whereby the Company will pay a LIBOR-based  fixed rate
          and  receive  a  LIBOR-based  floating  rate.   Generally,   the  swap
          arrangement  will be  advantageous  to the  Company to the extent that
          interest  rates  increase  in the  future and  disadvantageous  to the
          extent  that they  decrease.  The net amount  paid or  received by the
          Company on a quarterly basis will result in an increase or decrease to
          interest expense. Net additional interest expense to the Company under
          the swap agreement in 1998 was $4,701.  At December 31, 1998, the cost
          to the Company to  terminate  the  interest  rate swap would have been
          approximately $123,000.

          During the second quarter of 1998, the Company reached  agreement with
          the  two  former  principals  of Gold  Creek  to pay  them a total  of
          $1,629,000,  consisting of cash of $534,000 and two  promissory  notes
          totaling  $1,095,000,  in lieu of issuing  common stock as  previously
          provided  for in  connection  with  the  acquisition  of Gold  Creek's
          assets. The notes bear interest at 8.75% and require aggregate monthly
          payments  of  principal  and  interest of $16,100  through  June 2001.
          Additional  principal  payments  of $75,000  on  January 1, 1999,  and
          $50,000 on April 1, 1999, are required on one of the notes. On July 1,
          2001, the  then-remaining  aggregate  principal of $356,681 is due and
          payable.

          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  second   anniversary  date  at  127%  of  the  outstanding
          principal.  The  prepayment  amount  declines  to 122% after the third
          anniversary  date and to 116% after the fourth  anniversary  date. The
          entire unpaid principal is due on May 30, 2001.

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

                                      F-12
<PAGE>

         Scheduled maturities of long-term debt are as follows:

                       1999                               $   822,453
                       2000                                 4,109,606
                       2001                                 8,119,500
                                                        =============
                       Total                              $13,051,559
                                                        =============

5.        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 expired
          on March 4, 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 on March 31, 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 on 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 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.

                                      F-13
<PAGE>

          In April  1994 the  Board of  Directors  of the  Company  adopted  the
          Employees'  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, 1998, 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>

                                                                         1998                             1997

                                                             ------------------------------    ----------------------------
                                                                                 Weighted-                       Weighted-
                                                                                  Average                         Average
                                                                                 Exercise                         Exercise
                                                                 Shares            Price            Shares         Price
           Incentive Stock Options:                          --------------    -----------     -------------     ---------

<S>                                                               <C>              <C>             <C>             <C>    
              Outstanding at January 1                            2,615,400        $  1.44         2,371,400       $  1.50

              Granted                                                20,000        $  0.94           265,800       $  0.85
              Cancelled or forfeited                                (9,000)        $  1.50          (21,800)       $  1.50
                                                             ---------------                   --------------
              Outstanding at December 31                          2,626,400        $  1.43         2,615,400       $  1.44
                                                             ===============                   ==============

              Options exercisable at December 31                  2,604,267        $  1.44         2,460,834       $  1.47
                                                             ===============                   ==============
</TABLE>

          Summarized  information  regarding options outstanding at December 31,
          1998, is as follows:

                                              Weighted-
                                Number         Average             Number
            Exercise         Outstanding      Remaining          Exercisable
              Price          At Year End    Term in Years        At Year End
            --------         -----------    -------------        -----------
              $0.75             230,000          8.8                 230,000
              $0.94              20,000          9.0                  13,333
              $1.50           2,336,900          6.7               2,321,434
              $1.63              30,000          7.0                  30,000
              $2.25               9,500          6.4                   9,500

                              ==========                          ===========
                              2,626,400          6.9               2,604,267
                              ==========                          ===========


                                      F-14
<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 income (loss) and earnings
          (loss) per share  would have been  adjusted  to the pro forma  amounts
          indicated below:
<TABLE>
<CAPTION>

                                                                      1998             1997
                                                                   -----------      -----------
<S>                                                                <C>              <C>        
           Net income (loss)                  As reported          $ 1,927,889      $ (542,624)
                                              Pro forma            $ 1,881,683      $ (649,772)

           Earnings (loss) per share,
             basic and diluted                As reported          $      0.13      $    (0.03)
                                              Pro forma            $      0.12      $    (0.04)

</TABLE>

          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:

                                                          1998           1997
                                                        --------       --------
           Weighted-average fair value of
              options granted during the year           $   0.57       $   0.58
           Weighted-average risk-free interest rate         5.5%           5.7%
           Weighted-average expected life                 5 yrs.        10 yrs.
           Weighted-average expected volatility              67%            59%
           Weighted-average expected dividends               $ 0            $ 0

          In  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. In October 1998 the Board voted to increase
          the  limit on the  stock  repurchase  program  from $1  million  to an
          aggregate of $2 million.  Through  December 31, 1998,  the Company had
          repurchased 1,157,100 shares at an average cost per share of $1.07.

                                      F-15
<PAGE>


6.        COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

          Prague,  Czech  Republic - In March 1998 the  Company  entered  into a
          joint venture agreement with a Czech subsidiary of Bau Holding AG, one
          of the largest  construction and development  companies in Europe,  to
          form Century Casinos Praha a.s. The Company was to hold a 49% interest
          in the venture,  which will operate a casino in the five-star Marriott
          Hotel,   currently  under  construction  in  Prague,  Czech  Republic.
          Subsequent  to signing the joint  venture  agreement,  laws  governing
          casino  licenses  in the Czech  Republic  were  amended to  preclude a
          foreign entity from holding an equity interest in a casino license. In
          January 1999 the Company entered into a 20-year  definitive  agreement
          with Casino  Millennium  a.s.,  a Czech  company  that has secured the
          leasing rights from the hotel, to provide casino  management  services
          for ten percent of the casino's gross revenue,  and to provide certain
          gaming equipment for 45% of the casino's net profit.  Through December
          31, 1998, the Company had made deposits towards the purchase of gaming
          equipment totaling  $537,400,  with approximately $1 million remaining
          to be funded in 1999. The opening of the hotel and casino is currently
          scheduled, subject to change, for the second quarter of 1999.

          South  Africa - On April 21,  1998,  the Gauteng  Gambling and Betting
          Board (the "Board")  announced the award of the remaining two licenses
          for the province of Gauteng, South Africa. Silverstar Development Ltd.
          ("Silverstar"),  the consortium to which the Company is the contracted
          casino management  partner,  and in which the Company holds a minority
          equity  interest,  had  submitted  an  application  for a proposed $70
          million,   1,700  gaming  position  hotel/casino  resort  development.
          Silverstar was not awarded one of the licenses.  The Company  recorded
          an  impairment  allowance  against  its entire  equity  investment  in
          Silverstar  in the amount of  $196,022,  which is  included  in "other
          expense, net" in the accompanying statements of operations. Silverstar
          subsequently  filed a legal  action  with the  Supreme  Court of South
          Africa (the  "Court")  challenging  the  decision of the Board and the
          provincial  government in their  failure to award a casino  license to
          Silverstar on the grounds that the decision-making process was legally
          deficient.  On March 11,  1999,  the  Court  overturned  the  previous
          license award for the West Rand region of Gauteng Province, the region
          for which Silverstar had applied.  The Court's decision  requires that
          the Board and the provincial government  redetermine the award process
          for the West Rand  region.  Adverse  parties  have the right to appeal
          this ruling. To date, no timetable for  reconsideration  of the gaming
          license award has been  established.  While the Company  believes that
          Silverstar's  previous  application will be given proper consideration
          through the  reevaluation  process,  there can be no assurance  that a
          gaming license will ultimately be awarded to Silverstar.

          Riverboat  Development  Agreement-Indiana - On September 14, 1998, the
          Indiana  Gaming  Commission  awarded a Certificate  of  Suitability to
          Pinnacle  Gaming  Development  Corporation   ("Pinnacle")  to  conduct
          riverboat gaming in Switzerland  County.  In accordance with the terms
          of the sale of the Company's interest in Pinnacle in 1995, the Company
          received a payment in the third quarter of 1998 of $431,000,  which is
          included in "other  expense,  net" in the  accompanying  statements of
          operations.  Additionally,  the  Company is  entitled  to a payment of
          $1,040,000  upon  "groundbreaking"  of the  project,  and  installment
          payments  of  $32,000  per  month  for  the  first  60  months  of the
          riverboat's operation. The Company may elect to receive, or the owners
          of  Pinnacle  may elect to prepay,  the  installment  payments  in the
          aggregate discounted amount of $1,453,000.  While the Company believes
          that Pinnacle intends to proceed with the development of the riverboat
          project,  there can be no assurance  that  Pinnacle will do so, or, if
          the project does proceed,  when the additional payments will be earned
          and received by the Company.  Any future  payments to the Company will
          be recognized as income when earned.

                                      F-16
<PAGE>

          Consulting  Agreement-Rhodes,  Greece - In the second quarter of 1998,
          the Company reached a consulting agreement ("current  agreement") with
          Rhodes Casino S.A. and Playboy Gaming  International Ltd.  ("Playboy")
          to  assign   certain  of  the   Company's   rights  and  delegate  its
          responsibilities under a previously executed management and consulting
          agreement  ("previous  agreement")  pertaining  to the  operation of a
          casino on the island of Rhodes,  Greece. The Company has received from
          Playboy a payment of $25,000 for certain preopening services performed
          to date, and will receive  annual  payments of $50,000 for each of the
          first three years of the casino's operations. The Company will have no
          further obligations under the previous agreement unless, subsequent to
          the opening of the casino,  Playboy is  unwilling or unable to perform
          under the current  agreement.  In such event, the previous  agreement,
          and the Company's  obligations,  would be reinstated together with the
          Company's right to receive up to $300,000 per year for the first three
          years of casino  operations,  with an aggregate  minimum  guarantee of
          approximately $250,000.

          Settlement of Note Receivable from Terminated  Management  Agreement -
          In March 1998 the Company  negotiated an early  settlement of its note
          receivable from SSK Game Enterprises,  Inc.  ("SSK"),  with respect to
          the  Company's  casino  management  agreement  with the Soboba Band of
          Mission  Indians in  California,  which  agreement  was  terminated in
          August 1995.  Aggregate  payments  received  pursuant to the note from
          August 1995 through the date of settlement were  $2,457,727,  of which
          $1,825,756  was applied to recovery of  capitalized  costs through the
          third  quarter of 1997,  $81,971 was  recognized in income in 1997 and
          $550,000 was recognized in income in 1998.  The amounts  recognized in
          income  are  included  in  the  caption  "other  income,  net"  in the
          accompanying   consolidated  statements  of  operations.   No  further
          payments will be received under the note.

          Colorado  Division of Gaming Audit - In 1998 the Colorado  Division of
          Gaming  (the  "Division")  conducted  an  audit of the  Company's  two
          Colorado gaming licenses  covering the period August 1995 through July
          1998.  As  a  result  of  the  audit,  the  Division  alleged  certain
          violations  of  Colorado  gaming   regulations  and  internal  control
          procedures.  The licensees  have each entered into a  Stipulation  and
          Agreement whereby the licensees have agreed to fines totaling $120,000
          and have  submitted to the Division  corrective  action plans that are
          responsive to the Division's  concerns.  The  corrective  action plans
          have been  approved by, and will be monitored for  compliance  by, the
          Division.  Management  believes  that the  licensees are in compliance
          with the corrective action plans.

          Employee  Benefit Plan - In March 1998 the Company  adopted the 401(k)
          Savings and  Retirement  Plan (the "Plan").  The Plan allows  eligible
          employees to make tax-deferred  contributions  that are matched by the
          Company up to a specified  level. The Company  contributed  $16,177 to
          the Plan in 1998.

          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
          $468,150  in 1999,  $374,364 in 2000,  $328,878  in 2001,  $320,566 in
          2002,  $229,500 in 2003 and $272,000  thereafter.  Rental  expense was
          $573,584 in 1998 and $630,353 in 1997.

          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
          and having terms and  conditions  as shall be approved by the Board of
          Directors, or a combination thereof.

                                      F-17
<PAGE>

7.        INCOME TAXES

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

                                                 1998                 1997
                                           ---------------       --------------
          Current:

              Federal                      $       512,000       $       95,000
              State                                110,000
                                           ----------------      ---------------
                                                   622,000               95,000
                                           ----------------      ---------------

          Deferred:
              Federal                            (439,000)
              State                               (60,000)
                                           ----------------      ---------------
                                                 (499,000)

                                           ----------------      ---------------
                                           $      123,000        $       95,000
                                           ================      ===============

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

<TABLE>
<CAPTION>

                                                                                          1998             1997
                                                                                    ------------       ------------
          <S>                                                                       <C>                <C>         
          Expected federal income tax provision (benefit) at statutory rate         $    697,302       $   (93,759)
          Increase (decrease) due to:
              Goodwill amortization                                                      252,111           252,111
              Loss of foreign subsidiary                                                  16,444            17,702
              State income taxes, net of federal benefit                                  98,362            17,500
              Alternative minimum tax, before benefit associated
                  with extraordinary item of $40,000 in 1997                                                95,000
              Penalties and fines                                                         45,171             1,926
              Other nondeductible expenses                                                17,190             2,326
              Change in valuation allowance                                          (1,003,580)         (197,806)

                                                                                    -------------      ------------
          Provision for income taxes                                                $    123,000       $    95,000
                                                                                    =============      ============
</TABLE>

          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, 1998,
          consist of the following:

           Deferred tax assets:
             Alternative minimum tax credit carryforward          $  51,434
             Property, plant and equipment                          130,406
             Accrued liabilities and other                          348,952
                                                                  ----------
                                                                    530,792
           Deferred tax liabilities:
              Prepaid expenses                                      (31,792)

                                                                  ----------
           Net deferred tax assets                                $ 499,000
                                                                  ==========


                                      F-18
<PAGE>

8.        OTHER EXPENSE, NET

          Other expense, net, consists of the following:
<TABLE>
<CAPTION>

                                                             1998             1997
                                                         -------------    ------------
          <S>                                            <C>              <C>         
          Interest income                                $     108,041    $    152,912
          Interest expense                                  (1,023,906)     (1,039,147)
          Income from terminated projects, net                 687,128          81,971
          Amortization of deferred financing costs            (104,044)        (65,744)
          Gain (loss) on disposal of equipment                  46,169         (47,567)
                                                         --------------   -------------
                                                         $    (286,612)   $   (917,575)
                                                         ==============   =============
</TABLE>

9.       EARNINGS (LOSS) PER SHARE

         Basic and diluted earnings (loss) per share were computed as follows:
<TABLE>
<CAPTION>

                                                                                          1998              1997
                                                                                     --------------   --------------
             <S>                                                                     <C>              <C>           
          Basic Earnings (Loss) Per Share:
             Net income (loss)                                                       $   1,927,889    $    (542,624)
                                                                                     ==============   ==============
                                                                                                      
             Weighted average common shares                                             15,300,516       15,861,885
                                                                                     ==============   ==============
                                                                                                      
             Basic earnings (loss) per share                                         $        0.13    $       (0.03)
                                                                                     ==============   ==============

          Diluted Earnings (Loss) Per Share:
             Net income (loss), as reported                                          $   1,927,889    $    (542,624)
               Interest expense, net of income taxes, on convertible debenture              32,918
                                                                                     --------------   --------------
             Net income (loss) available to common shareholders                      $   1,960,807    $    (542,624)
                                                                                     ==============   ==============

             Weighted average common shares                                             15,300,516       15,861,885
               Effect of dilutive securities:

                   Convertible debenture                                                   271,739

                   Stock options and warrants                                               63,253
                                                                                     --------------   --------------
             Dilutive potential common shares                                           15,635,508       15,861,885
                                                                                     ==============   ==============

             Diluted earnings (loss) per share                                        $       0.13    $       (0.03)
                                                                                     ==============   ==============

             Excluded from computation of diluted earnings (loss) per share
                 due to antidilutive effect:
                   Options and warrants to purchase common shares                        5,526,009        6,215,009
                   Weighted average exercise price                                    $       1.99    $        1.97

</TABLE>

                                      F-19
<PAGE>

9.        EVENT SUBSEQUENT TO DECEMBER 31, 1998

          On February 8, 1999,  the  Company's  Board of Directors  approved the
          award of options on 809,000 shares of the Company's common stock under
          the  Employees'  Equity  Incentive  Plan. The options have an exercise
          price of $0.75 per share, a vesting period of one year and an exercise
          period of ten years.













                                      F-20
<PAGE>

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

     Not applicable.

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 1999 Annual Meeting of  Stockholders  to be
filed  with the  Commission  within 120 days of  December  31,  1998,  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 1999 Annual Meeting of  Stockholders  to be
filed  with the  Commission  within 120 days of  December  31,  1998,  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 1999 Annual Meeting of  Stockholders  to be
filed  with the  Commission  within 120 days of  December  31,  1998,  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 with respect to the 1999 Annual Meeting of
Stockholders  to be filed with the  Commission  within 120 days of December  31,
1998, under the caption "Certain Relationships and Related Transactions."

                                       21

<PAGE>

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 fiscal 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.

     10.33     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.


     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.


     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.

                                       22

<PAGE>

     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.


     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-QSB for the quarterly
          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").


     6. The  following  exhibits  were filed with the Form 10-KSB for the fiscal
     year ended December 31, 1997 and are incorporated herein by reference:

     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.


     7. The following exhibits were filed with the Form 10-QSB for the quarterly
     period ended June 30, 1998 and are incorporated herein by reference:

     Exhibit No.   Description

     10.71     Termination of Stock Transfer and  Registration  Rights Agreement
               dated May 1, 1998,  between  Century  Casinos,  Inc.  and Gary Y.
               Findlay

     10.72     Promissory Note dated April 30, 1998,  between  Century  Casinos,
               Inc. and Gary Y. Findlay

     10.73     Termination of Stock Transfer and  Registration  Rights Agreement
               dated June 2, 1998,  between Century  Casinos,  Inc. and James A.
               Gulbrandsen

     10.74     Promissory  Note  dated June 2, 1998,  between  Century  Casinos,
               Inc. and James A. Gulbrandsen

     10.75     Commercial  Contract to Buy and Sell Real Estate  dated  November
               19, 1997, between WMCK Venture Corp.
                           and Hal D. Hicks

     10.76     Casino Consulting  Agreement dated March 25, 1998, by and between
               Rhodes  Casino S.A.,  Century  Casinos,  Inc. and Playboy  Gaming
               International Ltd.

                                       24
<PAGE>

     8. The following exhibits are filed herewith:

     Exhibit No.    Description

     10.77     Third  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 4, 1998.

     10.78     Parking  Lease - Option to Purchase  dated June 1, 1998,  between
               the City of  Cripple  Creek  ("Lessor")  and WMCK  Venture  Corp.
               ("Lessee")

     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 fourth quarter
     of its fiscal year ended December 31, 1998.

                                       25
<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, 1999.

                         CENTURY CASINOS, INC.

                          By:/s/Erwin Haitzmann
                             ------------------ 
                             Erwin Haitzmann, President and Chief
                             Executive Officer

                             /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 Erwin Haitzmann 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, 1999.


<TABLE>
<CAPTION>

Signature                      Title                          Signature                      Title
---------                      -----                          ---------                      -----
<S>                           <C>                            <C>                            <C>
/s/ Erwin Haitzmann            Chairman of the Board and      /s/ Gottfried Schellmann       Director
-------------------            Chief Executive Officer        --------------------------
Erwin Haitzmann                                                   Gottfried Schellmann

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

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

/s/ Norbert Teufelberger       Chief Financial Officer and 
------------------------       Director
Norbert Teufelberger           

</TABLE>
                                       26
<PAGE>


                                  EXHIBIT INDEX

Exhibit No.                Description

10.77     Third  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 4, 1998.

10.78     Parking  Lease - Option to  Purchase  dated June 1, 1998,  between the
          City of Cripple Creek ("Lessor") and WMCK Venture Corp. ("Lessee")

21        Subsidiaries of the Registrant.

23.1      Consent of Independent Accountants.

27        Financial Data Schedule

                                       27