UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





þ  QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE
SECURITIES EXCHANGE ACT OF 1934





For the quarterly period
ended September 30, 2009





OR





 ̈  TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE
SECURITIES EXCHANGE ACT OF 1934





For
the transition period from ____________ to ___________





Commission
file number   0-22290







CENTURY CASINOS,
INC.


(Exact
name of registrant as specified in its charter)





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





2860 South Circle Drive,
Suite 350, Colorado Springs, Colorado 80906


(Address
of principal executive offices)


(Zip
Code)





(719)
527-8300


(Registrant’s
telephone number, including area code)





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





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).  Yes  ̈  No  ̈





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


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





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





Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practical date:


23,910,578
shares of common stock, $0.01 par value per share, were outstanding as of
October 31, 2009.


--1--











CENTURY
CASINOS, INC.






FORM
10-Q INDEX




PagePART
      I
            
            FINANCIAL
      INFORMATION
            NumberItem
      1.
            
            Condensed
      Consolidated Financial Statements (unaudited)Condensed
      Consolidated Balance Sheets as ofSeptember
      30, 2009 and December 31, 2008
            3Condensed
      Consolidated Statements of Earnings for theThree
      and Nine Months Ended September 30, 2009 and 2008
            4Condensed
      Consolidated Statements of Comprehensive Earnings (Loss) for the Three and
      Nine Months Ended September 30, 2009 and 2008
            6Condensed
      Consolidated Statements of Cash Flows forthe
      Nine Months Ended September 30, 2009 and 2008
            7Notes
      to Condensed Consolidated Financial Statements (unaudited)
            9Item
      2.
            
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            18Item
      3.
            
            Quantitative
      and Qualitative Disclosures About Market Risk
            37Item
      4.
            
            Controls
      and Procedures
            37PART
      II
            
            OTHER
      INFORMATIONItem
      6.
            
            Exhibits
            38SIGNATURES
            39


--2--


PART
I – FINANCIAL INFORMATION


Item
1.   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)





CENTURY
CASINOS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)





Amounts
      in thousands, except for share information
            
            September 30, 2009
            
            
            December 31, 2008ASSETSCurrent
      Assets:Cash
      and cash equivalents
            
            $
            30,754
            
            
            $
            7,835Receivables,
      net
            
            
            13,790
            
            
            
            426Prepaid
      expenses
            
            
            393
            
            
            
            388Inventories
            
            
            214
            
            
            
            170Other
      current assets
            
            
            28
            
            
            
            583Deferred
      income taxes – foreign
            
            
            342
            
            
            
            305Assets
      held for sale
            
            
            -
            
            
            
            35,983Total
      Current Assets
            
            
            45,521
            
            
            
            45,690Property
      and equipment, net
            
            
            89,022
            
            
            
            88,558Goodwill
            
            
            4,585
            
            
            
            4,014Equity
      investment
            
            
            11,127
            
            
            
            10,539Other
      assets
            
            
            357
            
            
            
            1,205Total
      Assets
            
            $
            150,612
            
            
            $
            150,006





LIABILITIES
      AND SHAREHOLDERS’ EQUITYCurrent
      Liabilities:Current
      portion of long-term debt
            
            $
            8,490
            
            
            $
            8,862Accounts
      payable and accrued liabilities
            
            
            5,116
            
            
            
            4,330Accrued
      payroll
            
            
            1,967
            
            
            
            1,595Taxes
      payable
            
            
            2,133
            
            
            
            2,734Deferred
      gain on disposition of Century Casinos Africa
            
            
            1,623
            
            
            
            -Liabilities
      related to assets held for sale
            
            
            -
            
            
            
            10,770Total
      Current Liabilities
            
            
            19,329
            
            
            
            28,291Long-term
      debt, less current portion
            
            
            14,823
            
            
            
            28,501Deferred
      income taxes – Foreign
            
            
            1,074
            
            
            
            427Other
      long-term accrued liabilities
            
            
            -
            
            
            
            303Total
      Liabilities
            
            
            35,226
            
            
            
            57,522Commitments
      and ContingenciesShareholders’
      Equity:Noncontrolling
      interests
            
            
            -
            
            
            
            4,711Preferred
      stock; $.01 par value; 20,000,000 shares authorized;no
      shares issued or outstanding
            
            
            -
            
            
            
            -Common stock; $.01 par value;
      50,000,000 shares authorized;23,915,503
      and 23,895,443 shares issued, respectively;23,910,578
      and 23,884,067 shares outstanding, respectively
            
            
            239
            
            
            
            239Additional paid-in
      capital
            
            
            74,150
            
            
            
            73,360Accumulated other
      comprehensive earnings (losses)
            
            
            3,140
            
            
            
            (5,147
            )Retained
    earnings
            
            
            37,868
            
            
            
            19,347115,397
            
            
            
            92,510Treasury
      stock – 4,925 and 11,376 shares at cost, respectively
            
            
            (11
            )
            
            
            (26
            )Total
      Shareholders’ Equity
            
            
            115,386
            
            
            
            92,484Total
      Liabilities and Shareholders’ Equity
            
            $
            150,612
            
            
            $
            150,006





See notes to condensed consolidated
financial statements.


--3--


CENTURY
CASINOS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)





For
      the three months
              ended
      September 30,
            
            
            For
      the nine months
              ended
      September 30,Amounts
      in thousands, except for share information
            
            2009
            
            
            2008
            
            
            2009
            
            
            2008Operating
      revenue:Gaming
            
            $
            12,804
            
            
            $
            13,122
            
            
            $
            35,414
            
            
            $
            39,108Hotel,
      food and beverage
            
            
            2,279
            
            
            
            2,396
            
            
            
            6,215
            
            
            
            6,594Other
            
            
            523
            
            
            
            511
            
            
            
            1,395
            
            
            
            1,469Gross
      revenues
            
            
            15,606
            
            
            
            16,029
            
            
            
            43,024
            
            
            
            47,171Less
      promotional allowances
            
            
            1,882
            
            
            
            2,063
            
            
            
            5,417
            
            
            
            5,802Net
      operating revenue
            
            
            13,724
            
            
            
            13,966
            
            
            
            37,607
            
            
            
            41,369Operating
      costs and expenses:Gaming
            
            
            5,196
            
            
            
            5,284
            
            
            
            14,254
            
            
            
            15,781Hotel,
      food and beverage
            
            
            1,807
            
            
            
            1,918
            
            
            
            5,006
            
            
            
            5,278General
      and administrative
            
            
            4,440
            
            
            
            4,793
            
            
            
            13,318
            
            
            
            15,299Impairments
      and other write-offs
            
            
            -
            
            
            
            9,357
            
            
            
            -
            
            
            
            9,357Depreciation
            
            
            1,526
            
            
            
            1,759
            
            
            
            4,648
            
            
            
            5,124Total
      operating costs and expenses
            
            
            12,969
            
            
            
            23,111
            
            
            
            37,226
            
            
            
            50,839Earnings
      from equity investment
            
            
            33
            
            
            
            218
            
            
            
            276
            
            
            
            766Operating
      earnings (loss) from continuing operations
            
            
            788
            
            
            
            (8,927
            )
            
            
            657
            
            
            
            (8,704
            )Non-operating
      income (expense):Interest
      income
            
            
            33
            
            
            
            4
            
            
            
            43
            
            
            
            26Interest
      expense
            
            
            (1,618
            )
            
            
            (879
            )
            
            
            (3,433
            )
            
            
            (3,087
            )(Losses) gains on foreign currency transactions and other
            
            
            (182
            )
            
            
            (70
            )
            
            
            (431
            )
            
            
            31Non-operating
      (expense), net
            
            
            (1,767
            )
            
            
            (945
            )
            
            
            (3,821
            )
            
            
            (3,030
            )Loss
      from continuing operations before income taxes
            
            
            (979
            )
            
            
            (9,872
            )
            
            
            (3,164
            )
            
            
            (11,734
            )Income
      tax provision
            
            
            200
            
            
            
            5,463
            
            
            
            519
            
            
            
            4,250Loss
      from continuing operations
            
            
            (1,179
            )
            
            
            (15,335
            )
            
            
            (3,683
            )
            
            
            (15,984
            )Discontinued
      operations:(Loss) earnings from
      discontinued operations
            
            
            (38
            )
            
            
            1,515
            
            
            
            2,674
            
            
            
            4,229Gain on disposition of Century
      Casino Millennium
            
            
            -
            
            
            
            -
            
            
            
            915
            
            
            
            -Gain on disposition of Century
      Casinos Africa
            
            
            429
            
            
            
            -
            
            
            
            20,277
            
            
            
            -Income tax (benefit)
      provision
            
            
            (70
            )
            
            
            247
            
            
            
            726
            
            
            
            756Earnings
      from discontinued operations
            
            
            461
            
            
            
            1,268
            
            
            
            23,140
            
            
            
            3,473Net
      (loss) earnings
            
            
            (718
            )
            
            
            (14,067
            )
            
            
            19,457
            
            
            
            (12,511
            )Less:   Net
      earnings attributable to the noncontrolling interests (continuing
      operations)
            
            
            (5
            )
            
            
            119
            
            
            
            (42
            )
            
            
            123Net
      earnings attributable to the noncontrolling interests (discontinued
      operations)
            
            
            14
            
            
            
            12
            
            
            
            978
            
            
            
            188Net
      (loss) earnings attributable toCentury
      Casinos, Inc. and subsidiaries
            
            $
            (727
            )
            
            $
            (14,198
            )
            
            $
            18,521
            
            
            $
            (12,822
            )





See notes
to condensed consolidated financial statements.








-Continued
on following page-


--4--


CENTURY
CASINOS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) - CONTINUED





For
      the three months
              ended
      September 30,
            
            
            For
      the nine months
              ended
      September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Basic
      (loss) earnings per share:Loss
      from continuing operations
            
            $
            (0.05
            )
            
            $
            (0.65
            )
            
            $
            (0.15
            )
            
            $
            (0.69
            )Earnings
      from discontinued operations
            
            
            0.02
            
            
            
            0.05
            
            
            
            0.94
            
            
            
            0.14Net (loss)
      earnings
            
            $
            (0.03
            )
            
            $
            (0.60
            )
            
            $
            0.79
            
            
            $
            (0.55
            )Diluted
      (loss) earnings per share:Loss from continuing
      operations
            
            $
            (0.05
            )
            
            $
            (0.65
            )
            
            $
            (0.15
            )
            
            $
            (0.69
            )Earnings from discontinued
      operations
            
            
            0.02
            
            
            
            0.05
            
            
            
            0.94
            
            
            
            0.14Net (loss)
      earnings
            
            $
            (0.03
            )
            
            $
            (0.60
            )
            
            $
            0.79
            
            
            $
            (0.55
            )Amounts
      attributable to Century Casinos, Inc. and and sbsidiaries common
      shareholders:Loss from continuing
      operations
            
            $
            (1,174
            )
            
            $
            (15,454
            )
            
            $
            (3,641
            )
            
            $
            (16,107
            )Earnings from discontinued
      operations
            
            
            447
            
            
            
            1,256
            
            
            
            22,162
            
            
            
            3,285Net (loss)
      earnings
            
            $
            (727
            )
            
            $
            (14,198
            )
            
            $
            18,521
            
            
            $
            (12,822
            )








See notes
to condensed consolidated financial statements.


--5--


CENTURY
CASINOS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS) (Unaudited)





For
      the three months
              ended September 30,
            
            
            For
      the nine months
              ended September 30,Amounts
      in thousands
            
            2009
            
            
            2008
            
            
            2009
            
            
            2008Net
      (loss) earnings
            
            $
            (718
            )
            
            $
            (14,067
            )
            
            $
            19,457
            
            
            $
            (12,511
            )Foreign
      currency translation adjustments
            
            
            2,314
            
            
            
            (4,232
            )
            
            
            9,124
            
            
            
            (6,653
            )Comprehensive
      earnings (loss)
            
            
            1,596
            
            
            
            (18,299
            )
            
            
            28,581
            
            
            
            (19,164
            )Less:
      Comprehensive earnings (loss) attributable to noncontrolling
      interest
            
            
            9
            
            
            
            (153
            )
            
            
            1,773
            
            
            
            (585
            )Comprehensive
      earnings (loss) attributable to Century Casinos, Inc. and
      subsidiaries
            
            $
            1,587
            
            
            $
            (18,146
            )
            
            $
            26,808
            
            
            $
            (18,579
            )








See notes
to condensed consolidated financial statements.


--6--


CENTURY
CASINOS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)





For
      the nine months
              ended September 30,Amounts
      in thousands
            
            2009
            
            
            2008Cash
      Flows from Operating Activities:Net
      earnings (loss) attributable to Century Casinos, Inc.and
      subsidiaries
            
            $
            18,521
            
            
            $
            (12,822
            )Adjustments
      to reconcile net earnings (loss) to net cash provided
      by operating activities:Depreciation
            
            
            4,648
            
            
            
            6,945Gain
      on disposition of Century Casino Millennium
            
            
            (915
            )
            
            
            -Gain
      on disposition of Century Casinos Africa
            
            
            (20,277
            )
            
            
            -Impairments
      of goodwill
            
            
            -
            
            
            
            9,357Tax
      valuation allowance
            
            
            -
            
            
            
            6,021(Gain)
      loss on disposition of fixed assets
            
            
            (8
            )
            
            
            63Amortization
      of share-based compensation
            
            
            863
            
            
            
            1,045Amortization
      of deferred financing costs
            
            
            1,390
            
            
            
            369Deferred
      tax expense
            
            
            710
            
            
            
            (2,283
            )Noncontrolling
      interests
            
            
            936
            
            
            
            311Earnings
      from unconsolidated subsidiary
            
            
            (276
            )
            
            
            (766
            )Other
            
            
            -
            
            
            
            1Excess
      tax benefits from stock-based payment arrangements
            
            
            (5
            )
            
            
            (24
            )Changes
      in operating assets and liabilities:Receivables
            
            
            242
            
            
            
            120Prepaid
      expenses and other assets
            
            
            (20
            )
            
            
            77Accounts
      payable and accrued liabilities
            
            (439
            )
            
            
            (2,339
            )Accrued
      payroll
            
            
            441
            
            
            
            276Taxes
      payable
            
            
            (943
            )
            
            
            (845
            )Net
      cash provided by operating activities
            
            
            4,868
            
            
            
            5,506Cash
      Flows from Investing Activities:Purchases
      of property and equipment
            
            
            (1,742
            )
            
            
            (2,779
            )Proceeds
      from disposition of Century Casino Millennium(net
      of  cash balance of $456 assumed by buyer)
            
            
            1,374
            
            
            
            -Proceeds
      from disposition of Century Casinos Africa(net
      of cash balance of $975 assumed by buyer)
            
            
            34,440
            
            
            
            -Investment
      in CC Tollgate LLC
            
            
            -
            
            
            
            (74
            )Proceeds
      from disposition of assets
            
            
            180
            
            
            
            218Other
            
            
            (21
            )
            
            
            -Net
      cash provided by (used in) investing activities
            
            
            34,231
            
            
            
            (2,635
            )





(continued)


--7--


CENTURY
CASINOS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - CONTINUED





For
      the nine months
              ended September 30,Amounts
      in thousands
            
            2009
            
            
            2008Cash
      Flows from Financing Activities:Proceeds
      from borrowings
            
            $
            80
            
            
            $
            12,766Principal
      repayments
            
            
            (17,413
            )
            
            
            (24,523
            )Excess
      tax benefits from stock-based payment arrangements
            
            
            5
            
            
            
            24Deferred
      financing charges
            
            
            (2
            )
            
            
            (199
            )Proceeds
      from exercise of options
            
            
            25
            
            
            
            672Purchase
      of subsidiary shares
            
            
            (1,136
            )
            
            
            -Net
      cash used in financing activities
            
            
            (18,441
            )
            
            
            (11,260
            )Effect
      of Exchange Rate Changes on Cash
            
            
            797
            
            
            
            (1,116
            )Increase
      (Decrease) in Cash and Cash Equivalents
            
            
            21,455
            
            
            
            (9,505
            )Decrease
      in Cash and Cash Equivalents related to Discontinued
      Operations
            
            
            1,464
            
            
            
            4,429Cash
      and Cash Equivalents at Beginning of Period
            
            
            7,835
            
            
            
            11,742Cash
      and Cash Equivalents at End of Period
            
            $
            30,754
            
            
            $
            6,666





Supplemental
Disclosure of Cash Flow Information:





Amounts
      in Thousands
            
            For
      the nine months
              ended September 30,2009
            
            
            2008Interest
      paid
            
            $
            2,492
            
            
            $
            3,829Income
      taxes paid
            
            $
            812
            
            
            $
            1,232





Supplemental
Disclosure of Non-Cash Financing Activities:




Please
refer to Note 2 to the Company’s condensed consolidated financial statements for
details of the Company’s recent dispositions.











See notes
to condensed consolidated financial statements.


--8--


CENTURY
CASINOS, INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)





1.           DESCRIPTION
OF BUSINESS AND BASIS OF PRESENTATION





Century
Casinos, Inc. (“CCI” or the “Company”) is an international casino entertainment
company. As of September 30, 2009, the Company owned and/or managed casino
operations in North America and international waters through various wholly
owned entities. The Company also holds a 33.3% ownership interest in Casinos
Poland Ltd (“CPL”), the owner and operator of seven full casinos and one slot
casino in Poland. The Company continues to pursue other projects in various
stages of development. See Note 2 for a discussion of the Company’s discontinued
operations. Unless otherwise indicated, the information contained in these notes
refers to the Company’s continuing operations.





The
accompanying condensed consolidated financial statements and related notes have
been prepared in accordance with accounting principles generally accepted in the
United States of America (“US GAAP”) for interim financial reporting and the
instructions to Form 10-Q and Rule
10-01 of Regulation S-X. The accompanying condensed consolidated financial
statements include the accounts of CCI and its majority-owned subsidiaries. All
intercompany transactions and balances have been eliminated. The financial
statements of all foreign subsidiaries consolidated herein have been converted
to US GAAP for financial statement presentation purposes. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with US GAAP have been condensed or omitted. Certain
reclassifications have been made to the 2008 financial information in order to
conform to the 2009 presentation.





In the
opinion of management, all adjustments considered necessary for fair
presentation of financial position, results of operations and cash flows of the
Company have been included. These condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto included in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2008. The results of operations for the period
ended September 30, 2009 are not necessarily indicative of the operating results
for the full year.





Presentation
of Foreign Currency Amounts





Historical
transactions that are denominated in a foreign currency are translated and
presented at the United States exchange rate in effect on the date of the
transaction.  Commitments that are denominated in a foreign currency
and all balance sheet accounts other than shareholders’ equity are translated
and presented based on the exchange rate at the end of the reported
periods.  Current period transactions affecting the profit and loss of
operations conducted in foreign currencies are valued at the average exchange
rate for the period in which they are incurred.  The exchange rates to
the U.S. dollar used to translate balances at the end of the reported periods
are as follows:





September 30, 2009
            
            
            December 31, 2008
            
            
            September 30, 2008Canadian
      dollar (CAD)
            
            
            1.0722
            
            
            
            1.2246
            
            
            
            1.0599Czech
      koruna (CZK)
            
            
            N/A
            
            
            
            19.2550
            
            
            
            17.4240Euros
      (€)
            
            
            0.6835
            
            
            
            0.7184
            
            
            
            0.7103Polish
      zloty (PLN)
            
            
            2.8852
            
            
            
            2.9709
            
            
            
            2.4094South
      African rand (ZAR)
            
            
            7.5401
            
            
            
            9.3410
            
            
            
            8.3195


Source:
Pacific Exchange Rate Service


--9--


Recently Adopted Accounting
Guidance





In July
2009, the Company adopted authoritative guidance issued by the Financial
Accounting Standards Board (“FASB”) which establishes the Accounting Standards
Codification (the “Codification”) and SEC interpretive releases as the sources
for authoritative US GAAP. The Codification supersedes all existing non-SEC
accounting and reporting standards under US GAAP.  The Codification does
not change existing US GAAP.





In June
2009, the Company adopted authoritative guidance issued by the FASB establishing
general standards of accounting for and disclosure of events that occur after
the balance sheet date but before the financial statements are issued or are
available to be issued. The guidance requires the disclosure of the date through
which an entity has evaluated subsequent events and the basis for that date. The
adoption of this guidance did not have a material effect on the Company’s
condensed consolidated financial statements.





In June
2009, the Company adopted authoritative guidance issued by the FASB requiring
disclosures about fair value of financial instruments in interim financial
statements as well as in annual financial statements. The adoption of this
guidance did not have an effect on the Company’s condensed consolidated
financial statements.





In
January 2009, the Company adopted authoritative guidance issued by the FASB
establishing new accounting, reporting and disclosure standards for minority
interests. Minority interests are now characterized as noncontrolling interests
and classified as a component of equity. The guidance also establishes reporting
requirements that provide sufficient disclosures that clearly identify and
distinguish between the interests of the parent and the interests of the
noncontrolling owners. As of December 31, 2008, noncontrolling interests of $4.7
million have been classified as a component of shareholders’ equity in the
accompanying condensed consolidated balance sheets.





Subsequent
Events





Management
performed an evaluation of the Company’s activity through November 6, 2009, the
date the financial statements were available to be issued. In addition to the
events disclosed in the footnotes below, in October 2009 the Company recorded an
additional gain of $0.3 million on the conversion of ZAR 98.8 million to
approximately $13.4 million.





In March
2000, the Company’s board of directors approved a discretionary program to
repurchase the Company’s outstanding common stock. As of September 30, 2009,
there was $1.2 million remaining under the repurchase program. On November 5,
2009, the Company’s board of directors increased the amount available to be
repurchased to $15.0 million. The Company did not purchase any shares of its
common stock on the open market during the nine months ended September 30, 2009
and 2008. The repurchase program has no set expiration or termination
date.








--10--


2.           DISCONTINUED
OPERATIONS





On
December 5, 2008, the Company entered into an agreement to sell the Century
Casino Millennium in Prague, Czech Republic for approximately $2.2 million (CZK
22.0 million plus $1.2 million).  Approximately $1.4 million (CZK 22.0
million plus $0.4 million) was paid to the Company at closing on February 11,
2009, with the balance payable over the 12-month period following the closing.
The Company received $0.4 million in August 2009. As of September 30, 2009, the
Company has recorded the remaining $0.4 million as a component of receivables,
net on the accompanying condensed consolidated balance sheet. The Company
received $0.2 million in October 2009. For the nine months ended September 30,
2009, the Company recorded a gain of $0.9 million relating to the disposition of
the Century Casino Millennium.





On
December 19, 2008, Century Resorts Ltd (“CRL”) entered into an agreement to sell
all of the outstanding shares of Century Casinos Africa (Pty) Limited (“CCA”)
for a gross selling price of ZAR 460.0 million (approximately $59.4 million)
less the balance of third party South African debt and other agreed to amounts.
Net proceeds of ZAR 253.5 million ($32.8 million) were paid to CRL at closing on
June 30, 2009. CCA owned the Caledon Hotel, Spa & Casino and 60% of the
Century Casino & Hotel in Newcastle, Africa. On September 29, 2009, CRL
received an additional ZAR 17.3 million ($2.3 million) that was previously held
in retention and an additional ZAR 3.2 million ($0.4 million) for the increase
in the net asset value (“NAV”) of CCA between December 31, 2008 and June 30,
2009.





Final
transaction approval by the KwaZulu-Natal Gambling Board was received on October
7, 2009. On October 14, 2009, CRL received the final outstanding payment of ZAR
98.8 million ($13.4 million). As of September 30, 2009, approximately ZAR 98.8
million ($13.4 million) has been classified as a component of receivables, net
on the condensed consolidated balance sheet.





At
closing, the Company recognized a gain of ZAR 163.1 million (approximately $19.8
million). In September 2009, the Company recorded an additional gain of ZAR 3.2
million ($0.4 million) as a result of the NAV adjustment. As the Company did not
receive final transaction approval by the KwaZulu-Natal Gambling Board until
October 7, 2009, an additional gain relating to the sale of Century Casino &
Hotel in Newcastle, Africa of ZAR 12.2 million (approximately $1.6 million) has
been deferred until October 2009, and is recorded as a deferred gain on
disposition on the September 30, 2009 condensed consolidated balance
sheet.





The
results of the Century Casino Millennium, the Caledon Hotel, Spa & Casino
and the Century Casino & Hotel in Newcastle are classified as discontinued
operations in the accompanying condensed consolidated statements of earnings for
all periods presented, as applicable. Net operating revenue of discontinued
operations was $7.9 million for the three months ended September 30, 2008. Net
operating revenue of discontinued operations was $11.2 million and $23.0 million
for the nine months ended September 30, 2009 and 2008, respectively. The cash
flows of discontinued operations are included with the cash flows of continuing
operations in the accompanying condensed consolidated statements of cash flows.
The Company’s discontinued operations had a combined carrying value of
approximately $25.2 million at December 31, 2008.









--11--




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




Amounts
      in thousands
            
            December 31, 2008ASSETSCurrent
      Assets:Cash
      and cash equivalents
            
            $
            1,464Restricted
      cash
            
            
            104Receivables,
      net
            
            
            278Prepaid
      expenses
            
            
            287Inventories
            
            
            244Other
      current assets
            
            
            21Total
      current assets
            
            
            2,398Property
      and equipment, net
            
            
            22,650Goodwill
            
            
            704Casino
      licenses
            
            
            8,356Deferred
      income taxes – foreign
            
            
            764Other
      assets
            
            
            1,111Total
      Assets
            
            $
            35,983LIABILITIESCurrent
      Liabilities:Current
      portion of long-term debt
            
            $
            3,405Accounts
      payable and accrued liabilities
            
            
            2,076Accrued
      payroll
            
            
            453Taxes
      payable
            
            
            1,035Total
      current liabilities
            
            
            6,969Long-term
      debt, less current portion
            
            
            3,801Total
      Liabilities
            
            
            10,770Net
      Assets
            
            $
            25,213





3.
            EQUITY
      INVESTMENT IN UNCONSOLIDATED
SUBSIDIARY





The
Company has a 33.3% ownership interest in CPL, and the Company accounts for this
investment under the equity method.





Following
is the summarized unaudited financial information of CPL:





Amounts
      in thousands (in USD):
            
            September
      30, 2009
            
            
            December
      31, 2008Balance
      Sheet:Current
      assets
            
            $
            3,525
            
            
            $
            3,208Noncurrent
      assets
            
            $
            15,609
            
            
            $
            16,751Current
      liabilities
            
            $
            11,165
            
            
            $
            10,530Noncurrent
      liabilities
            
            $
            4,084
            
            
            $
            3,842





--12--





Amounts
      in thousands (in PLN):
            September
      30, 2009
            
            December
      31, 2008Balance
      Sheet:Current
      assets
            
            
            PLN  
      10,172
            
            
            
            PLN 
         9,532Noncurrent
      assets
            
            
            PLN  
      45,036
            
            
            
            PLN 
       49,766Current
      liabilities
            
            
            PLN  
      32,212
            
            
            
            PLN 
       31,284Noncurrent
      liabilities
            
            
            PLN  
      11,753
            
            
            
            PLN 
       11,414









For
      the three months
              ended
      September 30,
            
            For
      the nine months
              ended
      September 30,2009
            
            2008
            
            2009
            
            2008Operating
      Results (in USD):Net operating
      revenue
            
            $
            10,617
            
            
            $
            14,036
            
            
            $
            30,986
            
            
            $
            44,340Net earnings
            
            $
            99
            
            
            $
            654
            
            
            $
            828
            
            
            $
            2,298Operating
      Results (in PLN):Net operating
      revenue
            PLN
            
            31,142
            
            PLN
            
            30,870
            
            PLN
            
            99,305
            
            PLN
            
            100,146Net earnings
            PLN
            
            309
            
            PLN
            
            1,282
            
            PLN
            
            2,662
            
            PLN
            
            4,880





The
Company’s maximum exposure to losses at September 30, 2009 was $11.1 million,
the value of its equity investment in CPL. Of the $11.1 million, $8.8 million
relates to goodwill recorded at the time of the Company’s acquisition of its
33.3% ownership interest in CPL.





4.           LONG-TERM
DEBT





Long-term
debt at September 30, 2009 and December 31, 2008 consisted of the
following:





Amounts
      in thousands
            
            September
      30,2009
            
            
            December
      31,2008Term
      Loan – Edmonton
            
            $
            16,127
            
            
            $
            15,050Term
      Loan – Cripple Creek
            
            
            -
            
            
            
            4,255Term
      Loan – Central City
            
            
            6,818
            
            
            
            17,600Other
            
            
            368
            
            
            
            458Total
      long-term debt
            
            
            23,313
            
            
            
            37,363Less
      current portion
            
            
            (8,490
            )
            
            
            (8,862
            )Long-term
      portion
            
            $
            14,823
            
            
            $
            28,501





Term Loan – Cripple Creek





In connection with the
Company’s sale of its interest in CCA, the Company pledged to repay the entire
balance outstanding on its debt related to the Company’s property in Cripple
Creek.On July 7, 2009, the entire principal balance outstanding of $2.7
million was repaid.








--13--


Term
Loan – Central City





With the proceeds from the
sale of CCA, on July 17, 2009, the Company repaid $6.0 million of principal on
its debt related to its Central City, Colorado property. On October 22, 2009,
the Company repaid the outstanding balance of $7.2 million, which includes
principal, accrued interest and unpaid charges arising from earlier prepayments
of principal. The Company did not incur any additional charges for these
repayments.In
connection with these repayments, the Company wrote off unamortized deferred
financing charges of $1.0 million for the three months ended September 30,
2009.





5.           PROMOTIONAL
ALLOWANCES





Hotel
accommodations and food and beverage furnished without charge to customers is
included in gross revenue at a value which approximates retail and is then
deducted as complimentary services to arrive at net operating
revenue.





The
Company issues coupons for the purpose of generating future revenue. Coupons are
valid for defined periods of time. The Company expects the net win from a
customer visit to be in excess of the value of the coupon utilized. The cost of
the coupons redeemed is applied against the revenue generated on the day of the
redemption.





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





Promotional
allowances presented in the condensed consolidated statements of operations for
the three and nine month periods ended September 30, 2009 and 2008 include the
following:





For
      the three months
              ended
      September 30,
            
            
            For
      the nine months
              ended
      September 30,Amounts
      in thousands
            
            2009
            
            
            2008
            
            
            2009
            
            
            2008Hotel,
      Food & Beverage
            
            $
            845
            
            
            $
            914
            
            
            $
            2,343
            
            
            $
            2,346Coupons
            
            
            542
            
            
            
            659
            
            
            
            1,670
            
            
            
            2,009Player
      Points
            
            
            495
            
            
            
            490
            
            
            
            1,404
            
            
            
            1,447Total
      Promotional Allowances
            
            $
            1,882
            
            
            $
            2,063
            
            
            $
            5,417
            
            
            $
            5,802





6.           IMPAIRMENTS
AND OTHER WRITE-OFFS





In 2008,
the Company recorded goodwill impairments of $7.2 million for WMCK Venture
Corp., a wholly-owned subsidiary that owns Womacks in Cripple Creek, Colorado,
and $2.1 million for CC Tollgate LLC, a wholly-owned subsidiary that owns the
Century Casino & Hotel in Central City, Colorado.





--14--


7.           INCOME
TAXES





The
Company records deferred tax assets and liabilities based on the difference
between the financial statement and income tax basis of assets and liabilities
using the enacted statutory tax rate in effect for the year these differences
are expected to be taxable or refunded.Deferred
income tax expenses or credits are based on the changes in the asset or
liability from period to period. The recorded deferred tax assets are reviewed
for realization on a quarterly basis by reviewing the Company’s internal
estimates for future net income.





Due to
the uncertainty of future taxable income, the Company established a valuation of
its U.S. deferred tax assets during the third quarter of 2008. As of September
30, 2009, deferred tax assets of $8.5 million resulting primarily from the
Company’s net operating losses in the U.S. were fully reserved.





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





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


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





The
income tax provisions are based on estimated full-year earnings for financial
reporting purposes adjusted for permanent differences. The Company’s income tax
provisions consist of the following:





For
      the three months
              ended
      September 30,
            
            
            For
      the nine months
              ended
      September 30,Amounts
      in thousands
            
            2009
            
            
            2008
            
            
            2009
            
            
            2008Provision
      for U.S. federal income taxes
            
            $
            23
            
            
            $
            (779
            )
            
            $
            55
            
            
            $
            (2,348
            )Provision
      for state income taxes
            
            
            -
            
            
            
            (111
            )
            
            
            -
            
            
            
            (335
            )Valuation
      allowance established for
              U.S.
      and state income taxes
            
            
            -
            
            
            
            6,020
            
            
            
            -
            
            
            
            6,020Provision
      for foreign income taxes
            
            
            177
            
            
            
            333
            
            
            
            464
            
            
            
            913Total
      provision for income taxes
            
            $
            200
            
            
            $
            5,463
            
            
            $
            519
            
            
            $
            4,250





The
Company’s income tax expense (benefit) by jurisdiction is summarized in the
table below:





Amounts
      in thousands
            
            For
      the three months
              ended
      September 30, 2009
            
            
            For
      the three months
              ended
      September 30, 2008Pre-tax
      income
            
            
            Income
      tax
            
            
            Effective
              tax rate
            
            
            Pre-tax
      income
            
            
            Income
      tax
            
            
            Effective
              tax rateCanada
            
            $
            690
            
            
            $
            183
            
            
            
            26.5
            %
            
            $
            998
            
            
            $
            314
            
            
            
            31.5
            %United
      States (1)
            
            
            (1,638
            )
            
            
            23
            
            
            
            (1.4
            %)
            
            
            (11,163
            )
            
            
            5,130
            
            
            
            (46.0
            %)Mauritius
      (2)
            
            
            (242
            )
            
            
            (7
            )
            
            
            2.9
            %
            
            
            250
            
            
            
            13
            
            
            
            5.2
            %Austria
            
            
            241
            
            
            
            1
            
            
            
            0.4
            %
            
            
            82
            
            
            
            6
            
            
            
            7.3
            %Poland
            
            
            (30
            )
            
            
            -
            
            
            
            -
            %
            
            
            (39
            )
            
            
            -
            
            
            
            -
            %Total
            
            $
            (979
            )
            
            $
            200
            
            
            
            (20.4
            %)
            
            $
            (9,872
            )
            
            $
            5,463
            
            
            
            (55.3
            %)


(1) 2009
includes an accrual for uncertain tax positions


(2)
Includes the earnings of the South African branch of Century Resorts
International taxed at South African rates





--15--





Amounts
      in thousands
            
            For
      the nine months
              ended
      September 30, 2009
            
            
            For
      the nine months
              ended
      September 30, 2008Pre-tax
      income
            
            
            Income
      tax
            
            
            Effective
              tax rate
            
            
            Pre-tax
      income
            
            
            Income
      tax
            
            
            Effective
              tax rateCanada
            
            $
            1,981
            
            
            $
            536
            
            
            
            27.1
            %
            
            $
            2,782
            
            
            $
            840
            
            
            
            30.2
            %United
      States (1)
            
            
            (4,750
            )
            
            
            55
            
            
            
            (1.2
            %)
            
            
            (16,468
            )
            
            
            3,337
            
            
            
            (20.3
            %)Mauritius
      (2)
            
            
            (1,512
            )
            
            
            (77
            )
            
            
            5.1
            %
            
            
            1,379
            
            
            
            55
            
            
            
            4.0
            %Austria
            
            
            928
            
            
            
            5
            
            
            
            0.5
            %
            
            
            15
            
            
            
            18
            
            
            
            120.0
            %Poland
            
            
            189
            
            
            
            -
            
            
            
            -
            %
            
            
            558
            
            
            
            -
            
            
            
            -
            %Total
            
            $
            (3,164
            )
            
            $
            519
            
            
            
            (16.4
            %)
            
            $
            (11,734
            )
            
            $
            4,250
            
            
            
            (36.2
            %)


(1) 2009
includes an accrual for uncertain tax positions


(2)
Includes the earnings of the South African branch of Century Resorts
International taxed at South African rates





8.           EARNINGS
PER SHARE





Basic
      earnings per common share is calculated by dividing net income by the
      weighted average number of common shares outstanding during the
      period.  Diluted earnings per common share adjusts the weighted
      average shares outstanding by the dilutive impact of shares underlying
      stock options and unvested restricted stock awards.  The weighted
      average shares outstanding were computed as
  follows:





For
      the three months
              ended
      September 30,
            
            
            For
      the nine months
              ended
      September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Weighted
      average common shares
            
            
            23,622,974
            
            
            
            23,522,763
            
            
            
            23,557,398
            
            
            
            23,432,279Dilutive
      effect of stock options and warrants
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Dilutive
      potential common shares
            
            
            23,622,974
            
            
            
            23,522,763
            
            
            
            23,557,398
            
            
            
            23,432,279





The
following stock options, warrants and unvested restricted stock are
anti-dilutive and have not been included in the weighted average diluted shares
outstanding calculation:





For
      the three months
              ended
      September 30,
            
            
            For
      the nine months
              ended
      September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Stock
      options and warrants
            
            
            1,268,271
            
            
            
            985,210
            
            
            
            1,268,271
            
            
            
            985,210Unvested
      restricted stock
            
            
            280,000
            
            
            
            360,000
            
            
            
            280,000
            
            
            
            360,000





--16--


9.           SEGMENT
AND GEOGRAPHIC INFORMATION





The
following summary provides information concerning the Company’s principal
geographic areas:





Long-Lived
      Assets*Amounts
      in thousands
            
            September
      30, 2009
            
            
            December
      31, 2008United
      States
            
            $
            59,847
            
            
            $
            62,349International:Canada
            
            $
            32,573
            
            
            $
            29,299Europe
            
            
            11,355
            
            
            
            10,836International
      waters
            
            
            959
            
            
            
            627Total
      international
            
            
            44,887
            
            
            
            40,762Total
            
            $
            104,734
            
            
            $
            103,111


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





Net
      Operating RevenueFor
      the three months
              ended
      September 30,
            
            
            For
      the nine months
              ended
      September 30,Amounts
      in thousands
            
            2009
            
            
            2008
            
            
            2009
            
            
            2008United
      States
            
            $
            8,037
            
            
            $
            7,741
            
            
            $
            21,391
            
            
            $
            22,509International:Canada
            
            $
            5,090
            
            
            $
            5,656
            
            
            $
            14,729
            
            
            $
            17,008International
      waters
            
            
            597
            
            
            
            569
            
            
            
            1,487
            
            
            
            1,852Total
      international
            
            
            5,687
            
            
            
            6,225
            
            
            
            16,216
            
            
            
            18,860Total
            
            $
            13,724
            
            
            $
            13,966
            
            
            $
            37,607
            
            
            $
            41,369





10.
            RELATED
      PARTY TRANSACTION





On July
27, 2009, CRL entered into an agreement to purchase the remaining 3.5% of its
outstanding shares of common stock that CCI previously did not own for $1.6
million. CRL paid $1.1 million in August 2009. The Company expects to repay the
remainder in November 2009. The Company’s Co CEOs and their respective family
trusts/foundation collectively owned these shares.





--17--


Item
2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND


RESULTS
OF OPERATIONS





Forward-Looking
Statements, Business Environment and Risk Factors





This
quarterly report on Form 10-Q contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995.  In
addition, Century Casinos, Inc. (the “Company”) may make other written and oral
communications from time to time that contain such
statements.  Forward-looking statements include statements as to
industry trends and future expectations of the Company and other matters that do
not relate strictly to historical facts and are based on certain assumptions by
management.  These statements are often identified by the use of words
such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,”
“estimate,” or “continue,” and similar expressions or
variations.  These statements are based on the beliefs and assumptions
of the management of the Company based on information currently available to
management.  Such forward-looking statements are subject to risks,
uncertainties and other factors that could cause actual results to differ
materially from future results expressed or implied by such forward-looking
statements.  Important factors that could cause actual results to
differ materially from the forward-looking statements include, among others, the
risks described in the section entitled “Risk Factors” under Item 1A in our
Annual Report on Form 10-K for the year ended December 31, 2008. We caution the
reader to carefully consider such factors.  Furthermore, such
forward-looking statements speak only as of the date on which such statements
are made.  We undertake no obligation to update any forward-looking
statements to reflect events or circumstances after the date of such
statements.





References
in this item to “we,” “our,” or “us” are to the Company and its subsidiaries on
a consolidated basis unless the context otherwise requires.





Amounts
presented in this Item 2 are rounded to whole dollar amounts. As such, rounding
differences could occur in period over period changes and percentages reported
throughout this Item 2.





OVERVIEW





Since our
inception in 1992, we have been primarily engaged in developing and operating
gaming establishments and related lodging and restaurant facilities. Our primary
source of revenue is from the net proceeds of our gaming machines and tables,
with ancillary revenue generated from the hotel and restaurant facilities that
are a part of the casinos.





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





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


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


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





We also
operate ship-based casinos aboard the Silver Cloud and the vessels of Oceania
Cruises. Effective October 16, 2008, we terminated operations aboard the World
of Residensea. On November 24, 2008, we entered into an exclusive, long-term
agreement with TUI Cruises GmbH (“TUI Cruises”), a joint venture between Royal
Caribbean Cruise Line and German tour operator TUI Reisen, under which we have
agreed to operate casinos on all cruise ships that TUI Cruises places into
service before December 31, 2012. The first vessel went into service in May
2009.





Furthermore,
we hold a 33.3% ownership interest in and actively participate in the management
of Casinos Poland Ltd (“CPL”), the owner and operator of seven full casinos and
one slot casino in Poland. At CPL, day to day decision making is controlled by a
management board consisting of three persons. Long term decision making is
controlled by a supervisory board consisting of three persons. As we are the
only shareholder with experience in the gaming industry, we chair both the
management board and the supervisory board. No material decisions can be made
without our consent, including the removal of the chairman of each board. Based
on this influence, management believes that it is appropriate to account for our
investment in CPL as a component of our operations.





--18--


From time
to time, we may sell existing businesses in order to raise capital for future
acquisitions, fund new development opportunities, improve our other locations or
repay debt financing. On December 5, 2008, we entered into an agreement to sell
the Century Casino Millennium located in Prague, Czech Republic, for
approximately $2.2 million (CZK 22.0 million plus $1.2
million).  Approximately $1.4 million (CZK 22.0 million plus $0.4
million) was paid to us at closing on February 11, 2009, with the balance
payable over the 12 months following the closing. We received $0.4 million in
August 2009 and $0.2 million in October 2009. At closing, we recognized a gain
of $0.9 million related to the disposition of the Century Casino
Millennium.





On
December 19, 2008, a subsidiary of ours entered into an agreement to sell all of
the outstanding shares of Century Casinos Africa (“CCA”) for a gross selling
price of ZAR 460.0 million (approximately $59.4 million) less the balance of
third party South African debt and other agreed to amounts. CCA owned the
Caledon Hotel, Spa & Casino and 60% of the Century Casino & Hotel in
Newcastle, Africa. Net proceeds of ZAR 253.5 million ($32.8 million) were paid
to us at closing on June 30, 2009. On September 29, 2009, we received an
additional ZAR 17.3 million ($2.3 million) that was previously held in retention
and an additional ZAR 3.2 million ($0.4 million) based on a net asset value
(“NAV”) adjustment. At closing, we recognized a gain of ZAR 163.1 million
(approximately $19.8 million). In September 2009, we recorded an additional gain
of ZAR 3.2 million ($0.4 million) as a result of the NAV
adjustment.  Final transaction approval by the KwaZulu-Natal Gambling
Board was received on October 7, 2009. On October 14, 2009, we received the
final outstanding payment for the sale of CCA of ZAR 98.8 million ($13.4
million). An additional gain of ZAR 12.2 million (approximately $1.6 million)
has been recorded in October 2009.





With the
proceeds from the sale of CCA, on July 7, 2009, we repaid the entire principal
balance outstanding of $2.7 million on our debt related to our Cripple Creek,
Colorado property. On July 17, 2009, we repaid $6.0 million of principal on our
debt related to our Central City, Colorado property. On October 22, 2009, we
repaid the outstanding balance of $7.2 million on our Central City debt, which
includes principal, accrued interest and unpaid charges arising from earlier
prepayments of principal. In connection with these
repayments, we wrote off unamortized deferred financing charges of $1.0 million
during the third quarter of 2009.





On July
27, 2009, Century Resorts Ltd (“CRL”) entered into an agreement to purchase the
remaining 3.5% of its outstanding shares of common stock that the Company
previously did not own for $1.6 million. CRL paid $1.1 million in August 2009.
The Company expects to repay the remainder in November 2009. Our Co CEOs and
their respective family trusts/foundation collectively owned these
shares.





Unless
otherwise indicated, the information contained in this report refers to the
Company’s continuing operations.  The operations of the Century Casino
Millennium and CCA are reported as discontinued operations throughout this
report.





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





As a
gaming company, our operating results are highly dependent on the volume of
customers at our casinos. Most of our revenue is essentially cash-based, through
customers wagering with cash or paying for non-gaming services with cash or
credit cards. Management believes that in Colorado, less consumer discretionary
spending and increased competition have significantly impacted our
operations.





--19--


Effective
as of July 2, 2009, gaming establishments in Colorado were permitted to raise
the maximum betting limit from $5 to $100, can now be open for 24 hours and add
roulette and craps tables. We have implemented all of these changes at our
Colorado casinos, and management believes that these changes have positively
impacted our gaming revenue in the Colorado gaming markets.





Presentation of Foreign Currency
Amounts - Historical transactions that are denominated in a foreign
currency are translated and presented in U.S. dollars at the exchange rate in
effect on the date of the transaction.  Commitments that are
denominated in a foreign currency and all balance sheet accounts other than
shareholders’ equity are translated and presented based on the exchange rate at
the end of the reported periods.  Current period transactions
affecting the profit and loss of operations conducted in foreign currencies are
valued at the average exchange rate for the period in which they are
incurred.  The average exchange rates to the U.S. dollar used to
translate balances during each reported period are as follows:





For
      the three months
              ended
      September 30,
            
            
            For
      the nine months
              ended
      September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Canadian
      dollar (CAD)
            
            
            1.0984
            
            
            
            1.0407
            
            
            
            1.1702
            
            
            
            1.0185Czech
      koruna (CZK)
            
            
            N/A
            
            
            
            16.0745
            
            
            
            21.1428
            
            
            
            16.3418Euros
      (€)
            
            
            0.6995
            
            
            
            0.6668
            
            
            
            0.7337
            
            
            
            0.6582Polish
      zloty (PLN)
            
            
            2.9346
            
            
            
            2.2040
            
            
            
            3.2170
            
            
            
            2.2571South
      African rand (ZAR)
            
            
            7.8000
            
            
            
            7.7805
            
            
            
            8.7347
            
            
            
            7.6998


Source:
Pacific Exchange Rate Service





RESULTS
OF OPERATIONS





The
results of operations for the three and nine months ended September 30, 2009 and
2008 are below (in thousands, except per share data). Unless otherwise noted,
these results exclude discontinued operations.





For
      the three months
              ended
      September 30,
            
            
            For
      the nine months
              ended
      September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Gaming
      revenue
            
            $
            12,804
            
            
            $
            13,122
            
            
            $
            35,414
            
            
            $
            39,108Net
      operating revenue
            
            
            13,724
            
            
            
            13,966
            
            
            
            37,607
            
            
            
            41,369Total
      operating costs and expenses
            
            
            12,969
            
            
            
            23,111
            
            
            
            37,226
            
            
            
            50,839Earnings
      from equity investment
            
            
            33
            
            
            
            218
            
            
            
            276
            
            
            
            766Operating
      earnings (loss) from continuing operations
            
            
            788
            
            
            
            (8,927
            )
            
            
            657
            
            
            
            (8,704
            )Loss
      from continuing operations
            
            
            (1,179
            )
            
            
            (15,335
            )
            
            
            (3,683
            )
            
            
            (15,984
            )Earnings
      from discontinued operations
            
            
            461
            
            
            
            1,268
            
            
            
            23,140
            
            
            
            3,473Net
      (loss) earnings attributable toCentury
      Casinos, Inc. and subsidiaries
            
            
            (727
            )
            
            
            (14,198
            )
            
            
            18,521
            
            
            
            (12,822
            )Earnings
      per shareBasicLoss from continuing
      operations
            
            
            (0.05
            )
            
            
            (0.65
            )
            
            
            (0.15
            )
            
            
            (0.69
            )Net (loss)
    earnings
            
            
            (0.03
            )
            
            
            (0.60
            )
            
            
            0.79
            
            
            
            (0.55
            )DilutedLoss from continuing
      operations
            
            
            (0.05
            )
            
            
            (0.65
            )
            
            
            (0.15
            )
            
            
            (0.69
            )Net (loss)
    earnings
            
            
            (0.03
            )
            
            
            (0.60
            )
            
            
            0.79
            
            
            
            (0.55
            )





--20--


The
decrease in net operating revenue from $14.0 million for the three months ended
September 30, 2008 to $13.7 million for the three months ended September 30,
2009 is the result of a $0.6 million decline in gaming revenue at our property
in Edmonton, partially offset by an increase in net operating revenue at our
properties in Colorado of $0.3 million resulting from increased betting limits,
new table games and 24 hour gambling. Net operating revenue in Edmonton was down
due to lower table game revenue and a decline in the average exchange rate
between the U.S. dollar and Canadian dollar of 5.5% during the three months
ended September 30, 2009 compared to the three months ended September 30,
2008.





The
decrease in net operating revenue from $41.4 million for the nine months ended
September 30, 2008 to $37.6 million for the nine months ended September 30, 2009
can be attributed to decreased gaming revenue at all of our properties period
over period and a decline in the average exchange rate between the U.S. dollar
and Canadian dollar of 14.9%. Further declines in the average exchange rate
between the U.S. dollar and the Canadian dollar may adversely affect the results
of operations of our Canadian casino when reported in U.S. dollars.





The
decrease in operating costs and expenses from $23.1 million for the three months
ended September 30, 2008 to $13.0 million for the three months ended September
30, 2009 is primarily the result of (i) the write-off of $9.3 million of
goodwill related to our investments in our properties in Central City, Colorado
and Cripple Creek, Colorado in 2008, which increased our operating expenses for
the three months ended September 30, 2008, (ii) a decrease in gaming expenses in
Canada that are directly related to the decline in gaming revenue during the
third quarter of 2009 as compared to the third quarter of 2008, and (iii) a
decline in the average exchange rate between the U.S. dollar and Canadian dollar
of 5.5% during the third quarter of 2009, partially offset by an increase in
gaming expenses at our Colorado casinos resulting from improved revenue and
additional staffing during the third quarter of 2009 as compared to the third
quarter of 2008.





The
decrease in operating costs and expenses from $50.8 million for the nine months
ended September 30, 2008 to $37.2 million for the nine months ended September
30, 2009 is primarily the result of the write-off of $9.3 million of goodwill
related to our investments in our properties in Central City, Colorado and
Cripple Creek, Colorado in 2008, cost saving measures undertaken at our Colorado
casinos during the first nine months of 2009 and a decline in the average
exchange rate between the U.S. dollar and Canadian dollar of 14.9% during the
first nine months of 2009 as compared to the first nine months of
2008.





The
decrease in losses from continuing operations from a loss of $15.3 million for
the three months ended September 30, 2008 to a loss of $1.2 million for the
three months ended September 30, 2009 was due to a decrease in operating losses
from continuing operations of $9.7 million (of which $9.3 million of the
difference relates to the write-off of goodwill during the third quarter of
2008) and the establishment of a tax valuation allowance of $6.0 million during
the third quarter of 2008. This was offset by an increase in interest expense of
$0.7 million resulting primarily from the write off of unamortized deferred
financing charges related to the early repayment of our Central City debt, a
decrease of $0.2 million in earnings from our equity investment in CPL and
additional foreign currency losses of $0.1 million.





The
decrease in losses from continuing operations from a loss of $16.0 million for
the nine months ended September 30, 2008 to a loss of $3.7 million for the nine
months ended September 30, 2009 was due to a decrease in operating losses from
continuing operations of $9.4 million (of which $9.3 million of the difference
relates to the write-off of goodwill during the third quarter of 2008) and the
establishment of a tax valuation allowance of $6.0 million during the third
quarter of 2008. This was offset by an increase in interest expense of $0.3
million, a decrease of $0.5 million in earnings from our equity investment in
CPL and additional foreign currency losses of $0.4 million.





--21--


Net
operating revenue by property for the three and nine months ended September 30,
2009 and 2008 is summarized below (in thousands):





For
      the three months
              ended
      September 30, (1)
            
            
            For
      the nine months
              ended
      September 30, (1)2009
            
            
            2008
            
            
            2009
            
            
            2008Century
      Casino & Hotel (Edmonton, Alberta, Canada)
            
            $
            5,090
            
            
            $
            5,656
            
            
            $
            14,729
            
            
            $
            17,008Womacks
      (Cripple Creek, Colorado)
            
            
            3,246
            
            
            
            3,086
            
            
            
            8,259
            
            
            
            8,827Century
      Casino & Hotel (Central City, Colorado)
            
            
            4,791
            
            
            
            4,655
            
            
            
            13,132
            
            
            
            13,679Cruise
      Ships
            
            
            597
            
            
            
            569
            
            
            
            1,487
            
            
            
            1,852Casinos
      Poland (Poland) (2)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Corporate
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3Net
      operating revenue
            
            $
            13,724
            
            
            $
            13,966
            
            
            $
            37,607
            
            
            $
            41,369


(1)
            Excludes
      discontinued operations


(2)
            Accounted
      for as an equity investment





Earnings
(losses) from operations by property for the three and nine months ended
September 30, 2009 and 2008 are summarized below (in thousands):





For
      the three months
              ended
      September 30, (1)
            
            
            For
      the nine months
              ended
      September 30, (1)2009
            
            
            2008
            
            
            2009
            
            
            2008Century
      Casino & Hotel (Edmonton, Alberta, Canada)
            
            $
            1,436
            
            
            $
            1,674
            
            
            $
            4,146
            
            
            $
            5,133Womacks
      (Cripple Creek, Colorado) (2)
            
            
            461
            
            
            
            (7,121
            )
            
            
            567
            
            
            
            (7,259
            )Century
      Casino & Hotel (Central City, Colorado) (3)
            
            
            454
            
            
            
            (1,700
            )
            
            
            993
            
            
            
            (1,158
            )Cruise
      Ships
            
            
            65
            
            
            
            (3
            )
            
            
            16
            
            
            
            119Casinos
      Poland (Poland) (4)
            
            
            33
            
            
            
            218
            
            
            
            276
            
            
            
            766Corporate
            
            
            (1,661
            )
            
            
            (1,995
            )
            
            
            (5,341
            )
            
            
            (6,305
            )Earnings
      (loss) from operations
            
            $
            788
            
            
            $
            (8,927
            )
            
            $
            657
            
            
            $
            (8,704
            )


(1)
            Excludes
      discontinued operations


(2)
            Goodwill
      impairment decreased earnings from operations by $7.2 million in
      2008


(3)
            Goodwill
      impairment decreased earnings from operations by $2.1 million in
      2008


(4)
            Accounted
      for as an equity investment








Three
months ended September 30, 2009 vs 2008





Revenue





The
following revenue discussion excludes discontinued operations. Net operating
revenue for the three months ended September 30, 2009 and 2008 was as follows
(in thousands):





Three
      months
              ended
      September 30,2009
            
            
            2008
            
            
            Variance
            
            
            Percentage
              VarianceGaming
            
            $
            12,804
            
            
            $
            13,122
            
            
            $
            (318
            )
            
            
            (2.4
            %)Hotel,
      food and beverage
            
            
            2,279
            
            
            
            2,396
            
            
            
            (117
            )
            
            
            (4.9
            %)Other
            
            
            523
            
            
            
            511
            
            
            
            12
            
            
            
            2.3
            %Gross
      revenue
            
            
            15,606
            
            
            
            16,029
            
            
            
            (423
            )
            
            
            (2.6
            %)Less
      promotional allowances
            
            
            1,882
            
            
            
            2,063
            
            
            
            (181
            )
            
            
            (8.8
            %)Net
      operating revenue
            
            $
            13,724
            
            
            $
            13,966
            
            
            $
            (242
            )
            
            
            (1.7
            %)








--22--


Gaming
revenue





Gaming
revenue decreased by $0.3 million, or 2.4%, from $13.1 million for the three
months ended September 30, 2008 to $12.8 million for the three months ended
September 30, 2009. Lower gaming revenue in Edmonton, primarily due to decreased
play and a decline in the average exchange rate between the U.S. dollar and
Canadian dollar, was partially offset by increased gaming revenue at our U.S.
properties, which management attributes to the increase in betting limits, the
introduction of new table games and 24-hour gaming in Colorado.





Gaming
revenue at the Century Casino & Hotel in Edmonton decreased by $0.6 million,
or 13.8%, from $4.3 million for the three months ended September 30, 2008 to
$3.7 million for the three months ended September 30, 2009, primarily resulting
from a lower hold on table games and a 5.5% decline in the average exchange rate
between the U.S. dollar and Canadian dollar for the three months ended September
30, 2009 compared to the average exchange rate for the three months ended
September 30, 2008. Gaming revenue in Canadian dollars decreased by CAD 0.4
million, or 9.0%, from CAD 4.4 million for the three months ended September 30,
2008 to CAD 4.0 million for the three months ended September 30, 2009. This
decrease is the result of a decrease of 16.8% in table revenue (particularly
baccarat) and a decrease of 3.1% in slot revenue. Management believes that
revenue at our casino in Edmonton has been negatively impacted by a slow economy
and road construction that is making accessibility to our casino difficult. The
road construction was completed the first week of November.





As
previously mentioned, on July 2, 2009, gaming establishments in Colorado were
permitted to raise the maximum betting limit from $5 to $100, be open for 24
hours and have roulette and craps tables. Management believes that these changes
have positively impacted gaming revenue at our Colorado casinos, but the effect
has been diluted due to poor economic conditions.





Gaming
revenue at Womacks in Cripple Creek increased by $0.2 million, or 6.4%, from
$3.3 million for the three months ended September 30, 2008 to $3.5 million for
the three months ended September 30, 2009. Management attributes this increase
to the change in gaming laws in Colorado, but ,as described above, believes that
growth has been limited due to the poor economic conditions. The Cripple Creek
gaming market increased by 2.4% from the three months ended September 30, 2008
to the three months ended September 30, 2009. Our share of the Cripple Creek
gaming market increased from 8.1% for the three months ended September 30, 2008
to 8.6% for the three months ended September 30, 2009.





Gaming
revenue at the Century Casino and Hotel in Central City remained flat at $5.0
million when comparing the three months ended September 30, 2009 to the three
months ended September 30, 2008. The combined Central City and Black Hawk gaming
market increased by 9.9% from the three months ended September 30, 2008 to the
three months ended September 30, 2009. Management attributes this increase to
the change in gaming laws in Colorado, but, as described above, believes that
growth has been limited due to the poor economic conditions. Our market share of
the combined Central City and Black Hawk gaming revenue decreased from 3.3% for
the three months ended September 30, 2008 to 3.0% for the three months ended
September 30, 2009. Management believes this decline is the result of our larger
competitors attracting more customers during the period immediately after the
new gaming laws went into effect.  Our share of the Central City
gaming revenue decreased from 28.6% for the three months ended September 30,
2008 to 27.5% for the three months ended September 30, 2009.





Gaming
revenue aboard the cruise ships on which we operate remained flat at $0.6
million for the three months ended September 30, 2009 as compared to the three
months ended September 30, 2008.





--23--


Hotel,
food and beverage revenue





Hotel,
food and beverage revenue decreased by $0.1 million, or 4.9%, from $2.4 million
for the three months ended September 30, 2008 to $2.3 million for the three
months ended September 30, 2009. Hotel, food and beverage revenue at Womacks
declined by $0.1 million, resulting primarily from the elimination of a special
food promotion that we offered during the third quarter of 2008.





Promotional
allowances





Promotional
allowances decreased by $0.2 million, or 8.8%, from $2.1 million for the three
months ended September 30, 2008 to $1.9 million for the three months ended
September 30, 2009, primarily due to a decline in coupons awarded at the
casinos. The retail value of accommodations, food and beverage, and other
services furnished to guests without charge (“complimentaries”) is included in
gross revenue and then deducted as promotional allowances. As a result,
complimentaries neither increase nor decrease our overall net operating
revenue.





Operating Costs and
Expenses





The
following operating cost and expense discussion excludes discontinued
operations. Operating costs and expenses for the three months ended September
30, 2009 and 2008 were as follows (in thousands):





Three
      months
              ended
      September 30,2009
            
            
            2008
            
            
            Variance
            
            
            Percentage
              VarianceGaming
            
            $
            5,196
            
            
            $
            5,284
            
            
            $
            (88
            )
            
            
            (1.7
            %)Hotel,
      food and beverage
            
            
            1,807
            
            
            
            1,918
            
            
            
            (111
            )
            
            
            (5.8
            %)General
      and administrative
            
            
            4,440
            
            
            
            4,793
            
            
            
            (353
            )
            
            
            (7.4
            %)Impairments
      and other write-offs
            
            
            -
            
            
            
            9,357
            
            
            
            (9,357
            )
            
            
            -Depreciation
            
            
            1,526
            
            
            
            1,759
            
            
            
            (233
            )
            
            
            (13.2
            %)Total
      operating costs and expenses
            
            $
            12,969
            
            
            $
            23,111
            
            
            $
            (10,142
            )
            
            
            (43.9
            %)





Gaming
expenses





Gaming
expenses decreased $0.1 million, or 1.7%, from $5.3 million for the three months
ended September 30, 2008 to $5.2 million for the three months ended September
30, 2009. Declines in gaming expenses in Edmonton that are directly related to a
decline in gaming revenue and a decline in the average exchange rate between the
U.S. dollar and the Canadian dollar, were partially offset by increased gaming
expenses in Colorado as discussed below.





Gaming
expenses at the Century Casino & Hotel in Edmonton decreased $0.3 million,
or 17.9%, from $1.7 million for the three months ended September 30, 2008 to
$1.4 million for the three months ended September 30, 2009. In Canadian dollars,
gaming expenses decreased by CAD 0.3 million, or 14.4%, from CAD 1.8 million for
the three months ended September 30, 2008 to CAD 1.5 million for the three
months ended September 30, 2009, primarily due to a decrease in
payroll.





Gaming
expenses at Womacks increased $0.2 million, or 14.8%, from $1.1 million for the
three months ended September 30, 2008 to $1.3 million for the three months ended
September 30, 2009. Payroll expenses at the casino increased by $0.2 million,
the result of adding dealers for new table games at the casino and additional
staff needed to keep the casino open 24 hours a day beginning on July 2,
2009.





--24--


Gaming
expenses at the Century Casino & Hotel in Central City increased $0.1
million, or 5.2%, from $2.0 million for the three months ended September 30,
2008 to $2.1 million for the three months ended September 30, 2009. Payroll
expenses at the casino increased by $0.1 million, the result of adding dealers
for new table games at the casino and additional staff needed to keep the casino
open 24 hours a day beginning on July 2, 2009.





Gaming
expenses aboard the cruise ships on which we operate declined by $0.1 million,
or 12.0%, from $0.5 million for the three months ended September 30, 2008 to
$0.4 million for the three months ended September 30, 2009, primarily due to a
decline in concession fees paid to the cruise ship operators.





Hotel,
food and beverage expenses





Hotel,
food and beverage expenses decreased by $0.1 million, or 5.8%, from $1.9 million
for the three months ended September 30, 2008 to $1.8 million for the three
months ended September 30, 2009. Food expenses at Womacks decreased by $0.1
million due to above average levels of expenses resulting from a special food
promotion at Womacks during the three months ended September 30,
2008.





General
and administrative expenses





General
and administrative expenses decreased by $0.4 million, or 7.4%, from $4.8
million for the three months ended September 30, 2008 to $4.4 million for the
three months ended September 30, 2009. General and administrative expenses
include facility maintenance, utilities, property and liability insurance,
property taxes, housekeeping, and all administrative departments, such as
information technology, accounting, human resources and internal
audit.





General
and administrative expenses at the Century Casino & Hotel in Edmonton
remained flat at $1.1 million when comparing the three months ended September
30, 2009 to the three months ended September 30, 2008, primarily due to the
decline in the average exchange rate between the U.S. dollar and the Canadian
dollar. In Canadian dollars, general and administrative expenses increased by
CAD 0.1 million, or 12.5%, from CAD 1.1 million for the three months ended
September 30, 2008 to CAD 1.2 million for the three months ended September 30,
2009, primarily due to an increases in payroll expenses and property
taxes.





General
and administrative expenses at Womacks decreased by $0.1 million, or 10.8%, from
$0.8 million for the three months ended September 30, 2008 to $0.7 million for
the three months ended September 30, 2009, due to decreases in payroll expense
and maintenance charges.





General
and administrative expenses at the Century Casino & Hotel in Central City
remained flat at $1.0 million when comparing the three months ended September
30, 2009 to the three months ended September 30, 2008. Decreases in insurance
charges and maintenance charges were offset by a slight increase in payroll
expenses.





Combined
general and administrative expenses aboard the cruise ships remained flat at
less than $0.1 million for the three months ended September 30, 2009 compared to
the three months ended September 30, 2008.





Corporate
expenses decreased by $0.3 million, or 16.8%, from $1.9 million for the three
months ended September 30, 2008 to $1.6 million for the three months ended
September 30, 2009, primarily due to a decline in payroll expense of $0.2
million and slight decreases in travel expenses and investor relations
expenses.





--25--


At
September 30, 2009, we had $1.0 million of total unrecognized compensation
expense related to unvested stock options and unvested restricted stock. Of this
amount, $0.2 million is expected to be recognized over the remainder of 2009,
and $0.8 million is expected to be recognized in subsequent years through
2011.





Impairments
and other write-offs





For the
three months ended September 30, 2008, we recorded $9.3 million in impairments
of goodwill related to Womacks in Cripple Creek, Colorado, and the Century
Casino and Hotel in Central City, Colorado. During 2008, these operations
experienced a significant decline in gaming revenue which we deemed to be an
indicator of potential impairment. As a result, we performed interim goodwill
impairment analyses as of September 30, 2008 and determined that there would be
no remaining value attributable to goodwill. Accordingly, we wrote-off the
entire goodwill balances related to these operations.





Depreciation





Depreciation
expense decreased by $0.2 million, or 13.2%, from $1.7 million for the three
months ended September 30, 2008 to $1.5 million for the three months ended
September 30, 2009. The decrease is primarily the result of a decline in
depreciation expense at Womacks of $0.2 million as gaming equipment with short
depreciable lives has become fully depreciated. Depreciation expense at our
remaining properties remained flat period over period.





Non-operating income
(expense)





Non-operating
income (expense) for the three months ended September 30, 2009 and 2008 was as
follows (in thousands):





Three
      months
              ended
      September 30,2009
            
            
            2008
            
            
            Variance
            
            
            Percentage
              VarianceInterest
      income
            
            $
            33
            
            
            $
            4
            
            
            $
            29
            
            
            
            725.0
            %Interest
      expense
            
            
            (1,618
            )
            
            
            (879
            )
            
            
            (739
            )
            
            
            84.1
            %Gains
      (losses) on foreign currency translation and other
            
            
            (182
            )
            
            
            (70
            )
            
            
            (112
            )
            
            
            160.0
            %Non-operating
      expense
            
            $
            (1,767
            )
            
            $
            (945
            )
            
            $
            (822
            )
            
            
            87.0
            %





Interest
income





Interest
income is directly related to interest earned on our cash reserves.





Interest
expense





The
increase in interest expense is primarily due to the write off of approximately
$1.0 million in deferred financing charges related to the early repayment of our
Central City debt. This was partially offset by a decrease in interest expense
resulting from a decrease in our average debt balance from $42.2 million for the
three months ended September 30, 2008 to $27.0 million for the three months
ended September 30, 2009, partially offset by an increase in interest rates on
our Colorado debt. Our weighted average interest rate, excluding the impact of
the amortization of deferred financing charges, was 7.3% and 8.3% for the three
months ended September 30, 2008 and 2009, respectively.





--26--


Gains
(losses) on foreign currency transactions and other





We
recognized foreign currency losses of $0.1 million and $0.2 million for the
three months ended September 30, 2008 and 2009, respectively. We have
outstanding cash denominated in U.S. dollars, Canadian dollars, Euros and South
African rand. In July 2009, we realized a foreign exchange loss of $0.8 million
upon the conversion of approximately ZAR 228.8 million into $28.8 million. This
exchange loss was offset by gains of $0.2 million recorded on the conversion of
approximately ZAR 39.3 million into $5.3 million throughout the remainder of the
period, exchange gains of $0.4 million on the revaluation of outstanding
receivables related to the sale of CCA and gains on the revaluation of loans
that we deemed to not be permanently invested.  Subsequent to the end
of the quarter we recorded an additional gain of $0.3 million on the conversion
of ZAR 98.8 million to approximately $13.4 million.





Other
Items





Earnings
from equity investment





We own
33.3% of all shares issued by CPL. Our portion of CPL’s earnings are recorded as
earnings from equity investment.  We recorded $0.3 million and less
than $0.1 million of earnings from our investment in CPL for the three months
ended September 30, 2008 and 2009, respectively. Although net operating revenue
at CPL increased slightly, our earnings decreased due to higher depreciation
costs resulting from CPL’s investment in new slot machines for the Marriott
Casino and increased personnel costs as CPL had to hire additional dealers.
Finally, a decline in the average exchange rate between the U.S. dollar and the
Polish zloty of 33.1% negatively impacted our results when comparing the three
months ended September 30, 2009 to the three months ended September 30,
2008.





Taxes





Our
foreign earnings significantly impact our tax rate. For the three months ended
September 30, 2009, we incurred pre-tax losses for our U.S. based operations
(including corporate losses) of $1.6 million compared to pre-tax earnings at our
foreign operations of $0.6 million. We currently have a valuation allowance
established for our U.S. deferred tax assets of $8.5 million. If we conclude at
a later date that the realization of these deferred taxes is more likely than
not, we will reduce the valuation allowance as appropriate. Accordingly, for the
three months ended September 30, 2009, we did not record a tax benefit on U.S.
operating losses.





Amounts
      in thousands
            
            For
      the three months
              ended
      September 30, 2009
            
            
            For
      the three months
              ended
      September 30, 2008Pre-tax
      income
            
            
            Income
      tax
            
            
            Effective
              tax rate
            
            
            Pre-tax
      income
            
            
            Income
      tax
            
            
            Effective
              tax rateCanada
            
            $
            690
            
            
            $
            183
            
            
            
            26.5
            %
            
            $
            998
            
            
            $
            314
            
            
            
            31.5
            %United
      States (1)
            
            
            (1,638
            )
            
            
            23
            
            
            
            (1.4
            %)
            
            
            (11,163
            )
            
            
            5,130
            
            
            
            (46.0
            %)Mauritius
      (2)
            
            
            (242
            )
            
            
            (7
            )
            
            
            2.9
            %
            
            
            250
            
            
            
            13
            
            
            
            5.2
            %Austria
            
            
            241
            
            
            
            1
            
            
            
            0.4
            %
            
            
            82
            
            
            
            6
            
            
            
            7.3
            %Poland
            
            
            (30
            )
            
            
            -
            
            
            
            -
            %
            
            
            (39
            )
            
            
            -
            
            
            
            -
            %Total
            
            $
            (979
            )
            
            $
            200
            
            
            
            (20.4
            %)
            
            $
            (9,872
            )
            
            $
            5,463
            
            
            
            (55.3
            %)


(1) 2009
includes an accrual for uncertain tax positions


(2)
Includes the earnings of the South African branch of Century Resorts
International taxed at South African rates





--27--


Nine
months ended September 30, 2009 vs 2008





Revenue





The
following revenue discussion excludes discontinued operations. Net operating
revenue for the nine months ended September 30, 2009 and 2008 was as follows (in
thousands):





Nine
      months
              ended
      September 30,2009
            
            
            2008
            
            
            Variance
            
            
            Percentage
              VarianceGaming
            
            $
            35,414
            
            
            $
            39,108
            
            
            $
            (3,694
            )
            
            
            (9.4
            %)Hotel,
      food and beverage
            
            
            6,215
            
            
            
            6,594
            
            
            
            (379
            )
            
            
            (5.7
            %)Other
            
            
            1,395
            
            
            
            1,469
            
            
            
            (74
            )
            
            
            (5.0
            %)Gross
      revenue
            
            
            43,024
            
            
            
            47,171
            
            
            
            (4,147
            )
            
            
            (8.8
            %)Less
      promotional allowances
            
            
            5,417
            
            
            
            5,802
            
            
            
            (385
            )
            
            
            (6.6
            %)Net
      operating revenue
            
            $
            37,607
            
            
            $
            41,369
            
            
            $
            (3,762
            )
            
            
            (9.1
            %)





Gaming
revenue





Gaming
revenue decreased by $3.7 million, or 9.4%, from $39.1 million for the nine
months ended September 30, 2008 to $35.4 million for the nine months ended
September 30, 2009. Reduced revenue at all of our properties contributed to this
decline, as discussed below.





Gaming
revenue at the Century Casino & Hotel in Edmonton decreased by $2.0 million,
or 15.7%, from $12.7 million for the nine months ended September 30, 2008 to
$10.7 million for the nine months ended September 30, 2009, primarily resulting
from a 14.9% decline in the average exchange rate between the U.S. dollar and
Canadian dollar compared to the average exchange rate for the nine months ended
September, 2008. Gaming revenue in Canadian dollars decreased by CAD 0.4
million, or 3.2%, from CAD 12.9 million for the nine months ended September 30,
2008 to CAD 12.5 million for the nine months ended September 30, 2009, primarily
due to a 7.8% decrease in table revenue (particularly baccarat). Management
believes that revenue at our casino in Edmonton has been negatively impacted by
a slow economy and road construction that is making accessibility to our casino
difficult. The road construction was completed the first week of
November.





As
previously mentioned, on July 2, 2009, gaming establishments in Colorado were
permitted to raise the maximum betting limit from $5 to $100, be open for 24
hours and have roulette and craps tables. Even though revenue is down period
over period, management believes that subsequent to July 2, these changes have
positively impacted gaming revenue at our Colorado casinos, but the effect has
been diluted due to poor economic conditions.





Gaming
revenue at Womacks in Cripple Creek decreased by $0.7 million, or 6.9%, from
$9.9 million for the nine months ended September 30, 2008 to $9.2 million for
the nine months ended September 30, 2009. We are currently reviewing various
marketing and other strategies to increase gaming revenue at Womacks. The
Cripple Creek gaming market increased by 0.6% when comparing the nine months
ended September 30, 2009 to the nine months ended September 30, 2008. Management
attributes this increase to the opening of a larger casino in May 2008
and to the change in gaming laws in Colorado, but believes that growth has been
limited due to the poor economic conditions. Our market share of the Cripple
Creek gaming market declined from 9.1% for the nine months ended September 30,
2008 to 8.4% for the nine months ended September 30, 2009, primarily due to a
larger casino opening in Cripple Creek. This represents a 7.6% decrease in the
market share while our share of the slot machines in the Cripple Creek market
declined by 12.4%.





--28--


Gaming
revenue at the Century Casino and Hotel in Central City decreased by $0.7
million, or 4.5%, from $14.8 million for the nine months ended September 30,
2008 to $14.1 million for the nine months ended September 30, 2009. The combined
Central City and Black Hawk gaming market increased by 0.3% from the nine months
ended September 30, 2008 to the nine months ended September 30, 2009. Management
attributes this increase to the change in gaming laws in Colorado, but believes
that growth has been limited due to poor economic conditions. Our market share
of the Central City and Black Hawk gaming revenue decreased from 3.3% for the
nine months ended September 30, 2008 to 3.2% for the nine months ended September
30, 2009. Our market share of the Central City gaming revenue has increased
slightly from 28.4% for the nine months ended September 30, 2008 to 28.5% for
the nine months ended September 30, 2009.





Gaming
revenue aboard the cruise ships on which we operated decreased by $0.4 million,
or 20.1%, from $1.8 million for the nine months ended September 30, 2008 to $1.4
million for the nine months ended September 30, 2009. Management believes that
the cruise ships have significantly reduced their ticket prices in an effort to
attract more passengers, particularly for the first nine months of 2009.
Management believes that this has resulted in consumers with less discretionary
income traveling on the ships, indirectly leading to less play at our casinos.
Management also believes that fewer gaming days on the Silvercloud during the
first quarter of 2009 and the shutdown of the casino on the Silvercloud during
drydock in May 2009 negatively impacted our gaming revenue.





Hotel,
food and beverage revenue





Hotel,
food and beverage revenue decreased by $0.4 million, or 5.7%, from $6.6 million
for the nine months ended September 30, 2008 to $6.2 million for the nine months
ended September 30, 2009, primarily due to a decline in the average exchange
rate between the U.S. dollar and the Canadian dollar. In U.S. dollars, hotel,
food and beverage revenue at our casino in Edmonton decreased by $0.3 million,
or 7.6%, from $3.6 million for the nine months ended September 30, 2008 to $3.3
million for the nine months ended September 30, 2009. In Canadian dollars,
hotel, food and beverage revenue increased CAD 0.2 million, or 6.0%, from CAD
3.6 million for the nine months ended September 30, 2008 to CAD 3.8 million for
the nine months ended September 30, 2009.





Promotional
allowances





Promotional
allowances decreased by $0.4 million, or 6.6%, from $5.8 million for the nine
months ended September 30, 2008 to $5.4 million for the nine months ended
September 30, 2009. Promotional allowances decreased by $0.2 million at Womacks
and $0.2 million at our casino in Central City due to a decline in award earning
play by our customers. The retail value of complimentaries are included in gross
revenue and then deducted as promotional allowances. As a result,
complimentaries neither increase nor decrease our overall net operating
revenue.





--29--


Operating Costs and
Expenses





The
following operating cost and expense discussion excludes discontinued
operations. Operating costs and expenses for the nine months ended September 30,
2009 and 2008 were as follows (in thousands):





Nine
      months
              ended
      September 30,2009
            
            
            2008
            
            
            Variance
            
            
            Percentage
              VarianceGaming
            
            $
            14,254
            
            
            $
            15,781
            
            
            $
            (1,527
            )
            
            
            (9.7
            %)Hotel,
      food and beverage
            
            
            5,006
            
            
            
            5,278
            
            
            
            (272
            )
            
            
            (5.2
            %)General
      and administrative
            
            
            13,318
            
            
            
            15,299
            
            
            
            (1,981
            )
            
            
            (12.9
            %)Impairments
      and other write-offs
            
            
            -
            
            
            
            9,357
            
            
            
            (9,357
            )
            
            
            -Depreciation
            
            
            4,648
            
            
            
            5,124
            
            
            
            (476
            )
            
            
            (9.3
            %)Total
      operating costs and expenses
            
            $
            37,226
            
            
            $
            50,839
            
            
            $
            (13,613
            )
            
            
            (26.8
            %)





Gaming
expenses





Gaming
expenses decreased $1.5 million, or 9.7%, from $15.8 million for the nine months
ended September 30, 2008 to $14.3 million for the nine months ended September
30, 2009, primarily due to a decrease in expenses at our Colorado casinos that
are directly related to decreased gaming revenue and reduced staffing prior to
July 2, 2009. Also contributing to the decrease was a decline in the average
exchange rate between the U.S. dollar and the Canadian dollar.





Gaming
expenses at the Century Casino & Hotel in Edmonton decreased $0.7 million,
or 14.6%, from $4.8 million for the nine months ended September 30, 2008 to $4.1
million for the nine months ended September 30, 2009, due to a decline in the
average exchange rate between the U.S. dollar and the Canadian dollar. In
Canadian dollars, gaming expenses decreased CAD 0.1 million, or 2.8%, from CAD
4.9 million for the nine months ended September 30, 2008 to CAD 4.8 million for
the nine months ended September 30, 2009 primarily due to a decrease in payroll
expenses of CAD 0.2 million, offset by an increase in slot royalties of CAD 0.1
million.





Gaming
expenses at Womacks decreased $0.3 million, or 8.0%, from $3.6 million for the
nine months ended September 30, 2008 to $3.3 million for the nine months ended
September 30, 2009. This decrease is primarily the result of a $0.1 million
decrease in gaming taxes resulting from the decrease in gaming revenue, a
decline in royalties of $0.1 million and a decline in payroll expenses of $0.1
million.  As part of a plan to bring expenses in line with revenue
levels, management reduced gaming staff levels at the casino during the first
half of 2009. As of July 2, 2009, we have increased staffing since the casino is
now open 24 hours and we have added new table games.





Gaming
expenses at the Century Casino & Hotel in Central City decreased $0.2
million, or 4.0%, from $5.9 million for the nine months ended September 30, 2008
to $5.7 million for the nine months ended September 30, 2009, primarily due to a
$0.1 million decrease in gaming taxes resulting from the decrease in gaming
revenue, a $0.1 million decrease in device fees and a $0.1 million decrease in
slot conversion expenses. These decreases were partially offset by a $0.1
million increase in payroll expenses. As of July 2, 2009, we have increased
staffing since the casino is now open 24 hours and we have added new table
games.





Gaming
expenses aboard the cruise ships on which we operate declined by $0.3 million,
or 20.7%, from $1.4 million for the nine months ended September 30, 2008 to $1.1
million for the nine months ended September 30, 2009, primarily due to a decline
in concession fees paid to the cruise ship operators.





--30--


Hotel,
food and beverage expenses





Hotel,
food and beverage expenses decreased by $0.3 million, or 5.2%, from $5.3 million
for the nine months ended September 30, 2008 to $5.0 million for the nine months
ended September 30, 2009, primarily due to a decline in the average exchange
rate between the U.S. dollar and the Canadian dollar from the first nine months
of 2008 to the first nine months of 2009. In U.S. dollars, hotel, food and
beverage expenses at our casino in Edmonton decreased by $0.2 million, or 7.3%,
from $2.4 million for the nine months ended September 30, 2008 to $2.2 million
for the nine months ended September 30, 2009. In Canadian dollars, hotel, food
and beverage expenses increased CAD 0.1 million, or 6.0%, from CAD 2.5 million
for the nine months ended September 30, 2008 to CAD 2.6 million for the nine
months ended September 30, 2009, primarily due to an increase in payroll of CAD
0.1 million. Hotel, food and beverage expenses at our other properties remained
flat period over period.





General
and administrative expenses





General
and administrative expenses decreased $2.0 million, or 12.9%, from $15.3 million
for the nine months ended September 30, 2008 to $13.3 million for the nine
months ended September 30, 2009. General and administrative expenses include
facility maintenance, utilities, property and liability insurance, property
taxes, housekeeping, and all administrative departments, such as information
technology, accounting, human resources and internal audit.





General
and administrative expenses at the Century Casino & Hotel in Edmonton
decreased by $0.3 million, or 8.2%, from $3.6 million for the nine months ended
September 30, 2008 to $3.3 million for the nine months ended September 30, 2009,
primarily due to the decline in the average exchange rate between the U.S.
dollar and the Canadian dollar. In Canadian dollars, general and administrative
expenses increased by CAD 0.2 million, or 6.6%, from CAD 3.6 million for the
nine months ended September 30, 2008 to CAD 3.8 million for the nine months
September 30, 2009, primarily due to a CAD 0.1 million increase in payroll
expenses and CAD 0.1 million increase in maintenance charges.





General
and administrative expenses at Womacks decreased by $0.5 million, or 19.9%, from
$2.5 million for the nine months ended September 30, 2008 to $2.0 million for
the nine months ended September 30, 2009. This decrease was primarily due to a
$0.3 million decrease in payroll expense related to reduced staffing and
contract labor at the casino and a $0.1 million decrease in maintenance
expenses.





General
and administrative expenses at the Century Casino & Hotel in Central City
decreased by $0.3 million, or 8.4%, from $3.0 million for the nine months ended
September 30, 2008 to $2.7 million for the nine months ended September 30, 2009.
The decrease is primarily the result of a $0.1 million decline in payroll
expenses related to reduced staffing at the casino and the cumulative effect of
cost saving measures at the casino. There were no other significant decreases in
individual general and administrative expenses.





Combined
general and administrative expenses aboard the cruise ships remained flat at
$0.1 million for the nine months ended September 30, 2009 compared to the nine
months ended September 30, 2008.





Corporate
expenses decreased by $0.9 million, or 15.4%, from $6.1 million for the nine
months ended September 30, 2008 to $5.2 million for the nine months ended
September 30, 2009, primarily due to a decrease in payroll expense of $0.5
million, a decline in travel expenses of $0.2 million, a decline in legal,
accounting and other professional fees of $0.1 million and a decline in
communication charges of $0.1 million.





--31--


Impairments
and other write-offs





For the
three months ended September 30, 2008, we recorded $9.3 million in impairments
of goodwill related to Womacks in Cripple Creek, Colorado and the Century Casino
and Hotel in Central City, Colorado. During 2008, these operations experienced a
significant decline in gaming revenue which we deemed to be an indicator of
potential impairment. As a result, we performed interim goodwill impairment
analyses as of September 30, 2008 and determined that there would be no
remaining value attributable to goodwill. Accordingly, we wrote-off the entire
goodwill balances related to these operations.





Depreciation





Depreciation
expense decreased by $0.5 million, or 9.3%, from $5.1 million for the nine
months ended September 30, 2008 to $4.6 million for the nine months ended
September 30, 2009. The decrease is primarily the result of gaming equipment at
Womacks becoming fully depreciated and a decline in the average exchange rate
between the U.S. dollar and Canadian dollar, which resulted in a decline in
depreciation expense of $0.1 million at our casino in Canada. In Canadian
dollars, depreciation remained flat at the casino for the nine months ended
September 30, 2009 compared to the nine months ended September 30,
2008.





Non-operating income
(expense)





Non-operating
income (expense) for the nine months ended September 30, 2009 and 2008 was as
follows (in thousands):





Nine
      months
              ended
      September 30,2009
            
            
            2008
            
            
            Variance
            
            
            Percentage
              VarianceInterest
      income
            
            $
            43
            
            
            $
            26
            
            
            $
            17
            
            
            
            65.4
            %Interest
      expense
            
            
            (3,433
            )
            
            
            (3,087
            )
            
            
            (346
            )
            
            
            11.2
            %(Losses)
      gains on foreign currency translation and other
            
            
            (431
            )
            
            
            31
            
            
            
            (462
            )
            
            
            -Non-operating
      expense
            
            $
            (3,821
            )
            
            $
            (3,030
            )
            
            $
            (791
            )
            
            
            26.1
            %





Interest
income





Interest
income is directly related to interest earned on our cash reserves.





Interest
expense





The
increase in interest expense is primarily due to the write off of approximately
$1.0 million in deferred financing charges related to the early repayment of our
Central City debt. This was partially offset by a decrease in interest expense
resulting from a decrease in our average debt balance from $45.7 million for the
nine months ended September 30, 2008 to $31.9 million for the nine months ended
September 30, 2009, offset by an increase in interest rates on our Colorado
debt. Our weighted average interest rate, excluding the impact of the
amortization of deferred financing charges and one-time charges incurred in 2008
for obtaining bank waivers of a financial covenant related to our Central City
debt, was 7.4% and 8.6% for the nine months ended September 30, 2008 and 2009,
respectively.





--32--


(Losses)
gains on foreign currency transactions and other





We
recognized foreign currency losses of $0.4 million for the nine months ended
September 30, 2009. We have outstanding cash denominated in U.S. dollars,
Canadian dollars, Euros and South African rand. In July 2009, we realized a
foreign exchange loss of $0.8 million upon the conversion of approximately ZAR
228.8 million into $28.8 million. This exchange loss was offset by gains of $0.2
million recorded on the conversion of approximately ZAR 39.3 million into $5.3
million throughout the remainder of the period, exchange gains of $0.4 million
on the revaluation of outstanding receivables related to the sale of South
Africa and gains on the revaluation of loans that we deem to be not be
permanently invested.  Subsequent to the end of the quarter we
recorded an additional gain of $0.3 million on the conversion of ZAR 98.8
million to approximately $13.4 million.





Other
Items





Earnings
from equity investment





We own
33.3% of all shares issued by CPL. Our portion of CPL’s earnings are recorded as
earnings from equity investment.  We recorded $0.8 million and $0.3
million of earnings from our investment in CPL for the nine months ended
September 30, 2008 and 2009, respectively. The decline is primarily a result of
higher depreciation costs resulting from CPL’s investment in new slot machines
for the Marriott Casino, increased personnel costs as CPL had to higher
additional dealers and a lower hold percentage on both slot and table games
during the first quarter of 2009. Furthermore, a decline in the average exchange
rate between the U.S. dollar and the Polish zloty of 42.5% negatively impacted
our results when comparing the  nine months ended September 30, 2009
compared to the nine months ended September 30, 2008.





Taxes





Our
foreign earnings significantly impact our tax rate. For the nine months ended
September 30, 2009, we incurred pre-tax losses for our U.S. based operations
(including corporate losses) of $4.8 million compared to pre-tax earnings at our
foreign operations of $1.6 million. We currently have a valuation established
for our U.S. deferred tax assets of $8.5 million. If we conclude at a later date
that the realization of these deferred taxes is more likely than not, we will
reduce the valuation allowance as appropriate.  Accordingly, for the
nine months ended September 30, 2009, we did not record a tax benefit on U.S.
operating losses.





Amounts
      in thousands
            
            For
      the nine months
              ended
      September 30, 2009
            
            
            For
      the nine months
              ended
      September 30, 2008Pre-tax
      income
            
            
            Income
      tax
            
            
            Effective
              tax rate
            
            
            Pre-tax
      income
            
            
            Income
      tax
            
            
            Effective
              tax rateCanada
            
            $
            1,981
            
            
            $
            536
            
            
            
            27.1
            %
            
            $
            2,782
            
            
            $
            840
            
            
            
            30.2
            %United
      States (1)
            
            
            (4,750
            )
            
            
            55
            
            
            
            (1.2
            %)
            
            
            (16,468
            )
            
            
            3,337
            
            
            
            (20.3
            %)Mauritius
      (2)
            
            
            (1,512
            )
            
            
            (77
            )
            
            
            5.1
            %
            
            
            1,379
            
            
            
            55
            
            
            
            4.0
            %Austria
            
            
            928
            
            
            
            5
            
            
            
            0.5
            %
            
            
            15
            
            
            
            18
            
            
            
            120.0
            %Poland
            
            
            189
            
            
            
            -
            
            
            
            -
            %
            
            
            558
            
            
            
            -
            
            
            
            -
            %Total
            
            $
            (3,164
            )
            
            $
            519
            
            
            
            (16.4
            %)
            
            $
            (11,734
            )
            
            $
            4,250
            
            
            
            (36.2
            %)


(1) 2009
includes an accrual for uncertain tax positions


(2)
Includes the earnings of the South African branch of Century Resorts
International taxed at South African rates


--33--


Discontinued
Operations





The
results of the operations of CCA (which include the Caledon Hotel, Spa &
Casino and the Century Casino Newcastle) and Century Casino Millennium are
classified as discontinued operations. The results of our discontinued
operations for the three and nine months ended September 30, 2009 and 2008 are
below (in thousands, except for per share information):





For
      the three months
              ended
      September 30,
            
            
            For
      the nine months
              ended
      September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Gaming
      revenue
            
            $
            -
            
            
            $
            6,694
            
            
            $
            9,533
            
            
            $
            19,645Net
      operating revenue
            
            
            45
            
            
            
            7,895
            
            
            
            11,248
            
            
            
            23,018Total
      operating costs and expenses
            
            
            82
            
            
            
            6,046
            
            
            
            7,836
            
            
            
            17,832Operating
      earnings from discontinued operations
            
            
            (37
            )
            
            
            1,849
            
            
            
            3,412
            
            
            
            5,186Net
      earnings from discontinued operations
            
            
            461
            
            
            
            1,268
            
            
            
            23,140
            
            
            
            3,473Earnings
      per share from discontinued operationsBasic
            
            
            0.02
            
            
            
            0.05
            
            
            
            0.94
            
            
            
            0.14Diluted
            
            
            0.02
            
            
            
            0.05
            
            
            
            0.94
            
            
            
            0.14





On
February 11, 2009, we ceased operations at the Century Casino Millennium upon
its sale to an unrelated third party. For the nine months ended September 30,
2009, we recorded gains of $0.9 million related to the disposition of the
Century Casino Millennium.





On June
30, 2009, we ceased operations at the Caledon Hotel, Spa & Casino and the
Century Casino Newcastle upon its sale to an unrelated third party. Prior to
this time, results from these operations had declined due to lower customer
attendance and declines in the average exchange rate between the U.S. dollar and
the South African rand. Management believes that gaming revenue decreased at the
Caledon mostly because of a decline in consumer discretionary spending. For the
three months ended September 30, 2009, we recorded a gain of $0.4 million on the
disposition of CCA resulting from an NAV adjustment. For the nine months ended
September 30, 2009, we recorded gains of $20.3 million related to the
disposition of CCA.





Final
transaction approval for the sale of CCA was received on October 7, 2009. On
October 14, 2009, we received the final outstanding payment of ZAR 98.8 million
($13.4 million). An additional gain of $1.6 million has been recorded in October
2009.





LIQUIDITY
AND CAPITAL RESOURCES





Cash
Flows





Unless
otherwise indicated, the following discussion on cash flows includes
discontinued operations.





Cash and
cash equivalents totaled $30.8 million at September 30, 2009, and we had working
capital (current assets minus current liabilities) of $26.2 million compared to
cash and cash equivalents of $7.8 million (excluding cash of $1.5 million
related to discontinued operations) and negative working capital of $7.8 million
(excluding assets and liabilities held for sale) at December 31,
2008.





We use
the cash flows that we generate to maintain operations, repay existing third
party debt, fund reinvestment in existing properties for both refurbishment and
expansion projects and pursue additional growth via new development and
acquisition opportunities. When necessary and available, we supplement the cash
flows generated by our operations with either cash on hand or funds provided by
investing and/or financing activities.





--34--


For the
nine months ended September 30, 2008, $5.5 million of net cash was provided by
operating activities. For the nine months ended September 30, 2009, $4.9 million
of net cash was provided by operating activities.  For a description
of our operating activities, please refer to the condensed consolidated
statements of cash flows and management’s discussion of the results of
operations, above.





Cash
provided by investing activities of $34.2 million for the nine months ended
September 30, 2009 consisted of $34.4 million in net proceeds received from the
sale of CCA, $1.4 million in net proceeds received from the sale of the Century
Casino Millennium and $0.2 million in proceeds received from the disposition of
land in Newcastle, South Africa. These cash receipts were offset by $0.5 million
of gaming equipment additions on a cruise ship-based casino placed in service in
May 2009; $0.6 million in additions at Womacks for digital surveillance
equipment; $0.2 million of capital projects and building improvements in
Edmonton; $0.1 million in gaming and surveillance equipment additions in Central
City; $0.1 million of capital project additions at the Caledon; and $0.2 million
of cumulative additions at our other remaining properties.





Cash used
in investing activities of $2.6 million for the nine months ended September 30,
2008 consisted of $0.7 million in capital project additions at Womacks; $0.2
million in gaming and non-gaming additions in Central City; $0.4 million of
furniture and non-gaming equipment additions in Edmonton; $0.9 million in
capital project additions at Caledon; $0.3 million in gaming equipment and
capital project additions at Newcastle; and $0.2 million of cumulative additions
at our other remaining properties. These cash payments were partially offset by
$0.2 million received from the disposition of assets.





Cash used
in financing activities of $18.4 million for the nine months ended September 30,
2009 consisted of repayments of $10.8 million towards the Central City term
loan; repayments of $4.3 million towards the Womacks term loan; repayments of
$1.0 million towards the Edmonton term loan; net repayments of $1.1 million
towards our South African term loans; and capital lease repayments of $0.1
million. Our subsidiary, CRL, also paid $1.1 million to repurchase the remaining
3.5% of its outstanding shares of common stock that CCI previously did not own.
Our Co CEOs and their respective family trusts/foundation collectively owned
these shares.





Cash used
in financing activities of $11.3 million for the nine months ended September 30,
2008 consisted of repayments of $1.8 million towards the Central City term loan;
repayments of $1.1 million towards the Edmonton term loan; net repayments of
$6.9 million towards the Womacks revolving credit facility that we previously
had; net repayments of $2.0 million towards our South African term loans; and
payments of $0.2 million for fees associated with the amendment of debt
agreements for the Central City term loan and Womacks revolving credit facility.
These repayments were partially offset by $0.7 million of proceeds from stock
option exercises.





Common
Stock Repurchase Program





Since
2000, we have had a discretionary program to repurchase our outstanding common
stock. As of September 30, 2009, there was $1.2 million remaining under the
repurchase program. We did not purchase any shares of our common stock on the
open market during the nine months ended September 30, 2009 and 2008. On
November 5, 2009, we increased the amount available to be repurchased to $15.0
million. The repurchase program has no set expiration or termination
date.





--35--


Potential
Sources of Liquidity





Our
primary sources of liquidity and capital resources have been cash flow from
operations and borrowings from banks and proceeds from the issuance of equity
securities. In addition, cash from the sales transactions discussed below have
enhanced our liquidity.
 
 On
December 5, 2008, we entered into an agreement to sell the Century Casino
Millennium, for approximately $2.2 million (CZK 22.0 million plus $1.2
million). Approximately $1.4 million (CZK 22.0 million plus $0.4 million)
was paid to us at closing on February 11, 2009, with the balance payable over
the 12 months following closing. We received $0.4 million in August 2009 and
$0.2 million in October 2009.


On
December 19, 2008, a subsidiary of ours entered into an agreement to sell all of
the outstanding shares of CCA for a gross selling price of ZAR 460.0 million
(approximately $59.4 million) less the balance of third party South African debt
and other agreed to amounts. CCA owned the Caledon Hotel, Spa & Casino and
60% of the Century Casino & Hotel in Newcastle, Africa. Net proceeds of ZAR
253.5 million ($32.8 million) were paid to us at closing on June 30, 2009. On
September 29, 2009, we received an additional ZAR 17.3 million ($2.3 million)
that was previously held in retention and an additional ZAR 3.2 million ($0.4
million) based on a NAV adjustment. Final transaction approval by the
KwaZulu-Natal Gambling Board was received on October 7, 2009. On October 14,
2009, we received the final outstanding payment of ZAR 98.8 million ($13.4
million).





Short-Term
Liquidity and Capital Requirements





We expect
that the primary source of our future operating cash flows will be from cash on
hand, our gaming operations and the remaining proceeds from the sale of CCA. We
intend to continue to rely on term loans with commercial banks or other debt
instruments to supplement our working capital and investing requirements.
Expected short-term uses of cash include ordinary operations, capital
expenditures at our casinos, interest and principal payments on outstanding
debt. Proceeds from the sale of CCA may also be used to repay other debt,
repurchase shares of our outstanding common stock, fund future developments or
acquisitions and/or fund capital improvements at existing locations. On October
22, 2009, we repaid the entire balance outstanding of $7.2 million on our debt
related to our Central City, Colorado property.


On July
27, 2009, CRL entered into an agreement to purchase the remaining 3.5% of its
outstanding shares of common stock that CCI previously did not own for $1.6
million. CRL paid $1.1 million in August 2009, with the remainder expected to be
paid in November 2009.


We
believe that our cash at September 30, 2009, together with expected cash flows
from operations and from the sales of our casinos in the Czech Republic and
South Africa, will be sufficient to fund our anticipated operating costs,
capital expenditures at existing properties and satisfy our current debt
repayment obligations. We will continue to evaluate our planned capital
expenditures at each of our existing locations in light of the operating
performance of the facilities at such locations. From time to time we expect to
have cash needs for the development or purchase of new properties that exceed
our current borrowing capacity and we may be required to seek additional
financing in the debt or equity markets. We may be unable to obtain additional
debt or equity financing on acceptable terms or at all. As a result, limitations
on our capital resources could delay or cause us to abandon certain plans for
the development of new projects.





--36--


Item
3.                 QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





We had no
significant changes in our exposure to market risks from that previously
reported in our Annual Report on Form 10-K for the year ended December 31,
2008.





Item
4.                 CONTROLS
AND PROCEDURES





Evaluation of
Disclosure Controls and Procedures –Our management, with the
participation of our Co Chief Executive Officers, Principal Financial Officer
and Chief Accounting Officer, has evaluated the effectiveness of our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end
of the period covered by this report. Based on such evaluation, our Co Chief
Executive Officers, Principal Financial Officer and Chief Accounting Officer
have concluded that as of such date, our disclosure controls and procedures were
effective to ensure that information required to be disclosed by us in reports
that we file or submit under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in applicable Securities and
Exchange Commission rules and forms.





Changes in
Internal Control Over Financial Reporting –  There has been no
change in our internal control over financial reporting (as such term is defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months
ended September 30, 2009 that has materially affected, or is reasonably likely
to materially affect, our internal control over financial
reporting.





--37--


PART
II - OTHER INFORMATION





Item
6. EXHIBITS





(a)
Exhibits





2.1
            Sale
      of Shares Agreement, entered into as of December 19, 2008, by and between
      Century Resorts Limited, Tsogo Sun Gaming (Pty) Ltd. and Century Casinos
      Africa (Pty) Ltd.,is
      hereby incorporated by reference to Exhibit 2.1 to the Company’s Current
      Report on Form 8-K dated December 24, 2008.2.2
            Amendment
      to the Sale of Shares Agreement, dated June 15, 2009, by and between
      Century Resorts Limited, Tsogo Sun Gaming (Pty) Ltd. And Century Casinos
      Africa (Pty) Ltd.,is
      hereby incorporated by reference to Exhibit 2.2 to the Company’s Current
      Report on Form 8-K dated June 19, 2009.3.1
            Certificate
      of Incorporation of Century Casinos, Inc. is hereby incorporated by
      reference to the Company’s Proxy Statement for the 1994 Annual Meeting of
      Stockholders.3.2
            Amended
      and Restated Bylaws of Century Casinos, Inc. is hereby incorporated by
      reference from Exhibit 11.14 to the Company’s Quarterly Report on Form
      10-Q for the quarterlyperiod
      ended June 30, 2002.4.1
            Rights
      Agreement, dated as of April 29, 1999, between Century Casinos, Inc. and
      the American Securities Transfer & Trust, Inc., as Rights Agent, is
      hereby incorporated byreference from Exhibit 1 to the Company’s Form 8-A dated May 7,
      1999.4.2
            Firt
      Supplement to Rights Agreement dated April 2000, between Century Casinos,
      Inc. and American Securities Transfer & Trust, Inc., as Rights Agent,
      is hereby incorporatedby
      reference from Exhibit A to the Company’s Proxy Statement for the 2000
      Annual Meeting of Stockholders.4.3
            Second
      Supplement to Rights Agreement dated July 2002, between Century Casinos,
      Inc. and Computershare Investor Services, Inc., as Rights Agent, is hereby
      incorporatedby
      reference from Exhibit 11.13 to the Company’s Quarterly Report on Form
      10-Q for the quarterly period ended June 30, 2002.31.1
            Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,Co
      Chief Executive Officer.31.2
            Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,Co
      Chief Executive Officer and President.31.3
            Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,Principal
      Financial Officer.31.4
            Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,Chief
      Accounting Officer.32.1
            Certification
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,Co
      Chief Executive Officer.32.2
            Certification
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,Co
      Chief Executive Officer and President.32.3
            Certification
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,Principal
      Financial Officer.32.4
            Certification
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,Chief
      Accounting Officer.





--38--


SIGNATURES:





Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





CENTURY
CASINOS, INC.





/s/ Larry
Hannappel


Larry
Hannappel


Senior
Vice President (Principal Financial Officer)


Date:
November 6, 2009








--39--


CENTURY
CASINOS, INC.


INDEX TO
EXHIBITS





Exhibit No.
            Document2.1
            Sale
      of Shares Agreement, entered into as of December 19, 2008, by and between
      Century Resorts Limited, Tsogo Sun Gaming (Pty) Ltd. and Century Casinos
      Africa (Pty) Ltd., is hereby incorporated by reference to Exhibit 2.1 to
      the Company’s Current Report on Form 8-K dated December 24,
      2008.2.2
            Amendment
      to the Sale of Shares Agreement, dated June 15, 2009, by and between
      Century Resorts Limited, Tsogo Sun Gaming (Pty) Ltd. And Century Casinos
      Africa (Pty) Ltd., is hereby incorporated by reference to Exhibit 2.2 to
      the Company’s Current Report on Form 8-K dated June 19,
    2009.3.1
            Certificate
      of Incorporation of Century Casinos, Inc. is hereby incorporated by
      reference to the Company’s Proxy Statement for the 1994 Annual Meeting of
      Stockholders.3.2
            Amended
      and Restated Bylaws of Century Casinos, Inc. is hereby incorporated by
      reference from Exhibit 11.14 to the Company’s Quarterly Report on Form
      10-Q for the quarterly period ended June 30, 2002.4.1
            Rights
      Agreement, dated as of April 29, 1999, between Century Casinos, Inc. and
      the American Securities Transfer & Trust, Inc., as Rights Agent, is
      hereby incorporated by reference from Exhibit 1 to the Company’s Form 8-A
      dated May 7, 1999.4.2
            First
      Supplement to Rights Agreement dated April 2000, between Century Casinos,
      Inc. and American Securities Transfer & Trust, Inc., as Rights Agent,
      is hereby incorporated by reference from Exhibit A to the Company’s Proxy
      Statement for the 2000 Annual Meeting of Stockholders.4.3
            Second
      Supplement to Rights Agreement dated July 2002, between Century Casinos,
      Inc. and Computershare Investor Services, Inc., as Rights Agent, is hereby
      incorporated by reference from Exhibit 11.13 to the Company’s Quarterly
      Report on Form 10-Q for the quarterly period ended June 30,
      2002.31.1
            Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,Co
      Chief Executive Officer.31.2
            Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,Co
      Chief Executive Officer and President.31.3
            Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,Principal
      Financial Officer.31.4
            Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,Chief
      Accounting Officer.32.1
            Certification
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,Co
      Chief Executive Officer.32.2
            Certification
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,Co
      Chief Executive Officer and President.32.3
            Certification
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,Principal
      Financial Officer.32.4
            Certification
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,Chief
      Accounting Officer.