EDGAR 10-K Filing

Company CIK: 911147
Filing Year: 2023
Filename: 911147_10-K_2023_0000911147-23-000008.json

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ITEM 1. BUSINESS
Item 1. Business.
As used in this report, the terms “Company,” “we,” “our,” or “us” refer to Century Casinos, Inc. and its consolidated subsidiaries, taken as a whole, unless the context otherwise requires.
This report includes amounts translated into US dollars from certain foreign currencies. For a description of the currency conversion methodology and exchange rates used for certain transactions, see Note 2 to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this report. The following information should be read in conjunction with the Consolidated Financial Statements and notes thereto included in Part II, Item 8, “Financial Statements and Supplementary Data” of this report.
Overview
Century Casinos, Inc., a Delaware corporation founded in 1992, is a casino entertainment company that develops and operates gaming establishments as well as related lodging, restaurant, horse racing (including off-track betting) and entertainment facilities primarily in North America. Our main goal is to grow our business by actively pursuing the development or acquisition of new gaming opportunities and growing and reinvesting in our existing operations.
We began operating land-based casinos in 1996 with the acquisition of our casino in Cripple Creek, Colorado. In 2006, we opened casinos in Central City, Colorado and Alberta, Canada. In 2007, we purchased a 33.3% ownership interest in Casinos Poland, Ltd. (“CPL”), the owner and operator of eight casinos throughout Poland, and in 2013 we purchased an additional 33.3% ownership interest in CPL, resulting in a majority 66.6% ownership interest. Between 2015 and 2019, we acquired an additional casino and developed two Racing and Entertainment Centers (“RECs”) in Alberta, Canada. In December 2019, we completed our largest acquisition to date, adding three properties to our United States (“US”) portfolio (the “2019 Acquired Casinos”), two in Missouri and one in West Virginia (the “2019 Acquisition”). In connection with the 2019 Acquisition, we entered into a triple net lease agreement (the “Master Lease”) with subsidiaries of VICI Properties Inc. (“VICI PropCo”). In 2022, we acquired 50% of Smooth Bourbon LLC (“Smooth Bourbon” or “PropCo”), which leases the land and building for the Nugget Casino Resort in Sparks, Nevada in which it operates. We currently have a pending acquisition of the operations of the Nugget Casino Resort and another pending acquisition of casino operations in Maryland. See “2022 Business Developments” below.
Operations
We view each jurisdiction in which our casinos are located as separate operating segments and each casino within those jurisdictions as reporting units. Except as described below, we aggregate our operating segments into three reportable segments based on the geographical locations in which our casinos operate. We have additional business activities, including our cruise ship concession agreement and certain other corporate and management operations, which we report as Corporate and Other. The following are our reportable segments:
United States
Canada
Poland
Corporate and Other
The general characteristics of our properties, including machine and table counts at our casinos, are provided in Part I, Item 2. “Properties”.
United States
Colorado -
Century Casino & Hotel - Central City, Colorado (“CTL” or “Central City”). Central City is located approximately 35 miles west of Denver. CTL is located at the end of the Central City Parkway, an eight mile four-lane highway that connects I-70, the main east/west interstate highway in Colorado, to Central City. In addition to the casino, the facility has 26 hotel rooms, a bar, two restaurants and a 500 -space on-site covered parking garage. Sports betting is available through a mobile sports betting app.
Century Casino & Hotel - Cripple Creek, Colorado (“CRC” or “Cripple Creek”). The town of Cripple Creek is located approximately 45 miles southwest of Colorado Springs, the second largest city in the state of Colorado. In addition to the casino, the facility has 21 hotel rooms, two bars, a restaurant and 271 surface parking spaces neighboring the casino. Sports betting is available through two mobile sports betting apps.
West Virginia -
Mountaineer Casino, Racetrack & Resort - New Cumberland, West Virginia (“MTR” or “Mountaineer”). Mountaineer is located on the Ohio River bank at the northern tip of West Virginia’s northwestern panhandle approximately 30 miles from Pittsburgh International Airport and a one hour drive from downtown Pittsburgh. In addition to the casino, Mountaineer has a racetrack that holds live thoroughbred races from April to December. The facility also has on-site pari-mutuel wagering, a sports book, 357 hotel rooms, five dining venues, a bar, a golf course and 5,248 surface parking spaces neighboring the casino. Sports betting and online gaming (“iGaming”) are also available through mobile apps.
Missouri -
Century Casino Caruthersville - Caruthersville, Missouri (“CCV” or “Caruthersville”). Caruthersville is located in southeast Missouri along the Mississippi River approximately 95 miles north of Memphis, Tennessee. In December 2022, we moved the casino into a 40,000 square foot land-based pavilion following record low water levels in the Mississippi River that made access to the riverboat dangerous. Caruthersville also has a food and beverage outlet, 27 space RV park and 1,343 surface parking spaces neighboring the casino. Also neighboring the casino is our newly renovated hotel, The Farmstead, which has 36 hotel rooms. See “2022 Business Developments - Recent Developments Related to Century Casino Caruthersville”, “- Caruthersville Land-Based Casino and Hotel” and “-Caruthersville Hotel” below.
Century Casino Cape Girardeau - Cape Girardeau, Missouri (“CCG” or “Cape Girardeau”). Cape Girardeau is located along the Mississippi River three and a half miles from Interstate 55 in southeast Missouri, approximately 120 miles south of St. Louis, Missouri. In addition to the casino, the facility has two dining venues, a conference and entertainment center and 1,058 surface parking spaces neighboring the casino. See “2022 Business Developments - Cape Girardeau Hotel” below.
Canada
Edmonton -
Century Casino & Hotel - Edmonton, Alberta, Canada (“CRA” or “Edmonton”). CRA is located in Edmonton, the capital of the province of Alberta. In addition to the casino, the facility has an off-track betting parlor, 26 hotel rooms, a 10,700 square foot showroom that can seat approximately 500 customers, a 3,000 square foot showroom that can seat approximately 200 customers where we host Yuk Yuks Comedy Club comedic performances, two restaurants, three bars, 600 surface parking spaces and a complimentary underground heated parking garage with 300 additional spaces.
Century Casino St. Albert - Edmonton, Alberta, Canada (“CSA” or “St. Albert”). St. Albert is located 13 miles from CRA, northwest of Edmonton. In addition to the casino, the facility has an off-track betting parlor, a restaurant, a bar, a lounge, a banquet facility and 585 surface parking spaces.
Century Mile Racetrack and Casino - Edmonton, Alberta, Canada (“CMR” or “Century Mile”). Century Mile is a one-mile horse racetrack and a multi-level REC located on Edmonton International Airport land close to the city of Leduc, south of Edmonton. In addition to the casino, the REC has two restaurants, two bars and an off-track betting parlor. CMR operates the Alberta pari-mutuel network under which CMR provides pari-mutuel content and live video to 25 off-track betting parlors throughout Alberta and has agreements with over 90 racetracks world-wide to broadcast races through the off-track betting network. Through August 2021, we operated the southern Alberta pari-mutuel off-track betting network through Century Bets! Inc. (“CBS” or “Century Bets”). In September 2021, we transferred these contracts to Century Mile. Century Bets was reported in the Canada reportable segment in the Calgary operating segment.
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Calgary -
Century Downs Racetrack and Casino - Calgary, Alberta, Canada (“CDR” or “Century Downs”). Our subsidiary Century Resorts Management GmbH (“CRM”) owns 75% of United Horsemen of Alberta Inc. dba Century Downs Racetrack and Casino, which in turn owns and operates a REC. The REC is in metropolitan Calgary, the largest city in the province of Alberta, seven miles from the Calgary International Airport. In addition to the casino and racetrack, the REC has a bar, a lounge, a restaurant facility, an off-track betting parlor, an entertainment area and 700 surface parking spaces. CDR is consolidated as a majority-owned subsidiary for which we have a controlling financial interest.
Poland
Casinos Poland - Poland (“CPL” or “Casinos Poland”). CPL has been in operation since 1989 and currently is the owner and operator of eight casinos throughout Poland. Our subsidiary CRM owns 66.6% of Casinos Poland and we consolidate CPL as a majority-owned subsidiary for which we have a controlling financial interest.
Corporate and Other
Cruise Ship. We have a concession agreement with TUI Cruises to operate one ship-based casino. Our agreement to operate that ship-based casino ends in the second quarter of 2023.
2022 Business Developments
Nugget Casino Resort in Sparks, Nevada
On February 22, 2022, we entered into a definitive agreement with Marnell Gaming, LLC (“Marnell”), pursuant to which we, through a newly formed subsidiary, (i) purchased from Marnell 50% of the membership interests in Smooth Bourbon, and (ii) will purchase 100% of the membership interests in Nugget Sparks, LLC (“OpCo”). OpCo owns and operates the Nugget Casino Resort in Sparks, Nevada, and PropCo owns the real property on which the casino is located.
We purchased 50% of the membership interests in PropCo for approximately $95.0 million at the first closing on April 1, 2022 (the “First Closing”). We used approximately $29.3 million of cash on hand in connection with the First Closing. On April 1, 2022 (the “Closing Date”), we entered into a Credit Agreement (the “Goldman Credit Agreement”) by and among the Company, as borrower, the subsidiary guarantors party thereto, Goldman Sachs Bank USA, as administrative agent (the “Administrative Agent”) and collateral agent, Goldman Sachs Bank USA and BOFA Securities, Inc., as joint lead arrangers and joint bookrunners, and the Lenders and L/C Lenders party thereto. The Goldman Credit Agreement replaced a credit agreement (the “Macquarie Credit Agreement”) with Macquarie Capital (USA) Inc. (“Macquarie”). The Goldman Credit Agreement provides for a $350.0 million term loan (the “Term Loan”) and a $30.0 million revolving credit facility (the “Revolving Facility”). The Company drew $350.0 million under the Term Loan to fund the PropCo acquisition, for the repayment of approximately $166.2 million outstanding under the Macquarie Credit Agreement, to fund the Acquisition Escrow (as defined below) and for related fees and expenses. The Company did not draw on the Revolving Facility on the Closing Date. For additional information regarding the Goldman Credit Agreement, see Note 6 to the Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary Data” of this report.
Subject to approval from the Nevada Gaming Commission, our purchase of 100% of the membership interests in OpCo for approximately $100.0 million (subject to certain adjustments) is expected to close in the second quarter of 2023 (the “Second Closing”). The purchase price for the OpCo Acquisition will be paid from $100.0 million of the proceeds of the Term Loan that were borrowed and deposited in escrow (the “Acquisition Escrow”) on the Closing Date. Following the Second Closing, we will own the operating assets of Nugget Casino Resort and 50% of the membership interests in PropCo. We also have a five-year option through April 1, 2027 to acquire the remaining 50% of the membership interests in PropCo for $105.0 million plus 2% per annum. At the First Closing, PropCo also entered into a lease with OpCo for an annual rent of $15.0 million.
Rocky Gap Casino Resort in Flintstone, Maryland
On August 24, 2022, we entered into a definitive agreement with Lakes Maryland Development LLC (“Lakes Maryland”), Golden Entertainment, Inc. (“Golden”), and VICI PropCo, pursuant to which we agreed to acquire the operations of Rocky Gap Casino Resort (“Rocky Gap”) for approximately $56.1 million, subject to the conditions and terms set forth therein. We plan to finance the cost of this acquisition with cash on hand. Pursuant to a real estate purchase agreement dated August 24, 2022, by and between Evitts Resort, LLC (“Evitts”) and an affiliate of VICI PropCo (“VICI PropCo Buyer”), VICI PropCo Buyer agreed to acquire the real estate assets relating to Rocky Gap for approximately $203.9 million, subject to the conditions and terms set forth therein. In connection with the closing of this transaction, one of our subsidiaries and a subsidiary of VICI PropCo will enter into an amendment to the Master Lease to (i) add Rocky Gap to the Master Lease, (ii) provide for an initial annual rent for Rocky Gap of approximately $15.5 million, and (iii) extend the initial Master Lease term for 15 years from the date of the amendment (subject to the existing four five-year renewal options). We expect this transaction to close in the second quarter of 2023.
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Recent Developments Related to Century Casino Caruthersville
On October 26, 2022, the Missouri Gaming Commission (“MGC”) approved the relocation of the casino at Century Casino Caruthersville from the riverboat and the barge to a land-based pavilion until the new land-based casino and hotel discussed below are completed. On October 13, 2022, the riverboat, which had operated since 1994, had to be closed as it was no longer accessible from the barge because of record low water levels in the Mississippi River. Prior to its closure, the riverboat casino had 519 slot machines and seven table games. From October to December 2022, Caruthersville operated the casino from the barge with 299 slot machines and four table games. The move to the pavilion, which has 425 slot machines and six table games, was completed in late December 2022. The pavilion building will not be affected by water levels and is protected by a flood wall. The pavilion provides for easier access to the casino for customers, and we anticipate it will bring operating efficiencies and cost savings. We have not experienced a negative impact on results following the move to the pavilion and have had a positive reaction from customers.
Caruthersville Land-Based Casino and Hotel
In July 2021, the Missouri law requiring each casino to be a floating facility was amended to allow casino facilities to be built as a standard building with a container with at least 2,000 gallons of water beneath the facility. A lawsuit was filed by the City of St. Louis that sought to block the implementation of the omnibus bill that included the amendment to the definition of a floating facility. In June 2022, the Missouri governor signed a standalone bill to amend the definition of a floating facility. This change provides an opportunity for Century Casino Caruthersville to move to a non-floating facility. In November 2022, the court ruled in our favor in the lawsuit brought by the City of St. Louis. We plan to build a new land-based casino with a 38-room hotel in Caruthersville, and broke ground on this development in December 2022. The casino at Century Casino Caruthersville will offer over 600 slot machines (with the possibility of an expansion of up to 140 additional slot machines), table games, a restaurant, and a bar. The hotel will be located in a hotel tower between the existing pavilion and the new casino. The new casino and hotel are expected to open in late 2024, subject to final regulatory approval from the MGC as well as other state and local approvals. We estimate the project will cost $51.9 million. To finance the Caruthersville project, we entered into an amendment to the Master Lease with VICI PropCo. Following completion, VICI PropCo will own the real estate improvements associated with the Caruthersville project. As of December 31, 2022, we have spent $2.2 million on this project and received $5.0 million from VICI PropCo.
Caruthersville Hotel
In July 2021, we announced that we had purchased land and a small two-story hotel near Century Casino Caruthersville with plans to refurbish the existing hotel’s 36 rooms. The completely renovated hotel called The Farmstead opened on October 30, 2022 with a grand opening held in December 2022. The total cost of the project was $3.6 million.
Cape Girardeau Hotel
We plan to build a 69-room hotel at our Cape Girardeau location. The hotel is planned as a six-story building with 68,000 square feet that will be adjacent to and connected with the existing casino building. The hotel project has been approved by the City of Cape Girardeau. Construction on this project began in September 2022 and is expected to be completed in the first half of 2024. We estimate the project will cost $30.5 million, and we plan to finance this cost with cash on hand. As of December 31, 2022, we have spent $2.8 million on this project.
Additional Projects
We currently are exploring additional potential gaming projects and acquisition opportunities. Along with the capital needs of potential projects or acquisitions, there are various other risks which, if they materialize, could affect our ability to complete a proposed project or acquisition or could eliminate its feasibility altogether. For more information on these and other risks related to our business, see Item 1A, “Risk Factors” below.
Terminated Projects
Century Casino Calgary and Century Sports
In August 2020, we announced that we had entered into an agreement to sell the casino operations of Century Casino Calgary for CAD 10.0 million ($7.5 million based on the exchange rate on August 5, 2020) plus a three year quarterly earn out as specified in the agreement. The transaction closed on December 1, 2020. During the first quarter of 2021, we paid CAD 0.1 million ($0.1 million based on the exchange rate on February 12, 2021) in working capital adjustments under the purchase agreement. Upon closing of the transaction, we entered into a three year lease agreement with the purchaser of the casino operations for annual net rent for the land and building of CAD 0.5 million ($0.4 million based on the exchange rate on December 31, 2022).
After the sale, we continued to operate Century Sports, and to own the underlying real estate. On February 10, 2022, we sold the land and building in Calgary for CAD 8.0 million ($6.3 million based on the exchange rate on February 10, 2022) at which time we transferred the lease agreement for the casino premises to the buyer and ceased operating Century Sports. Century Sports was included in the Canada reportable segment.
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Mendoza Central Entretenimientos S.A. (“MCE”)
In November 2021, our subsidiary CRM sold its ownership of 7.5% of MCE for nominal consideration. In addition, the consulting services agreement between CRM and MCE, under which CRM provided advice on casino matters and received a service fee from MCE, has been terminated. See Note 1 to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this report for additional information about MCE.
Bermuda
In August 2017, we announced that we had entered into a long-term casino management agreement with the owner of the Hamilton Princess Hotel & Beach Club in Hamilton, Bermuda. We would also provide a $5.0 million loan for the purchase of casino equipment if the gaming license was awarded. In January 2023, the management and funding agreements were mutually terminated because the project was not going forward.
Century Casino Bath (“CCB”)
In March 2020, CCB was closed due to COVID-19. Due to challenging conditions that included historical and forecasted losses due to changes in the regulatory environment for casinos in England requiring enhanced due diligence of customers, CCB’s board of directors determined that it would enter into creditors voluntary liquidation and control of CCB was relinquished. We deconsolidated CCB effective as of May 6, 2020. The process of voluntary liquidation was completed in October 2022 and CCB was dissolved. See Note 1 to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this report for further discussion of CCB.
Capital Needs, Uses and Cash Flow
As a gaming company, our operating results are highly dependent on the volume of customers at our casinos and customer spending. Most of our revenue is essentially cash-based, through customers wagering with cash or paying for non-gaming services with cash or credit cards. Our industry is capital intensive, and we rely heavily on the ability of our casinos to generate operating cash flow to maintain operations, fund reinvestment in existing properties for both refurbishment and expansion projects, repay third party debt, 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 bank borrowings or other debt or equity financing.
Marketing and Competition
We face intense competition from other casinos within the jurisdictions in which we operate. Many of our competitors are larger and have substantially greater name recognition and financial and marketing resources than we do. We seek to compete through promotion of our players’ clubs, enhancement of social networking initiatives and other marketing efforts. In addition to our players’ clubs, we also have various cash and prize promotions and market our casinos through a variety of media outlets including internet, television, radio, print and billboard advertising. Our marketing focuses on competition and other facts and circumstances of each market area in which we operate. Our primary marketing strategy centers on attracting new customers and rewarding repeat customers through our players’ club programs. All visitors to our properties are offered the opportunity to join our players’ club. We maintain a proprietary database that consists primarily of slot machine customers that allows us to create effective targeted marketing and promotional programs, cash and merchandise giveaways, coupons, downloadable promotional credits, preferred parking, food, lodging, game tournaments and other special events. In the United States, our players’ club cards allow us to update our database and track member gaming preferences, including, but not limited to, maximum, minimum, and total amounts wagered and frequency of visits. We have designed reward programs based on total amount wagered and frequency of visits to reward customer loyalty and attract new customers to our properties. Those who qualify for VIP status receive additional benefits compared to regular club membership, such as invitations to exclusive VIP events.
United States
Colorado - Cripple Creek, Central City and Black Hawk are the only three cities in Colorado that allow gaming, exclusive of two Native American gaming operations in southwestern Colorado, and are located in historic mining towns dating back to the late 1800’s that have developed into tourist attractions. The casino operations in Black Hawk constitute a significant portion of the overall casino gaming market in Colorado (exclusive of the Native American gaming operations), with approximately 58% of the total gaming devices in Colorado and approximately 78% of total gaming revenue in Colorado in 2022. Central City and Black Hawk are located approximately one mile apart and compete with one another for market share. As a result, we view the two cities as one combined market servicing the Denver area. Black Hawk, which we believe does not maintain the same rigorous historical preservation standards as Central City, has been able to successfully attract major casino industry leaders with the ability to offer larger hotels, upscale dining facilities, performance centers and spa facilities.
No limit single bets at casinos and new casino games were approved and began on May 1, 2021. Some of our competitors may offer larger betting limits or certain games not offered by us, which could attract customers to those competitors. Sports wagering in Colorado became legal in May 2020. We have partnered with sports betting operators that are conducting sports wagering under each of the three Colorado master licenses for sports wagering held by our Colorado subsidiaries.
Our marketing objective for the casinos in Colorado is to create public awareness by positioning our casinos as the premier provider of personal service, convenient parking, the latest gaming products and superior food. In addition to our players’ clubs, we also have various cash and prize promotions and market our casinos through a variety of channels including radio, billboard, print and social media. Cripple Creek, Central City and Black Hawk currently have 12, six and 15 casinos operating, respectively. There are competitors in each city that offer covered parking and more hotel rooms, which may negatively impact our Colorado casinos, particularly during inclement weather and the peak tourist season. In Cripple Creek, a casino across the street from ours is undergoing an expansion. The expanded property could have a negative effect on CRC unless it stimulates increased revenue in the Cripple Creek market.
West Virginia - Mountaineer is located on the Ohio River bank at the northern tip of West Virginia’s northwestern panhandle approximately 30 miles from Pittsburgh International Airport and a one hour drive from downtown Pittsburgh. Mountaineer has four competitors within 50 miles; two in Pennsylvania, one in West Virginia and one in Ohio. Mountaineer primarily attracts customers from neighboring Ohio and from the greater Pittsburgh area. We market this casino as a destination for year-round entertainment. Mountaineer also hosts the annual West Virginia Derby horse racing event.
Missouri - Cape Girardeau and Caruthersville have competitors in Missouri, Arkansas and Illinois. The distance between our Cape Girardeau and Caruthersville properties is 85 miles. While our two properties share a small portion of our customer database, we do not believe that our properties compete against one another for customers. We market our casinos as the premier providers of personal service. In addition to our players’ clubs, our casinos motivate customers by offering various cash and prize promotions, point incentives, and tournaments in addition to other incentives. Our casinos are marketed through a variety of channels including but not limited to radio, billboard, print and social media. Cape Girardeau includes an event center and draws customers mostly from within a 50-mile radius from the property. The closest competitor to Cape Girardeau is located 60 miles away in Illinois. A potential casino in southern Illinois approximately 56 miles from Cape Girardeau, which we expect to open in mid-2023, could increase competition at our Cape Girardeau casino. Caruthersville includes a 27-space RV park. The majority of Caruthersville’s customers reside in Tennessee. The closest competitor to Caruthersville, with the exception of our Cape Girardeau casino, is located in Arkansas and is 90 miles away. A casino expansion at that location in Arkansas, which was completed at the end of 2022, could increase competition with our Caruthersville casino. In addition, there is a proposal to build a casino near Lake of the Ozarks, which requires approval by the US Department of the Interior; however, that project is not expected to directly compete with our casinos as it is over 200 miles from our properties. We believe that our expansion projects at both Missouri locations will allow us to compete for individuals or groups that desire a multi-day visit to Cape Girardeau or Caruthersville.
Canada
Edmonton - CRA, St. Albert and Century Mile have five competitors, all casinos, in the Edmonton market. The distance between CRA and CSA is approximately 13 miles, and CMR is approximately 30 miles from each of CRA and CSA. We do not believe that our properties compete against one another for customers. Our main marketing activities for these properties focus on casino branding, promoting the racetrack, the player’s club program and promotions made through various marketing channels such as print, television, billboard, mail and social media. CRA is one of two casinos in the city of Edmonton that have both a hotel and showrooms. The property’s showrooms allow us to attract customers to the casino through live music concerts, private concerts, comedic performances, catering and banquet events. In addition, the property is the only casino in the Edmonton market to offer a heated and complimentary parking garage. CRA’s closest competitor is located approximately five miles away. St. Albert includes a small concert and event venue. St. Albert’s closest competitor is located approximately five miles away. Century Mile is the only REC in the Edmonton area. Unique to this property is an 8.0 furlong (1.0 mile) horse racetrack. Century Mile’s closest competitor is located approximately 17 miles away. In January 2022, the Alberta Gaming, Liquor and Cannabis Commission (“AGLC”) removed its moratorium on approving additional gaming facilities. Additional gaming facilities under consideration will be subject to market analysis done by the AGLC and, if approved by the AGLC, could increase competition with our properties.
Calgary - Century Downs has seven competitors (two of which have a combination of hotel and casino) in the Calgary market. Unique to this property is a 5.5 furlong (0.7 mile) horse racetrack. Our casino is one of two casinos in the market with an off-track betting parlor. Using numerous forms of media, such as radio, television and billboards, we concentrate our marketing on the casino floor, the players’ club and racetrack. This property is located one mile north of the city limits of Calgary, one mile from the CrossIron Mills Mall and seven miles from Calgary International Airport. A casino recently relocated approximately eight miles from Century Downs, which could present significant competition. In addition, due to the AGLC’s removal of its moratorium on approving additional gaming facilities, new gaming facilities may be approved by the AGLC, which could increase competition with our property.
Pari-mutuel networks - Century Mile is the exclusive operator of the Alberta pari-mutuel network. In addition to permitting customers to place wagers at off-track betting locations, the network offers advance deposit wagering for online wagering.
Loyalty program - Our casinos in Alberta participate in the Winner’s Edge, an Alberta-wide casino loyalty program implemented by the AGLC. Players who sign up for the program can earn points that can be redeemed for free play, take part in monthly contests and receive discounts on food in casino restaurants. Our casinos offer Winner’s Edge in addition to our own loyalty program.
Online gaming - In October 2020, the AGLC launched an online gaming website, “Play Alberta” offering online slot and table games. In September 2021, the AGLC added online sports wagering, including single event sports wagering, to its “Play Alberta” website. The website competes primarily with unregulated online gaming websites that are currently available to Alberta residents. We have not experienced a negative impact to our results of operations in Canada from online gaming; however, increased competition from online gaming could occur and adversely affect our results of operations in Alberta in the future.
Poland
There are 52 casino licenses available throughout Poland. The Polish government generally forbids the marketing of gaming activities outside of a casino, but the marketing of entertainment is permissible. CPL relies on the locations of its casinos, which are primarily in hotels in major cities throughout Poland, to attract customers. The Polish government issues casino licenses in Poland by district, and there are additional casinos in each district in which CPL operates. For example, five other casinos in the Warsaw district compete with our three casinos operating in Warsaw. The Polish Minister of Finance does not disclose individual casino data. Poland also has slot arcades and online gaming that operate through a state-run company. We have not experienced a negative impact to our results of operations in Poland from slot arcades or online gaming; however, increased competition from slot arcades that are located in the cities in which our casinos are located as well as online gaming could occur and adversely affect our results of operations in the future.
Seasonality
United States - Our casinos in Colorado attract more customers during the warmer months from May through September. We expect to attract fewer customers from October through April because weather conditions during this period are variable and can have a significant impact on daily business levels. In West Virginia, we attract more customers from March to August during the racing season. Our casinos in Missouri attract customers throughout the year with the highest business volumes in February and March.
Canada - Prior to the COVID-19 closures, our casinos in Alberta, Canada attracted more customers from September through April. During the late spring and summer months there is more competition with outdoor activities. Conversely, both Century Downs and Century Mile attract additional customers during the summer months of the racing season. Our off-track betting parlors attract more customers during the peak racing season from May through August. However, we have seen less seasonality since our properties reopened in mid-2021.
Poland - CPL generally attracts more customers from October through March because domestic customers generally vacation during the summer months.
Governmental Regulation and Licensing
The ownership and operation of casino gaming facilities are subject to extensive state, local, foreign, provincial or federal regulations. We are required to obtain and maintain gaming licenses in each of the jurisdictions in which we conduct gaming operations. The limitation, conditioning, suspension, revocation or non-renewal of gaming licenses, or the failure to reauthorize gaming in certain jurisdictions, would materially adversely affect our gaming operations in that jurisdiction. In addition, changes in laws that restrict, prohibit or permit gaming operations in any jurisdiction, including the removal of the AGLC’s moratorium on approving additional gaming facilities, could have a material adverse effect on our financial position, results of operations and cash flows. On February 28, 2023, the AGLC approved a temporary increase from the current 15% of slot machines net sales retained by casinos to 17% effective from April 1, 2023 through March 31, 2025. The increase in slot machine net sales is expected to have a positive impact on net operating revenue and results of operations at our Canadian properties.
Statutes and regulations can require us to meet various standards relating to, among other matters, business licenses, registration of employees, floor plans, background investigations of licensees and employees, historic preservation, building, fire and accessibility requirements, payment of gaming taxes, and regulations concerning equipment, machines, chips, gaming participants, and ownership interests. Civil and criminal penalties, including shutdowns or the loss of our ability to operate gaming facilities in a particular jurisdiction, can be assessed against us and/or our officers to the extent of their individual participation in, or association with, a violation of any of the state or local gaming statutes or regulations. Such laws and regulations apply in all jurisdictions in which we may do business. Management believes that we are in compliance with all applicable gaming and non-gaming regulations. A detailed description of the regulations to which we are subject is contained in Exhibit 99.1 to this report, which is incorporated herein by reference.
Other Regulations
We are subject to certain foreign, federal, state, provincial and local safety and health, employment and environmental laws, regulations and ordinances that apply to our non-gaming operations. We have not made, and do not anticipate making, material expenditures with respect to these laws, regulations and ordinances. However, the coverage of, and attendant compliance costs associated with, such laws, regulations and ordinances may result in future additional costs to our operations.
Rules and regulations regarding the service of alcoholic beverages are strict. The loss or suspension of a liquor license could significantly impair our operations. Local building, parking and fire codes and similar regulations also could impact our operations and any proposed development of our properties.
We also deal with significant amounts of cash in our operations and are subject to various reporting and anti-money laundering laws and regulations. Any violations of anti-money laundering laws or regulations by any of our properties could have an adverse effect on our business.
Employees and Human Capital
Employees - As of December 31, 2022, we had approximately 2,292 full-time employees and 512 part-time employees. During busier months, a casino may supplement its permanent staff with seasonal employees. We reduced our staffing during 2020 and 2021 in response to the COVID-19 pandemic closures and related issues. We have experienced difficulties attracting and retaining staff at some locations in the US and Canada. As a result, we have had to adjust hours of some food and beverage outlets, the number of table games open and the number of rooms available at some of our hotels. While our employee counts remain below pre-COVID-19 levels and we have open positions throughout North America, we consider our current staffing levels as normal due to a combination of increased efficiencies and the changes discussed above. Approximately 250 employees at our CPL casinos in Poland and 44 employees at Mountaineer belong to trade unions. The trade unions in Poland do not currently have any collective bargaining agreements with CPL, but changes in pay of union employees at CPL require approval of the unions. The trade unions at Mountaineer have collective bargaining agreements with Mountaineer.
Human Capital - Our company is led by two gaming industry professionals with a combined industry experience of more than 75 years. Due to extensive industry experience, the team’s diversity of experience gives us the ability to tailor our gaming-based entertainment developments and operations to the unique needs and circumstances of each specific location. We are aware that much of our success is based on our employees’ combined talents, skills and ideas. As an international casino entertainment company, we cater to very different markets with different customer expectations. In order to meet these expectations, we strive to build a workforce that is as diversified as our customers. As of December 31, 2022, 50% of our workforce and 37% of our leadership roles were held by women.
Focusing on employee development and creating a positive work environment is one of our main priorities. We have training and development programs to provide our employees with the opportunity to succeed and thrive at our company. We seek to provide upward and lateral movement to employees at all locations. In Missouri, for example, we have an Upward Mobility Program to provide front-line employees with information on how they can develop their leadership skills and be prepared to step into a leadership role. This program makes training and educational opportunities available to enhance qualification and permit progress into other career fields through mentorships.
As a company, we strive to be community leaders and to add value through our products, services, social responsibility and sharing of our financial and human resources to achieve a positive impact on our employees, their families and our fellow citizens. We have committed to supporting the local communities with their requests and needs in an effort to improve the lives of people in these communities. We seek to disburse contributions fairly among several charitable and non-profit organizations. Our management is confident that through working with charitable and non-profit organizations we are able to make a positive difference to the lives of people living in the communities in which we have operations. Our initiatives include donation boxes on the casino floors, volunteer events, fundraising drives, event sponsorships and charity events. Unique to Alberta, Canada is the charitable gaming model in which charitable organizations are licensed to conduct and manage casino events at our casinos.
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Information about our Executive Officers
Name
Age
Position Held
Erwin Haitzmann
Chairman of the Board and Co-Chief Executive Officer
Peter Hoetzinger
Vice Chairman of the Board, Co-Chief Executive Officer and President
Margaret Stapleton
Chief Financial Officer and Corporate Secretary
Timothy Wright
Chief Accounting Officer and Corporate Controller
Andreas Terler
Managing Director of Century Resorts Management GmbH and
‎Executive Vice President
Nikolaus Strohriegel
Managing Director of Century Resorts Management GmbH and
Executive Vice President
Geoff Smith
Senior Vice President, Operations - Canada
Erwin Haitzmann holds a Doctorate and a Masters degree in Social and Economic Sciences from the University of Linz, Austria (1980), and has extensive casino gaming experience ranging from dealer through various casino management positions. Dr. Haitzmann has been employed full-time by us since 1993 and has been employed as either Chief Executive Officer or Co-Chief Executive Officer since March 1994.
Peter Hoetzinger received a Masters degree from the University of Linz, Austria (1986). He thereafter was employed in several managerial positions in the gaming industry with Austrian casino companies. Mr. Hoetzinger has been employed full-time by us since 1993 and has been Co-Chief Executive Officer since March 2005.
Margaret Stapleton was appointed Chief Financial Officer, effective October 2019, and Corporate Secretary, effective May 2010. She holds a Bachelor of Science degree in Accounting from Regis University, Denver, Colorado (2004) and has over 30 years of experience in corporate accounting and internal audit. Mrs. Stapleton previously served as our Director of Internal Audit and Compliance from 2005 until May 2010 and as our Executive Vice President, Principal Financial/Accounting Officer from May 2010 to October 2019.
Timothy Wright was appointed Chief Accounting Officer effective October 2019 and Corporate Controller effective May 2010. Mr. Wright holds a Bachelor of Science degree in Accounting from the University of Colorado, Colorado Springs, Colorado (1995) and has over 30 years of experience in corporate accounting and finance. Mr. Wright has been employed by us since 2007, including previously serving as our Vice President of Accounting from May 2010 to October 2019.
Andreas Terler is a Graduate Engineer in Applied Mathematics from the University of Graz, Austria (1994). Mr. Terler has been employed by us since 2006. He has served as Managing Director of CRM since February 2007 and Executive Vice President since February 2022. Mr. Terler previously served as Vice President of Operations from May 2011 to October 2019, Chief Information Officer from February 2006 to January 2022 and Senior Vice President, Operations - Missouri and West Virginia from October 2019 to February 2022.
Nikolaus Strohriegel received a Masters degree from the University of Vienna, Austria (1996). Mr. Strohriegel has been employed by us since 2007. He has served as Managing Director of CRM since January 2009 and Executive Vice President since February 2022. Mr. Strohriegel previously served as Vice President of Operations from March 2017 to October 2019 and Senior Vice President, Operations - Europe from October 2019 to February 2022.
Geoff Smith holds an Honours Bachelor of Commerce degree from the University of Windsor, Ontario, Canada (1994). Mr. Smith has over 28 years of direct casino management experience across a variety of regulated gaming jurisdictions and operating models, including commercial casinos, charity casinos and horse racetrack casino establishments. Mr. Smith has been employed by us since 2006. He was appointed Senior Vice President, Operations - Canada in October 2019. He previously served as the General Manager of Century Casino & Hotel in Edmonton from 2006 to 2008 and Managing Director of Century Casino & Hotel in Edmonton from 2008 to 2019.
Available Information
Our internet address is www.cnty.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are made available free of charge on our website at www.cnty.com/investor/financials/sec-filings as soon as reasonably practicable after such report has been filed with, or furnished to, the SEC. None of the information posted to our website is incorporated by reference into this report.
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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors.
Our short and long-term success is subject to many factors beyond our control. If any of the following risks, or any risks described elsewhere in or incorporated by reference in this report, actually occur, our business, financial condition or results of operations could suffer. Additional risks not presently known to us or which we currently consider immaterial may also adversely affect our business, financial condition or results of operations.
Business Environment and Competition Risks
General economic conditions affecting discretionary consumer spending may have an adverse impact on our business, financial condition or results of operations.
Our success depends to a large extent on discretionary consumer spending, which is heavily influenced by general economic conditions and the availability of discretionary income. Adverse changes in the economic climate, including inflation, higher unemployment rates, declines in income levels and loss of personal wealth resulting from business shutdowns and associated mass layoffs by businesses, and the adoption of social distancing and other policies to slow or control the spread of future outbreaks of coronavirus, COVID-19 or other health-affecting outbreaks, have had and are likely to continue to have a negative impact on demand for casinos, including ours, and these impacts could exist for an extensive period of time. In addition, the Russia-Ukraine war could negatively impact our results of operations in Poland, which neighbors Ukraine, due to the potential impacts on tourism and other economic disruptions. Difficult economic conditions and recessionary periods may have an adverse impact on our business and our financial condition. Negative economic conditions, coupled with high volatility and uncertainty as to the future economic landscape, have at times had a negative effect on consumers’ discretionary income and consumer confidence, and similar impacts can be expected should such conditions recur. A decrease in discretionary spending due to decreases in consumer confidence in the economy or us, or a continued economic slowdown or deterioration in the economy, could adversely affect the frequency with which customers choose to visit our properties and the amount that our customers spend when they visit. The actual or perceived weakness in the economy could also lead to decreased spending by our customers. Both customer visits and customer spending at our casinos are key drivers of our revenue and profitability, and reductions in either could materially adversely affect our business, financial condition and results of operations.
We may experience construction delays and increased costs during our expansion or development projects, including the development and construction costs associated with the projects in Missouri, which could adversely affect our operations.
From time to time we may commence construction projects at our properties. Construction on the projects in Missouri began in 2022 and is expected to be completed in mid to late 2024. We may engage in additional construction projects in the future. Construction projects entail significant risks, which can substantially increase costs or delay completion of a project. Most of these factors are beyond our control.
Our current and future projects could also experience:
failure to obtain necessary licenses, permits, entitlements or other governmental approvals;
changes to plans and specifications, some of which may require the approval of regulatory agencies;
delays and significant cost increases;
shortages of materials;
shortages of skilled labor or work stoppages for contractors and subcontractors;
labor disputes or work stoppages;
disputes with and defaults by contractors and subcontractors;
health and safety incidents and site accidents;
engineering problems, including defective plans and specifications;
poor performance or nonperformance by our partners or other third parties on whom we place reliance;
changes in laws and regulations, or in the interpretation and enforcement of laws and regulations, applicable to gaming and other facilities, real estate development or construction projects;
unforeseen construction scheduling, engineering, environmental, permitting, construction or geological problems;
environmental issues, including the discovery of unknown environmental contamination;
weather interference, floods, fires or other casualty losses; and
other unanticipated circumstances or cost increases.
The occurrence of any of these development and construction risks could increase the total costs of our construction projects or delay or prevent the construction or opening or otherwise affect the design and features of our construction projects. This could materially adversely affect our plan of operations, financial condition and ability to satisfy our debt obligations. In addition, construction at our operating casinos may disrupt our customers’ experience and cause a decline in our revenue.
Actual costs and construction periods for any of our projects can differ significantly from initial expectations. We can provide no assurance that we will complete any project on time, if at all, or within established budgets, or that any project will result in increased earnings to us. If our initial budgets are not accurate, we may need to pursue additional financing to complete a proposed project, which may not be available on favorable terms or at all. Cost overruns on any construction projects we undertake may adversely impact our results of operations.
We may seek to expand through investments in other businesses and properties or through alliances or acquisitions, and we may also seek to divest some of our properties and other assets, any of which may be unsuccessful.
As part of our business strategy, we regularly evaluate opportunities for growth and expansion through development of gaming operations in existing or new markets, through acquiring other gaming facilities, through redeveloping our existing gaming facilities, and through joint ventures in new markets. We cannot be sure that we will be able to identify attractive acquisition opportunities or that we will experience the return on investment that we expect. Acquisitions require significant management attention and resources to integrate new properties, businesses and operations. There can be no assurance that we will be able to identify, acquire, develop or profitably manage additional companies or operations or successfully integrate such companies or operations, into our existing operations without substantial costs, delays or other problems. The pending Nugget Acquisition and Rocky Gap Acquisition and new developments may not generate revenue that will be sufficient to pay related expenses, or, even if such revenue is sufficient to pay related expenses, the acquisitions and new developments may not yield an adequate return or any return on our significant investments. In addition, generating returns on acquisitions, including the Nugget Acquisition and the Rocky Gap Acquisition, and new investments may take significantly longer than we expect and may negatively impact our operating results and financial condition. Furthermore, we may pursue any of these opportunities in alliance with third parties.
We may not be successful in obtaining the rights to develop new casino properties, and as a result, we may incur significant costs for which we will receive no return. Even if we are successful in obtaining the rights to develop such casino properties, commencing operations at new casino projects may require substantial development capital. Additional risks before commencing operations include the time and expense incurred and unforeseen difficulties from construction delays and cost overruns, in obtaining liquor licenses, building permits, materials, competent and able contractors, supplies, employees, gaming devices and related matters.
In addition, acquisitions require significant management attention and resources to integrate new properties, businesses and operations. Potential difficulties we may encounter as part of the integration process include:
the inability to successfully integrate acquired assets in a manner that permits us to achieve the full revenue and other benefits anticipated to result from the acquired operations;
complexities associated with managing the combined business, including difficulties addressing possible differences in cultures and management philosophies and the challenge of integrating complex systems, technology, networks and other assets of the company in a seamless manner that minimizes any adverse impact on customers, suppliers, employees and other constituencies;
potential unknown liabilities and unforeseen increased expenses associated with acquired operations;
diversion of the attention of our management;
the disruption of, or the loss of momentum in, our ongoing businesses; and
inconsistencies in standards, controls, procedures and policies;
any of which could adversely affect our ability to maintain relationships with customers, suppliers, employees and other constituencies or our ability to achieve the anticipated benefits, or could reduce our earnings or otherwise adversely affect our business and financial results.
We may pursue gaming opportunities that would require us to obtain a gaming license, such as the Nugget Acquisition and the Rocky Gap Acquisition. While our management believes that we are licensable in any jurisdiction that allows gaming operations, each licensing process is unique and requires a significant amount of funds and management time. The licensing process in any particular jurisdiction can take significant time and expense through licensing fees, background investigation costs, legal fees and other associated preparation costs. Moreover, if we proceed with a licensing approval process with industry partners, such industry partners would be subject to regulatory review as well. We seek to find industry partners that are licensable, but cannot assure that such partners will, in fact, be licensable. Certain licenses include competitive situations where, even if we and our industry partners are licensable, other factors such as the economic impact of gaming, financial and operational capabilities of competitors must be analyzed by regulatory authorities. In addition, political factors may make the licensing process more difficult. If any of our gaming license applications are denied or we are otherwise unable to complete a project, we may have to write off costs related to our investment in such application processes, which could be significant. In addition, our ability to attract and retain competent management and employees for any new location is critical to our success. One or more of these risks may result in any new gaming opportunity not being successful. If we are not able to successfully commence operations at these properties, our results of operations may be adversely affected.
In addition, we periodically review our business to identify properties or other assets that we believe no longer complement our business, are in markets that may not benefit us or could be sold at significant premiums. From time to time, we may attempt to sell these identified properties and assets. There can be no assurance, however, that we will be able to complete dispositions on profitable, commercially reasonable terms or at all.
We have certain properties that generate a significant percentage of our revenue and operating income, and our ability to meet our operating and debt service requirements is dependent, in part, upon the continued success of these properties.
We derived 52% of our net operating revenue and 68% of our earnings from operations from our properties in Missouri and West Virginia during the year ended December 31, 2022. Because our revenue and operating income are concentrated in two states, we are subject to greater risks from regional conditions than a gaming company with operating properties in a greater number of different geographic regions. Therefore, a decrease in revenue from, or an increase in costs for, one of these locations is likely to have a greater impact on our business and operations than it would for a gaming company with more geographically diverse operating properties. The cash flow from these properties services our Master Lease entered into with subsidiaries of VICI PropCo in connection with the 2019 Acquisition and our other debt service requirements, and our ability to meet our operating and debt service requirements is dependent, in part, upon the continued success of these properties.
We face significant competition, and if we are not able to compete successfully, our results of operations will be harmed.
We face intense competition from other casinos in jurisdictions in which we operate and from casinos in neighboring jurisdictions. Many of our competitors are larger and have substantially greater name recognition and financial and marketing resources than we do. We seek to compete through promotion of our players’ clubs and other marketing efforts. For example, for CRA, we emphasize the casino’s showroom, complimentary heated parking, players’ club program, and superior service. These marketing efforts may not be successful, which could hurt our competitive position.
The markets in which we operate are generally not destination resort areas and rely on a local customer base as well as tourists during peak seasons. The number of casinos in our markets may exceed demand, which could make it difficult for us to sustain profitability. We are particularly vulnerable to competition in our markets due to the large number of competitors in those markets. New or expanded operations by other entities in any of the markets in which we operate will increase competition for our gaming operations and could have a material adverse impact on us. For example, there are new casinos and expansions of existing casinos that could increase competition for our Cape Girardeau and Cripple Creek properties. A casino recently relocated closer to Century Downs that could present significant competition. In addition, in January 2023, sports betting began in Ohio, which will present additional competition for our Mountaineer casino. In January 2022, the AGLC removed the moratorium on gaming facilities. Consideration for additional gaming facilities will be based on a market analysis done by the AGLC. We anticipate the AGLC may award gaming facility licenses in underserved rural areas outside of the urban Calgary and Edmonton markets in which we are located, but any additional competition could adversely impact our results of operations in Alberta.
Changes to gaming laws in countries or states in which we have operations and in states near our operations could increase competition and could adversely affect our operations. Any such expansion of legalized gaming could adversely impact our properties. In Canada, a sports betting bill passed in August 2021 that removed the national prohibition on single-game sports betting and allows the Canadian provinces to regulate the industry. It is unclear what impact these changes will have on our Canadian casinos.
Potential changes in gaming laws in jurisdictions in which we have operations include:
In Missouri, several bills have been filed that would allow Class B gaming licensees and daily fantasy sports licensees to conduct sports wagering including on mobile devices so long as such devices are located within the state of Missouri. These bills are in the early stages of the law-making process and subject to significant changes in proposed statutory language prior to enactment.
In Missouri, a video lottery terminal bill would allow the state lottery to operate video gaming terminals, similar to slot machines, at various locations distributed across the state including bars, veterans and fraternal organizations and convenience stores throughout the state. This bill is in the early stages of the law-making process and subject to significant changes in proposed statutory language prior to enactment.
It is unclear what impact these changes will have on our casinos in these markets, but they could be material.
Capital expenditures, such as those for new gaming equipment, room refurbishments and amenity upgrades may be necessary from time to time to preserve the competitiveness of our properties. If we are not successful in making these improvements, our facilities may be less attractive to our visitors than those of our competitors, which could have a negative impact on our business.
Operational Risks
Our financial condition and results of operations may be adversely affected by climate change, the occurrence of severe weather, natural or man-made disasters and other catastrophic events, including war, terrorism and other acts of violence, and disease, such as the COVID-19 pandemic.
The operations of our facilities are subject to disruptions or reductions in the number of customers who visit our properties because of severe weather conditions. If weather conditions limit access to our casino properties or otherwise adversely impact our ability to operate our casinos at full capacity, our revenue will suffer, which will negatively impact our operating results. Extreme weather conditions, potentially exacerbated by climate change, may cause property damage or interrupt business, which could harm our business and results of operations. High winds, flooding, blizzards and sub-zero temperatures, such as those experienced in Colorado, Missouri and Alberta from time to time, can limit access to our properties. Extreme weather conditions may also interrupt the operations of critical suppliers, and may result in reduced availability or increased price volatility of certain critical supplies.
Events such as terrorist and war activities in the countries in which we are located and other acts of violence, such as the mass shooting in Las Vegas in 2017, could have a negative impact on travel and leisure expenditures, including gaming, lodging and tourism, especially if these events occur in a region in which we operate. The Russia-Ukraine war could have an adverse impact on our results of operations in Poland, which borders Ukraine, and the collateral global impacts of that situation could adversely impact our results of operations at all of our properties. We cannot predict the extent to which terrorism, security alerts or war, or other acts of violence in the countries that we operate will directly or indirectly affect our business and operating results, but the impact could be material.
An outbreak of a contagious disease, such as the COVID-19 pandemic or any similar illness, could have a negative impact on travel and leisure expenditures, including gaming, lodging and tourism, especially if an outbreak were to occur in or near the areas in which we operate. Negative impacts on the economy, travel restrictions and other restrictions by local or federal governments in the areas in which we operate could result in consumers reducing travel and leisure expenditures, including visits to our casinos. Actions taken to contain outbreaks in response to a public health epidemic pose the risk that we or our employees, suppliers, and other business partners may be prevented from conducting business activities for an unknown period of time. Our operating costs may increase due to additional health and safety requirements, and we may experience disruptions due to employee illness. Travel restrictions imposed by the US, European or other foreign governments may make it difficult or impossible for our management located in Europe to travel to the US or other countries where we have operations. We cannot predict the extent to which future outbreaks of a contagious disease will directly or indirectly affect our business and operating results, but the impact could be material.
The future impact of the COVID-19 pandemic, including its effect on the ability and desire of people to visit our properties, could impact our results, operations, outlooks, plans, goals, growth cash flows and liquidity. The extent of the effects of the outbreak on our business and the casino industry at large is highly uncertain and will ultimately depend on future developments, including, but not limited to, future recurrences of the outbreak, the continued availability and effectiveness of COVID-19 vaccines, and the length of time it takes for normal economic and operating conditions to resume, if at all. Even after the COVID-19 pandemic subsides, we could experience a longer-term impact on our costs, such as, for example, the need for enhanced health and hygiene requirements in one or more regions in attempts to counteract future outbreaks. Further, COVID-19 may also affect our operating and financial results in ways that are not presently known to us or that we currently do not consider present significant risks to our operations. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and liquidity.
Difficulties in managing our worldwide operations may have an adverse impact on our business.
We derive our revenue principally from operations located on two continents. Our management is located in North America and Europe, and our worldwide operations pose risks to our business. Risks associated with international operations include:
fluctuations in foreign currency exchange rates;
changes in laws and policies that govern our foreign operations;
possible failure to comply with anti-bribery laws such as the US Foreign Corrupt Practices Act (“FCPA”) and similar anti-bribery laws in other jurisdictions;
difficulty in establishing staffing and managing non-United States operations;
different labor regulations;
changes in environmental, health and safety laws;
potentially negative consequences from changes in or interpretations of tax laws;
political instability and actual or anticipated military or political conflicts;
economic instability and inflation, recession or interest rate fluctuations;
uncertainties regarding judicial systems and procedures;
different time zones; and
culture, management and language differences.
These factors make it more challenging to manage and administer a globally-dispersed business and, as a result, we must devote greater resources to operating under several regulatory and legislative regimes (See “Governmental Regulation and Licensing” in Item 1, “Business” of this report). This business model also increases our costs.
Our insurance coverage may not be adequate to cover all possible losses that our properties could suffer, our insurance costs may increase and we may not be able to obtain the same insurance coverage in the future.
We may suffer damage to our property caused by a casualty loss (such as fire, natural disasters, acts of war, terrorism or other acts of violence) that could severely disrupt our business or subject us to claims by third parties who are injured or harmed. Although we maintain insurance customary in our industry, including property, casualty, terrorism, cybersecurity and business interruption insurance, that insurance is subject to deductibles and limits on maximum benefits, including limitations on the coverage period for business interruption. Due to these variables, we may not be able to fully insure such losses, or fully collect, if at all, on claims resulting from severe weather conditions. The lack of sufficient insurance for these types of acts could expose us to heavy losses if any damages occur, directly or indirectly, that could have a significant adverse impact on our operations.
We renew our insurance policies on an annual basis. The cost of coverage may become so high that we may need to further reduce our policy limits or agree to certain exclusions from our coverage or self-insure. Among other factors, regional political tensions, homeland security concerns, other catastrophic events or any change in government legislation governing insurance coverage for acts of terrorism could materially adversely affect available insurance coverage and result in increased premiums on available coverage (which may cause us to elect to reduce our policy limits), additional exclusions from coverage or higher deductibles. Among other potential future adverse changes, in the future we may elect to not, or may not be able to, obtain any coverage for losses due to acts of terrorism.
We are dependent upon technology services and electrical power to operate our business, and if we experience damage or service interruptions, we may have to cease some or all of our operations, resulting in a decrease in revenue.
Our gaming operations rely heavily on technology services and an uninterrupted supply of electrical power. Our security system and all of our slot machines are controlled by computers and reliant on electrical power to operate. A loss of electrical power or a failure of the technology services needed to run the computers would make us unable to run all or parts of our gaming operations. Any unscheduled interruption in our technology services or interruption in the supply of electrical power is likely to result in an immediate, and possibly substantial, loss of revenue due to a shutdown of our gaming operations. Although we have designed our systems around industry-standard architectures to reduce downtime in the event of outages or catastrophic occurrences, they remain vulnerable to damage or interruption from floods, fires, power loss, telecommunication failures, terrorist attacks, computer viruses, computer denial-of-service attacks and similar events. Additionally, substantial increases in the cost of electricity and natural gas could negatively affect our results of operations.
Our reputation and business may be harmed by cybersecurity breaches, and we may be subject to legal claims if there is loss, disclosure or misappropriation of or access to our customers', our business partners' or our own information or other breaches of our information security.
We make use of online services and centralized data processing, including through third party service providers. The secure maintenance and transmission of customer information, including credit card numbers and other personally identifiable information for marketing and promotional purposes, is a critical element of our operations. Our collection and use of personal data are governed by state and federal privacy laws as well as the applicable laws of the countries in which we operate. Various federal, state and foreign legislative or regulatory bodies may enact or adopt new or additional laws and regulations concerning privacy, data retention, data transfer, and data protection. For example, the European Union adopted the General Data Protection Regulation, which became effective in May 2018, that changed companies’ operational and compliance requirements and included significant penalties for non-compliance. Compliance with applicable privacy regulations may increase our operating costs or adversely impact our ability to market our products, properties and services to our guests.
Our information technology and other systems that maintain and transmit customer information, or those of service providers, or our employee or business information may be compromised by a malicious third party penetration of our network security, or that of a third party service provider or business partner, or by actions or inactions by our employees. As a result, information of our customers, third party service providers or business partners or our employee or business information may be lost, disclosed, accessed or taken without their or our consent. Non-compliance with applicable privacy regulations by us (or in some circumstances non-compliance by third parties engaged by us) or a breach of security on systems storing our data may result in a loss of customers and subject us to fines, payment of damages, lawsuits or restrictions on our use or transfer of data. The loss, disclosure or misappropriation of our business information may adversely affect our businesses, operating results and financial condition.
We face the risk of fraud, theft, and cheating.
We face the risk that gaming customers may attempt or commit fraud or theft or cheat in order to increase winnings. Such acts of fraud, theft or cheating could involve the use of counterfeit chips or other tactics, possibly in collusion with our employees. Internal acts of cheating could also be conducted by employees through collusion with dealers, surveillance staff, floor managers, or other casino or gaming area staff. Additionally, we also face the risk that customers may attempt or commit fraud or theft with respect to our non-gaming offerings or against other customers. Such risks include stolen credit or charge cards or cash, falsified checks, theft of retail inventory and purchased goods, and unpaid or counterfeit receipts. Failure to discover such acts or schemes in a timely manner could result in losses in our operations. Negative publicity related to such acts or schemes could have an adverse effect on our reputation, potentially causing a material adverse effect on our business, financial condition, results of operations, and cash flows.
We are subject to risks related to corporate social responsibility and reputation.
Many factors influence our reputation and the value of our brand, including the perceptions held by our customers, business partners, other key stakeholders and the communities in which we do business. Our business faces increasing scrutiny related to environmental, social and governance factors, and we risk damage to our reputation and the value of our brand if we fail to act responsibly in a number of areas including diversity and inclusion, community engagement and philanthropy, environmental sustainability, climate change, responsible gaming, supply chain management, workplace conduct, human rights and many others, some of which may be unforeseen. Any harm to our reputation could impact employee engagement and retention and the willingness of customers and our partners to do business with us, which could have a material adverse effect on our business, results of operations and cash flows.
Credit and Liquidity Risks
Our obligations under our indebtedness and our Master Lease are significant. We may not be able to generate sufficient cash to service all of our indebtedness and pay rent under the Master Lease and may be forced to take other actions to satisfy our obligations under our indebtedness and Master Lease, which may not be successful.
We have a significant amount of indebtedness. As of December 31, 2022, our long-term debt, net of current portion and deferred financing costs excluding unamortized debt issuance costs, was approximately $366.4 million. The majority of our long-term debt outstanding as of December 31, 2022 is variable rate debt. Each one percentage point change associated with the variable rate debt would result in an estimated $3.5 million change to our annual cash interest expenses. In connection with the 2019 Acquisition, we entered into the Master Lease to lease the real estate assets of the 2019 Acquired Casinos. The long-term financing obligation to VICI Properties, Inc. subsidiaries was $284.9 million as of December 31, 2022. Our scheduled 2023 rent payments under the Master Lease are approximately $27.5 million. Our rent payments are subject to annual escalation. See Notes 6 and 7 to the Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary Data” of this report for more information on our long-term debt and Master Lease. These financial obligations could:
limit our ability to satisfy our obligations;
limit our ability to obtain additional indebtedness or financing to fund working capital requirements, capital expenditures, debt service, acquisitions, general corporate or other obligations;
limit our ability to use operating cash flow in other areas of our business because we must dedicate a significant portion of these funds to make principal and/or interest payments on our outstanding debt;
expose us to interest rate risk due to the variable interest rate on borrowings under our credit agreements;
place us at a competitive disadvantage compared to competitors that have less debt;
subject us to restrictive covenants that, among other things, limit our ability to pay dividends and distributions, make acquisitions and dispositions, borrow additional funds, and make capital expenditures and other investments;
cause our failure to comply with financial and restrictive covenants contained in our current or future indebtedness, which could cause a default under such indebtedness and which, if not cured or waived, could have a material adverse effect on us;
increase our vulnerability to general adverse economic and industry changes;
limit our flexibility in planning for, or reacting to, changes in our businesses, changing market conditions, changes in our industry and economic downturns; and
affect our ability to renew gaming and other licenses necessary to conduct our business.
We were required to make rent payments under the Master Lease during the temporary closures in 2020 of the casinos covered by the Master Lease. We also were required to make scheduled payments of interest and principal under our debt obligations during these closures. We could be required to make rent payments under the Master Lease and scheduled debt payments if such closures occur in the future. In addition, the Master Lease requires us to make specific minimum investments in capital expenditures and, subject to certain caps, the rent escalations under the Master Lease will continue to apply regardless of the cash flows generated by the properties subject to the Master Lease and the obligations guaranteed by us. Further, if our properties subject to the Master Lease are impacted by a casualty event, the Master Lease requires us to repair or restore the affected properties even if the cost of such repair or restoration exceeds the insurance proceeds that we receive. Under such circumstances, the rent under the Master Lease is required to be paid during the period of repair or restoration even if all or a portion of the affected property is not operating. We cannot assure that we will maintain a level of cash flows from operating activities sufficient to permit us to pay rent under the Master Lease and the principal, premium, if any, and interest on our indebtedness.
If our cash flows and capital resources are insufficient to fund our debt service and rent obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service or rent obligations. If we are not able to meet our scheduled obligations, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from them, and these proceeds may not be adequate to meet any debt service obligations then due. Additionally, the agreements governing our existing debt restrict sale of assets and limit the use of the proceeds from any disposition and our Master Lease limits our ability to dispose of leased properties; as a result, we may not be allowed, under these documents, to dispose of certain of our properties and use proceeds from such dispositions to satisfy all current debt service obligations.
We may be unable to obtain the capital necessary to fund our operations or potential acquisitions.
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. While we have a significant amount of cash currently on hand, we may not be able to obtain funding when we need it on favorable terms or at all. If we are unable to finance our current or future expansion projects, we will have to adopt one or more alternatives, such as reducing or delaying planned expansion, development and renovation projects and capital expenditures, selling assets, restructuring debt, obtaining additional equity financing or joint venture partners, or modifying our bank credit facilities. The amount of capital that we are able to raise often depends on variables that are beyond our control, such as the share price of our stock and its trading volume. The availability of financing may be impacted by local, regional and global economic, credit and stock market conditions, all of which have been volatile. As a result, we may not be able to secure financing on terms attractive to us, in a timely manner or at all. If we are able to consummate a financing arrangement, the amount raised may not be sufficient to meet all of our future needs and, if it involves equity, may be highly dilutive to our stockholders. If we cannot raise adequate funds to satisfy our capital requirements, we may have to reduce, dispose of or eliminate certain operations.
Some of our casinos are located on leased property. If we default on one or more leases or if we are unable to secure renewals of those leases, the applicable lessors could terminate the affected leases and we could lose possession of the affected casino.
We lease the land and buildings for our casinos in Missouri and West Virginia under a “triple-net” Master Lease. The real estate assets relating to Rocky Gap also will be owned by VICI PropCo and will be subject to the Master Lease. Accordingly, in addition to rent, we are required to pay, among other things, the following: (1) facility maintenance costs; (2) all insurance premiums for insurance with respect to the leased properties and the business conducted on the leased properties; (3) taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor); and (4) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties. We are responsible for incurring these costs notwithstanding the fact that many of the benefits received in exchange for such costs shall in part accrue to the lessor as the owner of the associated facilities. In addition, we remain obligated for lease payments and other obligations under the Master Lease even if one or more of such leased facilities is not operating or is unprofitable or if we decide to withdraw from those locations. We could incur special charges relating to the closing of such facilities, including lease termination costs, impairment charges and other charges that would reduce our net income and could have a material adverse effect on our business, financial condition and results of operations.
Our RECs and racetracks in Calgary and Edmonton are located on leased parcels of land, and our casinos in Poland are located within leased building spaces. If we were to default on any one or more of the leases or if we are unable to secure renewal terms for these locations, the lessors could terminate the affected leases and we could lose possession of the land or building and any improvements on the land and buildings, including the RECs that we have built in Canada. This would have a significant adverse effect on our business, financial condition and results of operations as we would then be unable to operate the affected facilities.
Legal, Regulatory and Compliance Risks
We face extensive regulation from gaming and other regulatory authorities, which involve considerable expense and could adversely impact our business, and potential changes in the regulatory environment also may adversely impact us.
As owners and operators of gaming facilities, we are subject to extensive state, local, and international provincial regulation. State, local and provincial authorities require us and our subsidiaries to demonstrate suitability to obtain and retain various licenses and require that we have registrations, permits and approvals to conduct gaming operations. Various regulatory authorities may, for any reason set forth in applicable legislation, rules and regulations, limit, condition, suspend or revoke a license or registration to conduct gaming operations or prevent us from owning the securities of our gaming subsidiaries. Like all gaming operators in the jurisdictions in which we operate or plan to operate, we must periodically apply to renew our gaming licenses or registrations and in North America we must have the suitability of certain of our directors, officers and employees approved. We are scheduled for renewals for our casino licenses at Cripple Creek, Central City and Mountaineer in 2023. The casino licenses for our casinos at the Hotel President in Bielsko-Biala, Poland, at the Park Inn by Radisson in Katowice, Poland and at the DoubleTree by Hilton Hotel in Wroclaw, Poland expire in 2023. A detailed description of the regulations to which we are subject, including the timing of license renewals for our properties, is contained in Exhibit 99.1 to this report, which is incorporated herein by reference. Failure to obtain license renewals would have an adverse effect on us.
In addition to gaming regulations, we are also subject to various federal, state, provincial, local and foreign laws and regulations affecting businesses in general. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, environmental matters, smoking, employees, currency transactions, taxation, zoning and building codes, and marketing and advertising. Rules and regulations regarding the service of alcoholic beverages are strict. The loss or suspension of a liquor license could significantly impair our operations.
We also deal with significant amounts of cash in our operations and are subject to various reporting and anti-money laundering regulations. Any violations of anti-money laundering laws or regulations by any of our properties could have an adverse effect on our financial condition, results of operations or cash flows. Regulations adopted by the Financial Crimes Enforcement Network require us to report currency transactions at our US locations in excess of $10,000 occurring within a gaming day, including identification of the patron by name and social security number. US Treasury Department regulations also require us to report certain suspicious activity, including any transaction that exceeds $5,000, if we know, suspect or have reason to believe that the transaction involves funds from illegal activity or is designed to evade federal regulations or reporting requirements. Substantial penalties can be imposed if we fail to comply with these regulations. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted.
From time to time, legislators and special interest groups have proposed legislation that would expand, restrict or prevent gaming operations or that may otherwise adversely impact our operations in the jurisdictions in which we operate. Any new gaming laws or regulations in the jurisdictions in which we operate could have an adverse impact on our financial position and results of operations. Any expansion of the gaming industry that results in increased competition and any restriction on or prohibition of our gaming operations could have a material adverse effect on our operating results or cause us to record an impairment of our assets.
We depend on agreements with our horsemen and pari-mutuel clerks. Failure to renew or modify agreements on satisfactory terms could materially affect our financial position and results of operations.
In the US, the Federal Interstate Horseracing Act of 1978, as amended (“FIHA”), and state law in West Virginia require that, in order to simulcast races, we have certain agreements with the horse owners and trainers at our racetrack. In addition, West Virginia requires applicants seeking to renew their gaming license to demonstrate they have an agreement regarding the proceeds of the gaming machines with a representative of a majority of (i) the horse owners and trainers, (ii) the pari-mutuel clerks, and (iii) the horse breeders. If we fail to present evidence of an agreement with horsemen at a track, we may not be permitted to conduct live racing and to export and import simulcasting at that track and through off-track wagering, and our video lottery license may not be renewed. In addition, our annual simulcast export agreements are subject to horsemen’s approval under the FIHA. Simulcast import and export agreements require horsemen approval per West Virginia law.
In Canada, the Pari-Mutuel Betting Supervision Regulations require that in order to conduct pari-mutuel betting we have certain agreements with approved horsepersons addressing the sharing of revenue. If we fail to present evidence of an agreement with
approved horsepersons, we may not be permitted to conduct live racing, export simulcasting and teletheatre wagering. If we are unable to conduct live racing, our license to operate a REC may not be renewed.
If we fail to renew or modify existing agreements on satisfactory terms, this failure could have a material adverse effect on our financial position, results of operations and cash flows.
The enactment of legislation implementing changes in the US taxation of international business activities or the adoption of other tax reform laws or policies could materially affect our financial position and results of operations.
We are subject to taxation at the federal, state, provincial and local levels in the US and various other countries and jurisdictions. Our future effective tax rate could be affected by changes in the composition of earnings in jurisdictions with differing tax rates, changes in statutory rates and other legislative changes, changes in the valuation of our deferred tax assets and liabilities, or changes in determinations regarding the jurisdictions in which we are subject to tax. From time to time, the US federal, state and local and foreign governments make substantive changes to tax rules and their application, which could result in materially higher corporate taxes than would be incurred under existing tax law and could adversely affect our financial condition or results of operations.
We face extensive taxation from gaming and regulatory authorities. Potential changes to the tax laws in the jurisdictions in which we operate may adversely affect the results of our operations.
We believe that the prospect of significant revenue to a jurisdiction through taxation and fees is one of the primary reasons jurisdictions permit legalized gaming. As a result, gaming companies are typically subject to significant taxes and fees in addition to normal federal, state, provincial and local income taxes, and such taxes and fees are subject to increase at any time. We pay substantial taxes and fees with respect to our operations. A detailed description of the gaming taxes and fees to which we are subject is contained in Exhibit 99.1 to this report, which is incorporated herein by reference. In addition, negative economic conditions could intensify the efforts of federal, state, provincial and local governments to raise revenue through increases in gaming taxes or introduction of additional gaming opportunities, which could adversely affect our results of operations and cash flows.
Any violation of the Foreign Corrupt Practices Act or any other similar anti-corruption laws could have a negative impact on us.
A portion of our revenue is derived from operations outside the United States, which exposes us to complex foreign and US regulations inherent in doing cross-border business and in each of the countries in which we transact business. We are subject to compliance with the US FCPA and other similar anti-corruption laws, which generally prohibit companies and their intermediaries from making improper payments to foreign government officials for the purpose of obtaining or retaining business. While our employees and agents are required to comply with these laws, we cannot be sure that our internal policies and procedures will always protect us from violations of these laws, despite our commitment to legal compliance and corporate ethics. Violations of these laws may result in severe criminal and civil sanctions as well as other penalties, and the SEC and US Department of Justice have increased their enforcement activities with respect to the FCPA. The occurrence or allegation of these types of risks may adversely affect our business, performance, prospects, value, financial condition, and results of operations.
Any failure to protect our trademarks could have a negative impact on the value of our brand names and adversely affect our business.
The development of intellectual property is part of our overall business strategy. While our business as a whole is not dependent on either of our trademarks or other intellectual property, we seek to establish and maintain our proprietary rights in our business operation through the use of trademarks. We file applications for, and obtain trademarks in, the United States and in foreign countries where we believe filing for such protection is appropriate. Despite our efforts to protect our proprietary rights, parties may infringe our trademarks and our rights may be invalidated or unenforceable. The laws of some foreign countries do not protect proprietary rights to as great an extent as the laws of the United States. Monitoring the unauthorized use of our intellectual property is difficult. Litigation may be necessary to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others. Litigation of this type could result in substantial costs and diversion of resources. We cannot assure you that all of the steps we have taken to protect our trademarks in the United States and foreign countries will be adequate to prevent imitation of our trademarks by others. The unauthorized use or reproduction of our trademarks could diminish the value of our brand and its market acceptance, competitive advantages or goodwill, which could adversely affect our business.
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Human Capital Risks
The loss of key personnel could have a material adverse effect on us.
We are highly dependent on the services of Erwin Haitzmann and Peter Hoetzinger, our founders and Co-Chief Executive Officers, and other members of our senior management team. The employment agreements with Erwin Haitzmann and Peter Hoetzinger provide that, under some circumstances, the departure of one executive could allow the other to leave for cause. Our ability to retain key personnel is affected by the competitiveness of our compensation packages and the other terms and conditions of employment, our continued ability to compete effectively against other gaming companies and our growth prospects. The loss of the services of any of these individuals could have a material adverse effect on our business, financial condition and results of operations.
Our business, financial condition, and results of operations may be harmed by staff shortages, work stoppages and other labor issues.
Our ability to attract and retain employees may cause us to reduce casino operating hours or close certain amenities at our properties which could negatively impact guest loyalty and operating results. The COVID-19 pandemic caused staffing issues to be more significant. We have adjusted, and if required we plan to continue to adjust, operating hours for food and beverage outlets, and hotel and convention spaces where we are impacted by staffing challenges. There are 250 employees at our CPL casinos in Poland who belong to trade unions. The trade unions do not currently have any collective bargaining agreements with CPL but changes in pay for union employees at CPL require approval from the trade unions. In the United States, there are 44 employees at our West Virginia casino who belong to unions. A lengthy strike or other work stoppage at our casino properties with unions could have an adverse effect on our business and results of operations. Our other employees in the US and Canada and in our Corporate and Other segment are not covered by collective bargaining agreements. From time to time, we have experienced attempts to unionize certain of our non-union employees. If a union seeks to organize any of our employees, we could experience disruption in our business and incur significant costs, both of which could have a material adverse effect on our results of operation and financial condition. If a union were successful in organizing any of our employees, we could experience significant increases in our labor costs which could also have a material adverse effect on our business, financial condition, and results of operations. In addition, changes to labor laws or prevailing market conditions could lead to increased labor costs that could have an adverse impact on our profitability.
Common Stock and Stockholder Risks
Certain anti-takeover measures we have adopted may limit our ability to consummate transactions that some of our security holders might otherwise support.
We have a fair price business combination provision in our certificate of incorporation, which requires approval of certain business combinations and other transactions by holders of 80% of our outstanding shares of voting stock. In addition, our certificate of incorporation allows our board of directors to issue shares of preferred stock without stockholder approval. These provisions generally have the effect of requiring that any party seeking to acquire us negotiate with our board of directors in order to structure a business combination with us. This may have the effect of depressing the price of our common stock due to the possibility that certain transactions that our stockholders might favor could be precluded by these provisions.
Stockholders may be required to dispose of their shares of our common stock if they are found unsuitable by gaming authorities.
Gaming authorities in the US and Canada generally can require that any beneficial owner of our common stock and other securities file an application for a finding of suitability. If a gaming authority requires a record or beneficial owner of our securities to file a suitability application, the owner must apply for a finding of suitability within 30 days or at an earlier time prescribed by the gaming authority. The gaming authority has the power to investigate an owner's suitability, and the owner must pay all costs of the investigation. If the owner is found unsuitable, then the owner may be required by law to dispose of our securities. Our certificate of incorporation also provides us with the right to repurchase shares of our common stock from certain beneficial owners declared by gaming regulators to be unsuitable holders of our equity securities, and the price we pay to any such beneficial owner may be below the price such beneficial owner would otherwise accept for his or her shares of our common stock.
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General Risk Factors
We are or may become involved in legal proceedings that, if adversely adjudicated or settled, could impact our financial condition.
From time to time, we are defendants in various lawsuits and gaming regulatory proceedings relating to matters incidental to our business. As with all litigation, no assurance can be provided as to the outcome of these matters and, in general, litigation can be expensive and time consuming. We may not be successful in the defense or prosecution of our current or future legal proceedings, which could result in settlements or damages that could significantly impact our business, financial condition and results of operations.
Fluctuations in currency exchange rates and currency controls in foreign countries could adversely affect our business.
The revenue generated and expenses incurred at our casinos in Canada and Poland are generally denominated in Canadian dollars and Polish zloty, respectively. Decreases in the value of these currencies in relation to the value of the US dollar have decreased the operating profit from our foreign operations when translated into US dollars, which has adversely affected our consolidated results of operations, and such decreases may occur in the future. In addition, we may expand our operations into other countries and, accordingly, we could face similar exchange rate risk with respect to the costs of doing business in such countries as a result of any increases in the value of the US dollar in relation to the currencies of such countries. We do not currently hedge our exposure to fluctuations of these foreign currencies, and there is no guarantee that we will be able to successfully hedge any future foreign currency exposure.
We may be required in the future to record impairment losses related to assets we currently carry on our balance sheet.
We have $10 million of goodwill, $30 million in casino licenses, $3 million in trademarks and $465 million in property and equipment as of December 31, 2022. Accounting rules require that we make certain estimates and assumptions related to our determinations as to the future recoverability of these assets. If we were to determine that the values of these assets carried on our balance sheet are impaired due to adverse changes in our business or otherwise, we may be required to record an impairment charge to write down the value of these assets, which would adversely affect our results during the period in which we recorded the impairment charge. In 2020, we impaired $35.1 million related to goodwill and other intangible assets, including our MCE cost investment, due to the impact from COVID-19. See Notes 1 and 5 to the Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary Data” of this report for more information on our goodwill and other intangible assets.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments.
None.
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ITEM 2. PROPERTIES
Item 2. Properties.
The following table sets forth the location, applicable reportable segment, size and description of certain types of gaming facilities at each of our casinos as of December 31, 2022:
Summary of Property Information
Segment/Property
Year Opened / Acquired
Approximate Casino Square Footage
Acreage
Slot / Electronic Gaming Machines
(#) (1)
Video Lottery Terminals
(#) (1)
Tables
(#) (1)
Racetrack
‎(#)
United States
Colorado
Century Casino & Hotel - Central City
22,640
1.3
-
-
Century Casino & Hotel - Cripple Creek
19,610
3.5
-
-
West Virginia
Mountaineer Casino, Racetrack & Resort (2)
72,380
1,528.1
1,032
-
Missouri
Century Casino Cape Girardeau (2)
41,530
19.1
-
-
Century Casino Caruthersville (2)
12,000
38.2
-
-
The Farmstead
-
-
-
-
-
-
Subtotal
168,160
1,590.2
3,085
-
Canada
Edmonton
Century Casino & Hotel - Edmonton
29,225
6.0
-
Century Casino St. Albert
13,269
7.1
-
Century Mile Racetrack and Casino (3)
19,407
100.0
-
Calgary
Century Downs Racetrack and Casino (4)
17,459
57.3
-
Subtotal
79,360
170.4
2,443
Poland
Casinos Poland (5)
85,560
-
-
-
Corporate Other
Cruise Ships (total of 1) (6)
N/A
2,300
-
-
-
Total
335,380
1,760.6
6,080
(1)Machine and table counts are reported as the total number of machines as of December 31, 2022.
(2)The land, buildings and riverboat (as applicable) at these properties are leased under the Master Lease. For more information see “Master Lease” below.
(3)Century Mile runs the pari-mutuel network in Alberta. The off-track betting parlors are located throughout Alberta and include the parlors at Century Mile, Century Casino & Hotel - Edmonton and Century Casino St. Albert. The land on which the REC and racetrack are located is leased.
(4)The land on which the REC and racetrack are located was sold by CDR to 1685258 Alberta Ltd. (“Rosebridge”) prior to our acquisition of our ownership interest in CDR. CDR leases from Rosebridge the 57.3 acres on which the REC and racetrack are located.
(5)As of December 31, 2022, Casinos Poland owned eight separate casinos in leased building spaces, including hotels, throughout Poland. For the locations of these casinos, see “Additional Property Information” below.
(6)Operated under a concession agreement. We do not own the ship on which our casino operates. For additional information about the ship, see “Additional Property Information” below.
Additional Property Information
As of December 31, 2022, our subsidiaries were pledged as collateral for our obligations under our credit facility (“Goldman Credit Agreement”) with Goldman Sachs Bank USA (“Goldman”). As of December 31, 2022, a parcel of land in Kolbaskowo, Poland owned by Casinos Poland secured a bank guarantee with mBank. See Note 6 to the Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary Data” of this report.
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Corporate Offices - We lease approximately 13,200 square feet of office space in Colorado Springs, Colorado and approximately 2,500 square feet of office space in Vienna, Austria for corporate and administrative purposes.
Poland - The following table summarizes information about CPL’s casinos as of December 31, 2022(1).
City
Location
License Expiration
Number of Slots
Number of Tables
Warsaw
Marriott Hotel
September 2028(2)
Warsaw
Hilton Hotel
July 2024(2)
Warsaw
LIM Center
June 2025
Bielsko-Biala
Hotel President
October 2023
Katowice
Park Inn by Radisson
October 2023
Wroclaw
DoubleTree by Hilton Hotel
November 2023
Krakow
Dwor Kosciuszko Hotel
May 2024
Lodz
Manufaktura Entertainment Complex
June 2024
(1)A detailed description of the regulations applicable to CPL licenses and our ability to obtain new licenses for our locations on their expiration is contained in Exhibit 99.1 to this report, which is incorporated herein by reference.
(2)In September 2022, CPL transferred the casino license for the Warsaw Marriott Hotel expiring in July 2024 to the Warsaw Hilton Hotel, and CPL was granted a new license for the Warsaw Marriott Hotel expiring in September 2028.
Cruise Ship - The following table summarizes information about the ship-based casino for which we had a concession agreement as of December 31, 2022.
Cruise Line
Ship
Concession
Agreement End Date
Number of Slots
Number of Tables
TUI Cruises
Mein Schiff Herz
April 2023(1)
(1)Estimated - The concession agreement for the casino onboard Mein Schiff Herz is scheduled to end in the second quarter of 2023.
In April 2022, a concession agreement with TUI Cruises for one other ship-based casino ended and in May 2021, a concession agreement with TUI Cruises for two other ship-based casinos ended.
Master Lease
Mountaineer, Cape Girardeau and Caruthersville are subject to the Master Lease. The Master Lease provides for the lease of land, buildings, structures and other improvements on the land (including barges and riverboats), easements and similar appurtenances to the land and improvements relating to the operations of the leased properties. The scheduled 2023 rent payments under the Master Lease are approximately $27.5 million. The rent payments are subject to annual escalations during the lease term. The Master Lease has an initial term of 15 years with no purchase option. In December 2022, we amended the Master Lease and exercised our first five year renewal term. At our option, the Master Lease may be extended for up to three additional five year renewal terms beyond the 20 year term. The renewal terms are effective as to all, but not less than all, of the properties then subject to the Master Lease. We do not have the ability to terminate our obligations under the Master Lease prior to its expiration without the lessor’s consent.
The Master Lease has a triple-net structure, which requires us to pay substantially all costs associated with the 2019 Acquired Casino properties, including real estate taxes, insurance, utilities, maintenance and operational costs. The Master Lease contains certain covenants, including minimum capital improvement expenditures. Century Casinos, Inc. has provided a guarantee of our subsidiaries’ obligations under the Master Lease. For additional information regarding the Master Lease, see Note 7 to the Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary Data” of this report.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings.
We are not a party to any pending litigation that, in management’s opinion, could have a material effect on our financial position or results of operations except as disclosed in Note 16 to the Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary Data” of this report.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures.
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Our common stock is traded in the United States on the Nasdaq Capital Market under the symbol “CNTY”.
The following graph illustrates the cumulative shareholder return of our common stock during the period beginning December 31, 2017 through December 31, 2022, and compares it to the cumulative total return on the Nasdaq and the Dow Jones US Gambling Index. The comparison assumes a $100 investment on December 31, 2017, in our common stock and in each of the foregoing indices, and assumes reinvestment of dividends, if any. This table is not intended to forecast future performance of our common stock.
12/17
12/18
12/19
12/20
12/21
12/22
CNTY
100.00
80.94
86.75
69.99
133.41
77.00
Nasdaq
100.00
96.12
129.97
186.69
226.63
151.61
Dow Jones US Gambling Index
100.00
67.36
96.55
85.49
74.51
55.50
No dividends have been declared or paid by us. Declaration and payment of dividends, if any, in the future will be at the discretion of the board of directors.
At March 3, 2023, we had 124 holders of record of our common stock.
In March 2000, our board of directors approved and announced a discretionary program to repurchase up to $5.0 million of our outstanding common stock. In November 2009, our board of directors approved an increase of the amount available to be repurchased under the program to $15.0 million. The amount available for repurchase as of December 31, 2022 is $14.7 million. The repurchase program has no set expiration or termination date. No repurchases were made during the year ended December 31, 2022.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. Removed and Reserved.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements, Business Environment and Risk Factors
The following discussion should be read in conjunction with Part II, Item 8, “Financial Statements and Supplementary Data” of this report. Information contained in the following discussion of our results of operations and financial condition contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, and, as such, is based on current expectations and is subject to certain risks and uncertainties. The reader should not place undue reliance on these forward-looking statements for many reasons, including those risks discussed under Item 1A, “Risk Factors,” and elsewhere in this document. See “Cautionary Statement Regarding Forward-Looking Information” that precedes Part I of this report. We undertake no obligation to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise.
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. The term “USD” refers to US dollars, the term “CAD” refers to Canadian dollars, the term “PLN” refers to Polish zloty and the term “GBP” refers to British pounds. Certain terms used in this Item 7 without definition are defined in Item 1, “Business” of this report.
Amounts presented in this Item 7 are rounded. As such, there may be rounding differences in period over period changes and percentages reported throughout this Item 7.
EXECUTIVE OVERVIEW
Overview
Since our inception in 1992, we have been primarily engaged in developing and operating gaming establishments and related lodging, restaurant and entertainment facilities. Our primary source of revenue is from the net proceeds of our gaming machines and tables, with ancillary revenue generated from hotel, restaurant, horse racing (including off-track betting), sports betting, iGaming, bowling and entertainment facilities that are in most instances a part of the casinos.
We view each market in which we operate as a separate operating segment and each casino within those markets as a reporting unit. We aggregate all operating segments into three reportable segments based on the geographical locations in which our casinos operate: United States, Canada and Poland. We have additional business activities including concession agreements, management agreements, consulting agreements and certain other corporate and management operations that we report as Corporate and Other.
The table below provides information about the aggregation of our operating segments and reporting units into reportable segments as of December 31, 2022. The reporting units except for Century Downs Racetrack and Casino and Casinos Poland are owned, operated and managed through wholly-owned subsidiaries. Our ownership and operation of Century Downs Racetrack and Casino and Casinos Poland are discussed below. The real estate assets at our West Virginia and Missouri operating segments are owned by VICI PropCo and leased to us under the Master Lease. The land on which the REC and racetracks at Century Downs and Century Mile are located is leased.
Reportable Segment
Operating Segment
Reporting Unit
United States
Colorado
Century Casino & Hotel - Central City
Century Casino & Hotel - Cripple Creek
West Virginia
Mountaineer Casino, Racetrack & Resort
Missouri
Century Casino Cape Girardeau
Century Casino Caruthersville (1)
Canada
Edmonton
Century Casino & Hotel - Edmonton
Century Casino St. Albert
Century Mile Racetrack and Casino
Calgary (2)
Century Downs Racetrack and Casino
Poland
Poland
Casinos Poland
Corporate and Other
Corporate and Other
Cruise Ships & Other
Corporate Other (3)
(1)Includes The Farmstead.
(2)We operated Century Sports through February 10, 2022. We operated Century Bets through August 2021, when operations were transferred to Century Mile. For more information about Century Sports and Century Bets see Item 1, “Business” above.
(3)Our equity investment in Smooth Bourbon is included in the Corporate and Other reporting unit. See Item 1, “Business - 2022 Business Developments - Nugget Casino Resort in Sparks, Nevada” above.
‎
We have controlling financial interests through our subsidiary CRM in the following reporting units:
We have a 66.6% ownership interest in CPL and we consolidate CPL as a majority-owned subsidiary for which we have a controlling financial interest. Polish Airports owns the remaining 33.3% in CPL. We account for and report the 33.3% Polish Airports ownership interest as a non-controlling financial interest. CPL has been in operation since 1989 and, as of December 31, 2022, owned and operated eight casinos throughout Poland.
We have a 75% ownership interest in CDR and we consolidate CDR as a majority-owned subsidiary for which we have a controlling financial interest. We account for and report the remaining 25% ownership interest in CDR as a non-controlling financial interest. CDR operates Century Downs Racetrack and Casino, a REC in Balzac, a north metropolitan area of Calgary, Alberta, Canada.
We also have a concession agreement for one ship-based casino and had ownership in and a consulting agreement with MCE, which are detailed further under “Corporate and Other” below.
Recent Developments Related to COVID-19
The COVID-19 pandemic had an adverse effect on our 2020 results of operations and financial condition, and negatively impacted our results of operations in the first half of 2021 because of closures of our Canada and Poland properties during this period. Our casinos varied their operations based on the governmental health and safety requirements in the jurisdictions in which they are located. Currently our operations have no health and safety requirements for entry and few COVID-19 restrictions.
We estimate that, for the years ended December 31, 2021 and 2020, net operating revenue was adversely impacted by approximately $35.9 million and $100.5 million, respectively, and Adjusted EBITDA was adversely impacted by approximately $13.1 million and $36.0 million, respectively, due to the closures. See “Discussion of Results” below for a discussion of the impact of the closures in each operating segment.
The duration and impact of the COVID-19 pandemic otherwise remains uncertain. We cannot predict the negative impacts that COVID-19 will have on our consumer demand, workforce, suppliers, contractors and other partners and whether future closures will be required. Such closures have had a material impact on us. The effects of COVID-19, ongoing governmental health and safety requirements and any future closures could have a material impact on us. We will continue to monitor our liquidity and make reductions to marketing and operating expenditures, where possible, if future government mandates or closures due to COVID-19 or other health-related issues are required that would have an adverse impact on us.
Other Acquisitions and Development Projects
As detailed further in Item 1, “Business - 2022 Business Developments”, we have two pending acquisitions. The acquisition of the operations of the Nugget Casino Resort in Sparks, Nevada for approximately $100.0 million is expected to close in the second quarter of 2023. The acquisition of the operations of Rocky Gap Casino Resort in Flintstone, Maryland for approximately $56.1 million is expected to close in the second quarter of 2023. In addition to the acquisitions, we have moved the casino at Century Casino Caruthersville from the riverboat and barge to a temporary land-based facility while we construct a new casino with an adjoining hotel and we have opened a small hotel neighboring Century Casino Caruthersville. We are also constructing a hotel at Century Casino Cape Girardeau.
Additional Gaming Projects
We currently are exploring additional potential gaming projects and acquisition opportunities. Along with the capital needs of potential projects, there are various other risks which, if they materialize, could affect our ability to complete a proposed project or acquisition or could eliminate its feasibility altogether.
Terminated Projects
As detailed further in Item 1, “Business - 2022 Business Developments”, we sold the casino operations of Century Casino Calgary as well as the land and building in which we operated Century Sports. We also terminated our ownership interest in and consulting services agreement with MCE as well as our management and funding agreements related to a potential casino in Bermuda. In 2020, we closed Century Casino Bath.
‎
Presentation of Foreign Currency Amounts
The average exchange rates to the US dollar used to translate balances during each reported period are as follows:
For the year
ended December 31,
% Change
Average Rates
2022/2021
2021/2020
Canadian dollar (CAD)
1.3011
1.2537
1.3412
(3.8%)
6.5%
Euros (EUR)
0.9506
0.8456
0.8776
(12.4%)
3.6%
Polish zloty (PLN)
4.4559
3.8608
3.8989
(15.4%)
1.0%
British pound (GBP)
N/A
0.7270
0.7798
N/A
6.8%
Source: 2022 Xe Currency Converter, 2021 and 2020 Pacific Exchange Rate Service
We recognize in our statement of earnings (loss), foreign currency transaction gains or losses resulting from the translation of casino operations and other transactions that are denominated in a currency other than US dollars. Our casinos in Canada and Poland represent a significant portion of our business, and the revenue generated and expenses incurred by these operations are generally denominated in Canadian dollars and Polish zloty. A decrease in the value of these currencies in relation to the value of the US dollar would decrease the earnings from our foreign operations when translated into US dollars. An increase in the value of these currencies in relation to the value of the US dollar would increase the earnings from our foreign operations when translated into US dollars. See Note 2 to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this report.
DISCUSSION OF RESULTS
Years ended December 31, 2022, 2021 and 2020
Century Casinos, Inc. and Subsidiaries
For the year
ended December 31,
2022/2021
2021/2020
Amounts in thousands
$ Change
% Change
$ Change
% Change
Gaming Revenue
$
365,986
$
331,877
$
253,281
$
34,109
10.3%
$
78,596
31.0%
Pari-mutuel, Sports Betting and iGaming Revenue
19,607
18,848
17,660
4.0%
1,188
6.7%
Hotel Revenue
9,628
8,286
5,910
1,342
16.2%
2,376
40.2%
Food and Beverage Revenue
24,097
17,788
16,194
6,309
35.5%
1,594
9.8%
Other Revenue
11,211
11,707
11,223
(496)
(4.2%)
4.3%
Net Operating Revenue
430,529
388,506
304,268
42,023
10.8%
84,238
27.7%
Gaming Expenses
(183,841)
(161,119)
(131,563)
22,722
14.1%
29,556
22.5%
Pari-mutuel, Sports Betting and iGaming Expenses
(22,149)
(19,735)
(19,301)
2,414
12.2%
2.2%
Hotel Expenses
(2,815)
(2,360)
(2,125)
19.3%
11.1%
Food and Beverage Expenses
(22,631)
(16,523)
(15,962)
6,108
37.0%
3.5%
General and Administrative Expenses
(105,467)
(93,489)
(80,246)
11,978
12.8%
13,243
16.5%
Depreciation and Amortization
(27,109)
(26,762)
(26,534)
1.3%
0.9%
Impairment - Intangible and Tangible Assets
-
-
(35,121)
-
-
(35,121)
(100.0%)
Gain on Sale of Casino Operations
-
-
6,457
-
-
(6,457)
(100.0%)
(Loss) on Sale of Assets
(2,154)
-
-
(2,154)
(100.0%)
-
-
Total Operating Costs and Expenses
(366,166)
(319,988)
(304,395)
46,178
14.4%
15,593
5.1%
Earnings from Equity Investment
3,249
-
-
3,249
100.0%
-
-
Earnings (Loss) from Operations
67,612
68,518
(127)
(906)
(1.3%)
68,645
54051.2%
Income Tax Benefit (Expense)
7,660
(6,371)
(4,848)
(14,031)
(220.2%)
1,523
31.4%
Net (Earnings) Loss Attributable to Non-controlling Interests
(5,694)
(1,156)
4,538
392.6%
1,290
962.7%
Net Earnings (Loss) Attributable to Century Casinos, Inc. Shareholders
7,976
20,622
(48,002)
(12,646)
(61.3%)
68,624
143.0%
Adjusted EBITDA (1)
$
103,340
$
97,926
$
48,398
$
5,414
5.5%
$
49,528
102.3%
Earnings (Loss) Per Share Attributable to Century Casinos, Inc. Shareholders
Basic Earnings (Loss) Per Share
$
0.27
$
0.70
$
(1.62)
$
(0.43)
(61.4%)
$
2.32
143.2%
Diluted Earnings (Loss) Per Share
$
0.25
$
0.66
$
(1.62)
$
(0.41)
(62.1%)
$
2.28
140.7%
(1)For a discussion of Adjusted EBITDA and reconciliation of Adjusted EBITDA to net earnings (loss) attributable to Century Casinos, Inc. shareholders, see “Non-GAAP Measures - Adjusted EBITDA” below in this Item 7.
Items impacting year-over-year comparability of the results include the following:
COVID-19 - Closures of all or a portion of our facilities due to COVID-19 had a significant negative impact on our results for the year ended December 31, 2020 and, to a lesser extent, in 2021. See “Executive Overview-Recent Developments Related to COVID-19” above for details regarding the closures. In addition to the impacts on our revenue, expenses and results of operations, COVID-19 had the following impacts:
We impaired goodwill and intangible assets in the year ended December 31, 2020 due to a quantitative and qualitative impairment analysis performed related to the triggering events caused by COVID-19. We impaired $30.7 million in the United States segment and $3.4 million in the Canada segment.
We impaired the $1.0 million MCE investment in the Corporate and Other segment in the year ended December 31, 2020 due to assessments made related to the impact of COVID-19 on MCE.
We recorded valuation allowances on our net deferred tax assets in the United States, Canada and Corporate and Other segments in the year ended December 31, 2020, which resulted in $1.0 million, $1.5 million and $1.1 million of tax expense in the United States, Canada and Corporate and Other segments, respectively.
Calgary - In February 2022, we sold the land and building that we owned in Calgary for CAD 8.0 million ($6.3 million based on the exchange rate on February 10, 2022). We recorded a loss on the sale of the land and building of CAD 2.7 million ($2.2 million based on the average exchange rate for the month ended February 28, 2022).
Corporate and Other
We began operating CCB in May 2018. CCB was closed in March 2020 due to COVID-19 and CCB’s board of directors determined that CCB would enter into creditors voluntary liquidation, which occurred in May 2020. CCB was deconsolidated as a subsidiary in May 2020. We recorded a $7.4 million gain related to the deconsolidation to general and administrative expenses for the year ended December 31, 2020. CCB contributed a total of $0.5 million in net operating revenue and $6.9 million in net earnings for the year ended December 31, 2020, primarily related to the gain on deconsolidation.
We wrote-down $0.7 million related to the portion of the liability that we had sought to collect from LOT Polish Airlines (“LOT”) and a $0.3 million receivable related to MCE in the year ended December 31, 2020.
Our cruise ship operations were impacted by COVID-19 related closures in 2020 and 2021. See “Corporate and Other” below for additional information on the closures.
Deferred Financing - We wrote-off approximately $7.3 million of deferred financing costs to interest expense in the second quarter of 2022 in connection with the prepayment of the $170.0 million term loan (the “Macquarie Term Loan”) issued under the Macquarie Credit Agreement.
Inflation - We have seen operating expenses, such as utilities, maintenance costs and food and beverage costs, increase at our properties but the increases have not been material to date.
Staffing - We have experienced difficulties attracting and retaining staff at some locations in the US and Canada. As a result, we have had to adjust hours of some food and beverage outlets, the number of table games open and the number of rooms available at some of our hotels. We have been able to make adjustments during non-peak times and have not seen a material impact to our operating results.
Valuation Allowance - We released a $10.2 million US valuation allowance, which contributed to an income tax benefit of $7.7 million for the year ended December 31, 2022.
Net operating revenue increased by $42.0 million, or 10.8%, and by $84.2 million, or 27.7%, for the year ended December 31, 2022 compared to the year ended December 31, 2021 and for the year ended December 31, 2021 compared to the year ended December 31, 2020, respectively. Following is a breakout of net operating revenue by segment for the year ended December 31, 2022 compared to the year ended December 31, 2021 and for the year ended December 31, 2021 compared to the year ended December 31, 2020.
United States decreased by ($14.7) million, or (5.2%), and increased by $84.9 million, or 42.8%.
Canada increased by $25.1 million, or 54.2%, and decreased by ($3.8) million, or (7.6%).
Poland increased by $31.9 million, or 54.9%, and by $4.0 million, or 7.3%.
Corporate Other decreased by ($0.4) million, or (63.7%), and by ($0.8) million, or (59.9%).
Operating costs and expenses increased by $46.2 million, or 14.4%, and by $15.6 million, or 5.1%, for the year ended December 31, 2022 compared to the year ended December 31, 2021 and for the year ended December 31, 2021 compared to the year ended December 31, 2020, respectively. Following is a breakout of operating costs and expenses by segment for the year ended December 31, 2022 compared to the year ended December 31, 2021 and for the year ended December 31, 2021 compared to the year ended December 31, 2020.
United States increased by $1.4 million, or 0.7%, and by $6.7 million, or 3.4%.
Canada increased by $18.2 million, or 43.5%, and by $1.0 million, or 2.5%.
Poland increased by $22.3 million, or 38.0%, and by $1.6 million, or 2.8%.
Corporate Other increased by $4.2 million, or 32.2%, and by $6.2 million, or 90.3%.
Earnings from operations decreased by ($0.9) million, or (1.3%), and increased by $68.6 million, or 54051.2%, for the year ended December 31, 2022 compared to the year ended December 31, 2021 and for the year ended December 31, 2021 compared to the year ended December 31, 2020, respectively. Following is a breakout of earnings (loss) from operations by segment for the year ended December 31, 2022 compared to the year ended December 31, 2021 and for the year ended December 31, 2021 compared to the year ended December 31, 2020.
United States decreased by ($16.1) million, or (21.0%), and increased by $78.2 million, or 6566.9%.
Canada increased by $6.9 million, or 152.8%, and decreased by ($4.8) million, or (51.5%).
Poland increased by $9.6 million, or 2177.9%, and by $2.3 million, or 84.1%.
Corporate Other decreased by ($1.3) million, or (10.7%), and by ($7.1) million, or (128.9%).
Net earnings decreased by ($12.6) million, or (61.3%), and increased by $68.6 million, or 143.0%, for the year ended December 31, 2022 compared to the year ended December 31, 2021 and for the year ended December 31, 2021 compared to the year ended December 31, 2020, respectively. Items deducted from or added to earnings from operations to arrive at net earnings include interest income, interest expense, gains (losses) on foreign currency transactions and other, income tax expense and non-controlling interests. For a discussion of these items, see “Non-Operating Income (Expense)” and “Taxes” below in this Item 7.
Non-GAAP Measures - Adjusted EBITDA
We define Adjusted EBITDA as net earnings (loss) attributable to Century Casinos, Inc. shareholders before interest expense (income), net, income taxes (benefit), depreciation, amortization, non-controlling interests net earnings (losses) and transactions, pre-opening expenses, acquisition costs, non-cash stock-based compensation charges, asset impairment costs, loss (gain) on disposition of fixed assets, discontinued operations, (gain) loss on foreign currency transactions, cost recovery income and other, gain on business combination and certain other one-time transactions. Expense related to the Master Lease is included in the interest expense (income), net line item. Intercompany transactions consisting primarily of management and royalty fees and interest, along with their related tax effects, are excluded from the presentation of net earnings (loss) attributable to Century Casinos, Inc. shareholders and Adjusted EBITDA reported for each segment. Not all of the aforementioned items occur in each reporting period, but have been included in the definition based on historical activity. These adjustments have no effect on the consolidated results as reported under US generally accepted accounting principles (“US GAAP”). Adjusted EBITDA is not considered a measure of performance recognized under US GAAP.
Management believes that Adjusted EBITDA is a valuable measure of the relative performance of the Company and its properties. The gaming industry commonly uses Adjusted EBITDA as a method of arriving at the economic value of a casino operation. Management uses Adjusted EBITDA to evaluate and forecast the operating performance of the Company and its properties as well as to compare results of current periods to prior periods. Management believes that presenting Adjusted EBITDA to investors provides them with information used by management for financial and operational decision making in order to understand the Company’s operating performance and evaluate the methodology used by management to evaluate and measure such performance. Management believes that using Adjusted EBITDA is a useful way to compare the relative operating performance of separate reportable segments by eliminating the above-mentioned items associated with the varying levels of capital expenditures for infrastructure required to generate revenue, and the often high cost of acquiring existing operations. Our computation of Adjusted EBITDA may be different from, and therefore may not be comparable to, similar measures used by other companies within the gaming industry.
‎
The reconciliation of Adjusted EBITDA to net earnings (loss) attributable to Century Casinos, Inc. shareholders is presented below.
For the year ended December 31, 2022
Amounts in thousands
United States
Canada
Poland
Corporate and Other
Total
Net earnings (loss) attributable to Century Casinos, Inc. shareholders
$
24,759
$
6,070
$
5,811
$
(28,664)
$
7,976
Interest expense (income), net (1)
28,531
2,281
(686)
34,854
64,980
Income taxes (benefit)
7,595
2,354
2,326
(19,935)
(7,660)
Depreciation and amortization
19,364
4,754
2,606
27,109
Net earnings attributable to non-controlling interests
-
2,787
2,907
-
5,694
Non-cash stock-based compensation
-
-
-
3,335
3,335
(Gain) loss on foreign currency transactions, cost recovery income and other (2)
(1)
(1,153)
(205)
(1,236)
Loss (gain) on disposition of fixed assets
(121)
Acquisition costs
-
-
-
3,124
3,124
Adjusted EBITDA
$
80,297
$
18,396
$
11,874
$
(7,227)
$
103,340
(1)Expense of $28.5 million related to our Master Lease is included in interest expense (income), net in the United States segment. Expense of $2.3 million related to our CDR land lease is included in interest expense (income), net in the Canada segment. Cash payments related to our Master Lease and CDR land lease were $25.7 million and $2.1 million, respectively, for the period presented. Expense of $7.3 related to the write-off of deferred financing costs in connection with the prepayment of the Macquarie Term Loan is included in interest expense (income), net in the Corporate and Other segment.
(2)Loss of $2.2 million related to the sale of the land and building in Calgary in February 2022 is included in the Canada segment. The loss from the sale was offset by cost recovery income for CDR.
For the year ended December 31, 2021
Amounts in thousands
United States
Canada
Poland
Corporate and Other
Total
Net earnings (loss) attributable to Century Casinos, Inc. shareholders
$
49,628
$
1,124
$
$
(30,570)
$
20,622
Interest expense (income), net (1)
28,229
1,796
(477)
13,110
42,658
Income taxes
-
1,256
4,858
6,371
Depreciation and amortization
18,398
4,904
3,028
26,762
Net earnings attributable to non-controlling interests
-
-
1,156
Non-cash stock-based compensation
-
-
-
2,652
2,652
Gain on foreign currency transactions, cost recovery income and other (2)
(836)
(545)
(887)
(418)
(2,686)
Loss (gain) on disposition of fixed assets
(37)
Adjusted EBITDA
$
95,760
$
9,510
$
2,629
$
(9,973)
$
97,926
(1)Expense of $28.2 million related to our Master Lease is included in interest expense (income), net in the United States segment. Expense of $1.8 million related to our CDR land lease is included in interest expense (income), net in the Canada segment. Cash payments related to our Master Lease and CDR land lease were $25.3 million and $2.0 million, respectively, for the period presented.
(2)Income of $0.8 million is included in the United States segment related to the sale of excess land at Mountaineer, net of related expenses.
‎
For the year ended December 31, 2020
Amounts in thousands
United States
Canada
Poland
Corporate and Other
Total
Net (loss) earnings attributable to Century Casinos, Inc. shareholders
$
(30,571)
$
2,551
$
(1,373)
$
(18,609)
$
(48,002)
Interest expense (income), net (1)
28,357
2,047
12,667
43,098
Income taxes (benefit)
1,023
3,765
(518)
4,848
Depreciation and amortization
17,580
5,264
3,124
26,534
Net earnings (loss) attributable to non-controlling interests
-
(687)
-
(134)
Non-cash stock-based compensation
-
-
-
(214)
(214)
Gain on foreign currency transactions, cost recovery income and other (2)
-
(6,015)
(233)
(6,897)
(13,145)
Impairment - intangible and tangible assets
30,746
3,375
-
1,000
35,121
Loss (gain) on disposition of fixed assets
(43)
Acquisition costs
-
-
-
Adjusted EBITDA
$
47,199
$
11,497
$
$
(10,642)
$
48,398
(1)Expense of $28.4 million related to our Master Lease is included in interest expense (income), net in the United States segment. Expense of $1.5 million related to our CDR land lease is included in interest expense (income), net in the Canada segment. Cash payments related to our Master Lease and CDR land lease were $25.0 million and $1.3 million, respectively, for the period presented.
(2)Income of $6.5 million is included in the Canada segment related to the gain on sale of the casino operations of Century Casino Calgary.
Non-GAAP Measures - Net Debt
We define Net Debt as total long-term debt (including current portion) plus deferred financing costs minus cash and cash equivalents. Net Debt is not considered a liquidity measure recognized under US GAAP. Management believes that Net Debt is a valuable measure of our overall financial situation. Net Debt provides investors with an indication of our ability to pay off all of our long-term debt if it becomes due simultaneously. The reconciliation of Net Debt is presented below.
Amounts in thousands
December 31, 2022
December 31, 2021
Total long-term debt, including current portion
$
349,580
$
181,484
Deferred financing costs
16,844
7,695
Total principal
$
366,424
$
189,179
Less: Cash and cash equivalents
$
101,785
$
107,821
Net Debt
$
264,639
$
81,358
‎
REPORTABLE SEGMENTS
The following discussion provides further detail of consolidated results by reportable segment.
United States
For the year
ended December 31,
2022/2021
2021/2020
Amounts in thousands
$ Change
% Change
$ Change
% Change
Gaming Revenue
$
232,871
$
249,397
$
168,904
$
(16,526)
(6.6%)
$
80,493
47.7%
Pari-mutuel, Sports Betting and iGaming Revenue
8,728
8,492
7,502
2.8%
13.2%
Hotel Revenue
9,159
8,241
5,826
11.1%
2,415
41.5%
Food and Beverage Revenue
12,394
11,761
9,795
5.4%
1,966
20.1%
Other Revenue
5,430
5,394
6,317
0.7%
(923)
(14.6%)
Net Operating Revenue
268,582
283,285
198,344
(14,703)
(5.2%)
84,941
42.8%
Gaming Expenses
(117,731)
(120,316)
(90,553)
(2,585)
(2.1%)
29,763
32.9%
Pari-mutuel, Sports Betting and iGaming Expenses
(6,402)
(6,656)
(6,423)
(254)
(3.8%)
3.6%
Hotel Expenses
(2,568)
(2,315)
(2,056)
10.9%
12.6%
Food and Beverage Expenses
(10,451)
(9,842)
(8,871)
6.2%
10.9%
General and Administrative Expenses
(51,182)
(48,737)
(43,306)
2,445
5.0%
5,431
12.5%
Depreciation and Amortization
(19,364)
(18,398)
(17,580)
5.3%
4.7%
Impairment - Intangible and Tangible Assets
-
-
(30,746)
-
-
(30,746)
(100.0%)
Total Operating Costs and Expenses
(207,698)
(206,264)
(199,535)
1,434
0.7%
6,729
3.4%
Earnings (Loss) from Operations
60,884
77,021
(1,191)
(16,137)
(21.0%)
78,212
6566.9%
Income Tax Expense
(7,595)
-
(1,023)
7,595
100.0%
(1,023)
(100.0%)
Net Earnings (Loss) Attributable to Century Casinos, Inc. Shareholders
24,759
49,628
(30,571)
(24,869)
(50.1%)
80,199
262.3%
Adjusted EBITDA
$
80,297
$
95,760
$
47,199
$
(15,463)
(16.1%)
$
48,561
102.9%
Sports wagering in Colorado became legal on May 1, 2020. We partnered with sports betting operators that are conducting sports wagering under each of the three Colorado master licenses for sports wagering held by our Colorado subsidiaries. One of these mobile sports betting apps launched in July 2020, a second launched in August 2021 and the third launched in September 2022. Each agreement with the sports betting operators provides for a share of net gaming revenue and a minimum revenue guarantee each year.
New table games and unlimited betting began in May 2021 in Colorado.
In December 2020, we entered into an agreement with an iGaming partner to utilize our license with the state of West Virginia to operate an internet and mobile interactive gaming app. The iGaming app launched in April 2021. The agreement provides for a share of net gaming revenue.
In December 2021, we entered into an agreement to sell excess land at Mountaineer. The sale proceeds were shared between us and VICI PropCo and we recorded income related to the sale net of related expenses of $0.8 million in gain (loss) on foreign currency transactions, cost recovery income and other on our consolidated statement of earnings (loss) for the year ended December 31, 2021.
We recorded income tax expense of $7.6 million in the year ended December 31, 2022 due to the release of the US valuation allowance.
The table below provides the closure and reopen dates for casinos in the United States due to COVID-19.
Operating Segment
Closure Date
Reopen Date
Colorado
March 17, 2020
June 15 and June 17, 2020
Missouri
March 17, 2020
June 1, 2020
West Virginia
March 17, 2020
June 5, 2020
‎
The results below are presented to illustrate the changes in net operating revenue in the United States segment for the year ended December 31, 2022 compared to the year ended December 31, 2021 as well as the changes, primarily due to COVID-19, for the year ended December 31, 2021 compared to the year ended December 31, 2020.
Amounts in millions
Q1
Q2
Q3
Q4
YTD
Colorado
10.3
11.6
13.5
11.2
46.6
9.4
12.1
12.5
11.3
45.3
6.7
2.0
10.4
9.5
28.6
2022/2021
0.9
(0.5)
1.0
(0.1)
1.3
9.5%
(4.0%)
8.1%
(1.0%)
2.9%
2021/2020
2.7
10.1
2.1
1.8
16.7
40.9%
499.1%
20.0%
19.3%
58.4%
West Virginia
26.3
29.7
30.4
26.5
112.9
23.9
30.6
31.7
28.8
115.0
25.1
12.2
28.4
24.5
90.2
2022/2021
2.4
(0.9)
(1.3)
(2.3)
(2.1)
9.7%
(2.8%)
(4.2%)
(7.6%)
(1.8%)
2021/2020
(1.2)
18.4
3.3
4.3
24.8
(4.7%)
151.2%
11.9%
17.2%
27.5%
Missouri
28.7
29.0
26.8
24.6
109.1
31.0
34.1
29.7
28.2
123.0
21.6
9.6
23.9
24.5
79.6
2022/2021
(2.3)
(5.1)
(2.9)
(3.6)
(13.9)
(7.6%)
(14.8%)
(9.6%)
(13.1%)
(11.3%)
2021/2020
9.4
24.5
5.8
3.7
43.4
43.4%
253.0%
24.3%
15.7%
54.6%
‎
The results below are presented to illustrate the changes in operating expenses in the United States segment for the year ended December 31, 2022 compared to the year ended December 31, 2021 as well as changes, primarily due to COVID-19, for the year ended December 31, 2021 compared to the year ended December 31, 2020, excluding depreciation and amortization expense and impairment - intangible and tangible assets.
Amounts in millions
Q1
Q2
Q3
Q4
YTD
Colorado
7.1
7.2
8.2
7.5
30.0
6.3
7.2
7.6
7.3
28.4
5.9
1.7
5.7
6.1
19.4
2022/2021
0.8
-
0.6
0.2
1.6
12.7%
-
7.9%
2.7%
5.6%
2021/2020
0.4
5.5
1.9
1.2
9.0
7.1%
323.5%
33.3%
19.7%
46.4%
West Virginia
22.0
24.7
25.1
23.1
94.9
20.4
24.3
25.9
24.3
94.9
23.3
12.7
23.6
21.2
80.8
2022/2021
1.6
0.4
(0.8)
(1.2)
-
7.8%
1.6%
(3.1%)
(4.9%)
-
2021/2020
(2.9)
11.6
2.3
3.1
14.1
(12.4%)
91.3%
9.7%
14.6%
17.5%
Missouri
15.9
16.0
16.2
15.4
63.5
15.7
17.0
16.3
15.5
64.5
15.5
7.3
14.2
14.1
51.1
2022/2021
0.2
(1.0)
(0.1)
(0.1)
(1.0)
1.3%
(5.9%)
(0.6%)
(0.6%)
(1.6%)
2021/2020
0.2
9.7
2.1
1.4
13.4
1.5%
132.9%
14.8%
9.9%
26.2%
2020 and 2021 COVID-19 Restrictions
During the closures of our United States properties in 2020, we suspended marketing initiatives, furloughed employees and reduced operating costs and expenses as much as possible. Additional savings related to gaming-related expenses.
Colorado - In Cripple Creek, table games were closed through December 2020 but the full slot floor was open by the end of 2020. In Central City, table games were closed from June to September 2020 and closed again in December 2020. In addition, after reopening in 2020, CTL’s slot floor was operating at approximately 65% from June to December 2020. Both properties reopened table games in February 2021 with restrictions on the number of gaming positions through the first quarter of 2021. Revenue from sports betting apps was $1.5 million for the year ended December 31, 2021 compared to $0.5 million for the year ended December 31, 2020.
West Virginia - During 2020 through the first quarter of 2021, the gaming floor was operating with reduced hours and at approximately 85% capacity with machines limited to six feet apart with barriers, casino hours of operation were reduced and there were capacity restrictions within the casino. Food and beverage outlets were operating with reduced hours and capacity, the hotel was operating at reduced capacity and the convention spaces were closed through the first quarter of 2021. Revenue from sports betting was $0.6 million for the year ended December 31, 2021 compared to $0.7 million for the year ended December 31, 2020. Revenue from iGaming, which began in 2021, was $0.2 million for the year ended December 31, 2021.
Missouri - After reopening in 2020 through the first quarter of 2021, the casinos operated with reduced hours and approximately 94% of the gaming floors were open. In addition, there were state-wide smoking restrictions in place through May 2021. During the first and second quarters of 2021, gaming revenue was positively impacted by federal stimulus payments.
‎
2022 Results
Colorado - The increase in net operating revenue was primarily due to a second sports betting app that launched in August 2021 and a third sports betting app that launched in September 2022. Each agreement with the sports betting operators provides for a share of net gaming revenue and a minimum revenue guarantee each year. Revenue from sports betting apps was $2.1 million for the year ended December 31, 2022. Gaming revenue increased by $0.6 million, or 1.6%, for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to increased slot revenue at both properties in the third quarter of 2022. Colorado’s operating costs and expenses have increased due to increased payroll resulting from table game operations and no COVID-19 restrictions on food and beverage outlets as well as increased maintenance costs and gaming-related expenses.
West Virginia - The decrease in net operating revenue was primarily due to increased promotional allowances related to complimentary rooms and gaming offers. In addition, gaming revenue and pari-mutuel revenue decreased compared to 2021 due to lower customer volumes believed to be from economic and inflationary factors. Revenue from sports betting was $0.6 million and from iGaming was $0.6 million for the year ended December 31, 2022. West Virginia’s operating costs and expenses remained constant. In March 2022, weekend operating hours increased to 24 hours per day from 19 hours per day.
Missouri - Gaming revenue decreased ($14.0) million, or (11.8%), compared to the year ended December 31, 2021. The decrease in gaming revenue was due to the positive impact of the stimulus payments in 2021 and decreases in the second half of 2022 due to lower customer volumes believed to be from economic and inflationary factors and decreased table game offerings due to staffing issues. In addition, revenue at our Caruthersville location was negatively impacted by disruptions in operations due to the record low water levels in the Mississippi River that caused us to relocate the casino from the riverboat and barge to a land-based pavilion. During the transition, there were fewer slot machines and table games operating. The transition was completed in December 2022 and we believe that there will not be a material impact to operations in this temporary location while we are constructing the new land-based casino. Operating costs and expenses decreased due to decreased gaming-related expenses offset by minimum wage increases in Missouri and expenses at Caruthersville related to low water levels in the Mississippi River beginning in August 2022.
We continue to follow any government and local health board mandates related to COVID-19 and will adjust operations if there are any further COVID-19 or other health-related impacts.
A reconciliation of net earnings (loss) attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the “Non-GAAP Measures - Adjusted EBITDA” discussion above in this Item 7.
‎
Canada
For the year
ended December 31,
2022/2021
2021/2020
Amounts in thousands
$ Change
% Change
$ Change
% Change
Gaming Revenue
$
43,972
$
25,604
$
30,319
$
18,368
71.7%
$
(4,715)
(15.6%)
Pari-mutuel, Sports Betting and iGaming Revenue
10,879
10,356
10,158
5.1%
1.9%
Hotel Revenue
942.2%
(39)
(46.4%)
Food and Beverage Revenue
10,860
5,606
5,832
5,254
93.7%
(226)
(3.9%)
Other Revenue
5,392
4,817
3,847
11.9%
25.2%
Net Operating Revenue
71,572
46,428
50,240
25,144
54.2%
(3,812)
(7.6%)
Gaming Expenses
(9,952)
(4,730)
(5,583)
5,222
110.4%
(853)
(15.3%)
Pari-mutuel, Sports Betting and iGaming Expenses
(15,747)
(13,079)
(12,878)
2,668
20.4%
1.6%
Hotel Expenses
(247)
(45)
(69)
448.9%
(24)
(34.8%)
Food and Beverage Expenses
(9,067)
(4,663)
(4,921)
4,404
94.4%
(258)
(5.2%)
General and Administrative Expenses
(18,190)
(14,473)
(15,257)
3,717
25.7%
(784)
(5.1%)
Depreciation and Amortization
(4,754)
(4,904)
(5,264)
(150)
(3.1%)
(360)
(6.8%)
Impairment - Intangible and Tangible Assets
-
-
(3,375)
-
-
(3,375)
(100.0%)
Gain on Sale of Casino Operations
-
-
6,457
-
-
(6,457)
(100.0%)
(Loss) on Sale of Assets
(2,154)
-
-
(2,154)
(100.0%)
-
-
Total Operating Costs and Expenses
(60,111)
(41,894)
(40,890)
18,217
43.5%
1,004
2.5%
Earnings from Operations
11,461
4,534
9,350
6,927
152.8%
(4,816)
(51.5%)
Income Tax Expense
(2,354)
(1,256)
(3,765)
1,098
87.4%
(2,509)
(66.6%)
Net Earnings Attributable to Non-controlling Interests
(2,787)
(932)
(553)
1,855
199.0%
68.5%
Net Earnings Attributable to Century Casinos, Inc. Shareholders
6,070
1,124
2,551
4,946
440.0%
(1,427)
(55.9%)
Adjusted EBITDA
$
18,396
$
9,510
$
11,497
$
8,886
93.4%
$
(1,987)
(17.3%)
We sold the casino operations of CAL in December 2020, which impacts comparability of the Calgary operating segment in 2021. We sold the land and building of CAL in February 2022, as a result of which we transferred the lease agreement for the casino premises to the buyer and stopped operating Century Sports.
The AGLC approved the relocation of a competing casino to a new site approximately eight miles south of Century Downs that opened in late November 2022. An increase in competitors close to our casino at Century Downs could have a negative impact on financial results at this location. In addition, in January 2022, the AGLC removed the moratorium on gaming facilities. While we do not expect new gaming facilities in the markets in which we operate, an increase in competitors could have a negative impact on our results of operations in Alberta.
On February 28, 2023, the AGLC approved a temporary increase from the current 15% of slot machines net sales retained by casinos to 17% effective from April 1, 2023 through March 31, 2025. The increase in slot machine net sales is expected to have a positive impact on net operating revenue and results of operations at our Canadian properties.
Results in US dollars were impacted by a (3.8%) exchange rate decrease and 6.5% exchange rate increase in the average rates between the US dollar and the Canadian dollar for the year ended December 31, 2022 compared to the year ended December 31, 2021 and the year ended December 31, 2021 compared to the year ended December 31, 2020, respectively.
The table below provides the closure and reopen dates for casinos in Canada due to COVID-19.
Closure Date
Reopen Date
March 17, 2020
June 13, 2020
December 13, 2020
June 10, 2021
‎
The results below are presented to illustrate changes in net operating revenue, primarily due to COVID-19, in the Canada segment for the year ended December 31, 2022 compared to the year ended December 31, 2021 and the year ended December 31, 2021 compared to the year ended December 31, 2020, respectively.
Amounts in millions
Q1
Q2
Q3
Q4
YTD
Edmonton - CAD
13.6
16.8
17.8
15.8
64.0
1.3
5.1
17.8
13.5
37.7
13.1
3.9
13.5
10.2
40.7
2022/2021
12.3
11.7
-
2.3
26.3
926.4%
230.1%
-
16.7%
69.5%
2021/2020
(11.8)
1.2
4.3
3.3
(3.0)
(89.9%)
31.0%
32.0%
31.7%
(7.3%)
Edmonton - USD
10.7
13.2
13.7
11.6
49.2
1.0
4.2
14.2
10.7
30.1
9.8
2.8
10.2
7.8
30.6
2022/2021
9.7
9.0
(0.5)
0.9
19.1
923.5%
216.8%
(3.4%)
8.2%
63.4%
2021/2020
(8.8)
1.4
4.0
2.9
(0.5)
(89.3%)
46.1%
39.6%
37.0%
(1.7%)
Amounts in millions
Q1
Q2
Q3
Q4
YTD
Calgary - CAD
6.7
7.5
8.3
6.6
29.1
1.2
3.1
9.1
7.1
20.5
8.5
2.6
8.6
6.4
26.1
2022/2021
5.5
4.4
(0.8)
(0.5)
8.6
449.4%
144.5%
(8.3%)
(7.5%)
42.0%
2021/2020
(7.3)
0.5
0.5
0.7
(5.6)
(85.7%)
19.6%
5.8%
10.7%
(21.5%)
Calgary - USD
5.3
5.8
6.4
4.9
22.4
1.0
2.5
7.1
5.7
16.3
6.4
1.9
6.4
4.9
19.6
2022/2021
4.3
3.3
(0.7)
(0.8)
6.1
447.1%
134.9%
(11.5%)
(14.2%)
37.1%
2021/2020
(5.4)
0.6
0.7
0.8
(3.3)
(84.9%)
33.5%
10.9%
15.1%
(16.7%)
‎
The results below are presented to illustrate the changes in operating expenses, primarily due to COVID-19, in the Canada segment for the year ended December 31, 2022 compared to the year ended December 31, 2021 and the year ended December 31, 2021 compared to the year ended December 31, 2020, respectively, excluding depreciation and amortization expense, impairment - intangible and tangible assets and gain on sale of casino operations.
Amounts in millions
Q1
Q2
Q3
Q4
YTD
Edmonton - CAD
11.2
13.0
14.3
13.2
51.7
3.7
4.9
12.1
11.8
32.5
11.6
4.1
10.3
7.8
33.8
2022/2021
7.5
8.1
2.2
1.4
19.2
202.7%
165.3%
18.2%
11.9%
59.1%
2021/2020
(7.9)
0.8
1.8
4.0
(1.3)
(68.2%)
19.5%
17.5%
51.3%
(3.8%)
Edmonton - USD
8.9
10.2
10.9
9.7
39.7
3.0
3.9
9.6
9.4
25.9
8.7
2.9
7.8
5.9
25.3
2022/2021
5.9
6.3
1.3
0.3
13.8
196.7%
161.5%
13.5%
3.2%
53.3%
2021/2020
(5.7)
1.0
1.8
3.5
0.6
(65.4%)
34.5%
23.1%
59.3%
2.4%
Amounts in millions
Q1
Q2
Q3
Q4
YTD
Calgary - CAD
4.0
4.2
5.3
4.0
17.5
2.1
2.6
4.7
4.6
14.0
6.0
2.5
5.8
3.6
17.9
2022/2021
1.9
1.6
0.6
(0.6)
3.5
90.5%
61.5%
12.8%
(13.0%)
25.0%
2021/2020
(3.9)
0.1
(1.1)
1.0
(3.9)
(65.0%)
4.0%
(19.0%)
27.8%
(21.8%)
Calgary - USD
3.2
3.3
4.1
2.9
13.5
1.7
2.0
3.8
3.6
11.1
4.5
1.8
4.4
2.7
13.4
2022/2021
1.5
1.3
0.3
(0.7)
2.4
88.2%
65.0%
7.9%
(19.4%)
21.6%
2021/2020
(2.8)
0.2
(0.6)
0.9
(2.3)
(62.0%)
11.1%
(13.6%)
33.3%
(17.2%)
COVID-19 has impacted each year presented above due to closures or restrictions. These impacts are detailed below. During the closures of our Canada properties, we suspended marketing initiatives, furloughed employees and reduced operating costs and expenses as much as possible. We believe that we have captured operating synergies, labor savings and cost savings following the reopening of our Canada properties in June 2021.
2020 Comparability Impacts
Following the March 2020 closures, table games were reopened in mid-September 2020 and closed again in November 2020. Our casinos in Canada were operating with approximately 71% of the slot floor open prior to the second closures in December 2020. Closures of our showroom at CRA also negatively impacted food and beverage revenue at that property in 2020. We received wage subsidies provided by the Canadian government through the Canada Emergency Wage Subsidy (“CEWS”) that was enacted in April 2020 as a result of COVID-19 to help employers offset a portion of their employee wages for a limited period. CEWS reduced operating expenses by CAD 7.4 million ($5.5 million based on the average exchange rate for the year ended December 31, 2020) for the year ended December 31, 2020. We also received rent subsidies provided by the Canadian government through the Canada Emergency Rent Subsidy (“CERS”) that was enacted in November 2020 as a result of COVID-19 to help subsidize for a limited period rent for businesses experiencing a decrease in revenue. CERS reduced operating expenses by CAD 0.5 million ($0.4 million based on the average exchange rate for the year ended December 31, 2020) for the year ended December 31, 2020. In addition, we
sold the casino operations of CAL in December 2020. The sale resulted in a gain on sale of the casino operations which reduced total operating costs and expenses in the Calgary operating segment by $6.5 million for the year ended December 31, 2020.
2021 Comparability Impacts
We reopened the casinos in June 2021. From September 2021 to early February 2022, we required patrons to provide proof of vaccination, a negative rapid test result or an original medical exception letter for entry in order to comply with a government mandate. In accordance with a government mandate, all patrons and employees were required to wear masks while indoors. We continued closures of our showroom and hotel at CRA. These closures and the COVID-19 restrictions on restaurants and hotels through the third quarter of 2021 negatively impacted food and beverage revenue at our casinos. CEWS and CERS reduced operating expenses by CAD 3.1 million ($2.5 million based on the average exchange rate for the year ended December 31, 2021) and by CAD 1.6 million ($1.3 million based on the average exchange rate for the year ended December 31, 2021), respectively, for the year ended December 31, 2021. The sale of the casino operations of CAL decreased net operating revenue by approximately $2.7 million and operating expenses by approximately $2.4 million for the year ended December 31, 2021 compared to the year ended December 31, 2020.
2022 Comparability Impacts
Through early February 2022, we required customers to provide proof of vaccination, a negative rapid test result or an original medical exception letter for entry to comply with a government mandate. In accordance with a government mandate, all customers and employees were required to wear masks while indoors through early March 2022. Since the lifting of these restrictions, we have seen a positive impact in the number of customers coming to our casinos and in operating results. In Calgary, operating costs and expenses in the third quarter of 2022 increased due to hosting the World Professional Chuckwagon Association World Finals. These increases were offset by decreased expenses in 2022 because we no longer operated Century Sports.
A reconciliation of net earnings attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the “Non-GAAP Measures - Adjusted EBITDA” discussion above in this Item 7.
Poland
For the year
ended December 31,
2022/2021
2021/2020
Amounts in thousands
$ Change
% Change
$ Change
% Change
Gaming
$
88,959
$
56,724
$
53,228
$
32,235
56.8%
$
3,496
6.6%
Food and Beverage
100.2%
(41)
(8.9%)
Other Revenue
1,081
(714)
(66.0%)
86.1%
Net Operating Revenue
90,169
58,226
54,271
31,943
54.9%
3,955
7.3%
Gaming Expenses
(56,025)
(35,963)
(34,700)
20,062
55.8%
1,263
3.6%
Food and Beverage Expenses
(3,113)
(2,018)
(2,037)
1,095
54.3%
(19)
(0.9%)
General and Administrative Expenses
(19,220)
(17,660)
(17,193)
1,560
8.8%
2.7%
Depreciation and Amortization
(2,606)
(3,028)
(3,124)
(422)
(13.9%)
(96)
(3.1%)
Total Operating Costs and Expenses
(80,964)
(58,669)
(57,054)
22,295
38.0%
1,615
2.8%
Earnings (Loss) from Operations
9,205
(443)
(2,783)
9,648
2177.9%
2,340
84.1%
Income Tax (Expense) Benefit
(2,326)
(257)
2,069
805.1%
149.6%
Net (Earnings) Loss Attributable to Non-controlling Interests
(2,907)
(224)
2,683
1197.8%
132.6%
Net Earnings (Loss) Attributable to Century Casinos, Inc. Shareholders
5,811
(1,373)
5,371
1220.7%
1,813
132.0%
Adjusted EBITDA
$
11,874
$
2,629
$
$
9,245
351.7%
$
2,285
664.2%
In Poland, casino gaming licenses are granted for a term of six years. These licenses are not renewable. Before a gaming license expires, there is a public notification of the available license and any gaming company can apply for a new license for that city. In September 2022, CPL transferred the casino license for the Warsaw Marriott Hotel expiring in July 2024 to the Warsaw Hilton Hotel, and CPL was granted a new license for the Warsaw Marriott Hotel expiring in September 2028. The next license expiration for a CPL casino occurs in October 2023 in Bielsko-Biala and Katowice and November 2023 in Wroclaw.
Results in US dollars were impacted by a (15.4%) exchange rate decrease and 1.0% exchange rate increase in the average rates between the US dollar and the Polish zloty for the year ended December 31, 2022 compared to the year ended December 31, 2021 and the year ended December 31, 2021 compared to the year ended December 31, 2020, respectively.
‎
The table below provides the closure and reopen dates for casinos in Poland due to COVID-19.
Closure Date
Reopen Date
March 13, 2020
May 18, 2020
December 29, 2020
February 12, 2021
March 20, 2021
May 28, 2021
The results below are presented to illustrate changes in net operating revenue, primarily due to COVID-19, in the Poland segment for the year ended December 31, 2022 compared to the year ended December 31, 2021 and the year ended December 31, 2021 compared to the year ended December 31, 2020, respectively.
Amounts in millions
Q1
Q2
Q3
Q4
YTD
PLN
90.2
94.6
102.2
115.5
402.5
22.4
32.4
82.0
90.7
227.5
66.6
29.6
62.1
51.0
209.3
2022/2021
67.8
62.2
20.2
24.8
175.0
303.4%
191.4%
24.8%
27.3%
77.0%
2021/2020
(44.2)
2.8
19.9
39.7
18.2
(66.4%)
9.9%
32.0%
77.8%
8.7%
USD
21.8
21.7
21.8
24.9
90.2
5.9
8.7
21.2
22.4
58.2
17.1
7.4
16.3
13.5
54.3
2022/2021
15.9
13.0
0.6
2.5
32.0
269.3%
149.8%
2.8%
10.8%
54.9%
2021/2020
(11.2)
1.3
4.9
8.9
3.9
(65.4%)
17.6%
30.1%
66.8%
7.3%
The results below are presented to illustrate the changes in operating expenses, primarily due to COVID-19, in the Poland segment for the year ended December 31, 2022 compared to the year ended December 31, 2021 and the year ended December 31, 2021 compared to the year ended December 31, 2020, respectively, excluding depreciation and amortization expense and impairment - intangible and tangible assets.
Amounts in millions
Q1
Q2
Q3
Q4
YTD
PLN
79.1
82.8
86.8
100.6
349.3
32.0
36.5
68.7
79.4
216.6
62.5
35.9
58.3
51.9
208.6
2022/2021
47.1
46.3
18.1
21.2
132.7
147.2%
126.8%
26.3%
26.7%
61.3%
2021/2020
(30.5)
0.6
10.4
27.5
8.0
(48.8%)
1.7%
17.8%
53.0%
3.8%
USD
19.2
19.0
18.4
21.8
78.4
8.5
9.7
17.8
19.6
55.6
16.0
8.9
15.3
13.8
54.0
2022/2021
10.7
9.3
0.6
2.2
22.8
125.9%
95.9%
3.4%
11.2%
41.0%
2021/2020
(7.5)
0.8
2.5
5.8
1.6
(46.9%)
9.0%
16.3%
42.0%
3.0%
2020 Comparability Impacts
Following the reopening of the casinos in March 2020 through December 2020, there were restrictions on the number of gaming positions that were open at table games. During the closures of our Poland casinos, we reduced operating costs and expenses as much as possible. Tourism was down in Poland due to travel restrictions, which had a negative impact on our results while the casinos were open from March to December 2020.
‎
2021 Comparability Impacts
Through 2021, COVID-19 continued to impact international travel and hotel occupancy in Poland, which had a negative impact on our results. However, since reopening in May 2021, revenue from our Warsaw casinos increased as tourism returned stronger than it did following the reopening in 2020.
2022 Comparability Impacts
In 2022, revenue continued to increase as travel restrictions continued to lessen. Operating costs and expenses, particularly related to gaming, increased due to uninterrupted operations and increased revenue. We have not seen a material negative impact on our operations as a result of the war in Ukraine. Although Poland borders Ukraine, our casinos are not located near the border. However, continued conflict in that region could have a negative impact on our results of operations.
A reconciliation of net earnings (loss) attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the “Non-GAAP Measures - Adjusted EBITDA” discussion above in this Item 7.
Corporate and Other
For the year
ended December 31,
2022/2021
2021/2020
Amounts in thousands
$ Change
% Change
$ Change
% Change
Gaming
$
$
$
$
21.1%
$
(678)
(81.7%)
Food and Beverage Revenue
-
-
-
-
(105)
(100.0%)
Other Revenue
(393)
(94.7%)
(63)
(13.2%)
Net Operating Revenue
1,413
(361)
(63.7%)
(846)
(59.9%)
Gaming Expenses
(133)
(110)
(727)
20.9%
(617)
(84.9%)
Food and Beverage Expenses
-
-
(133)
-
-
(133)
(100.0%)
General and Administrative Expenses
(16,875)
(12,619)
(4,490)
4,256
33.7%
8,129
181.0%
Depreciation and Amortization
(385)
(432)
(566)
(47)
(10.9%)
(134)
(23.7%)
Impairment - Intangible and Tangible Assets
-
-
(1,000)
-
-
(1,000)
(100.0%)
Total Operating Costs and Expenses
(17,393)
(13,161)
(6,916)
4,232
32.2%
6,245
90.3%
Earnings from Equity Investment
3,249
-
-
3,249
100.0%
-
-
Losses from Operations
(13,938)
(12,594)
(5,503)
(1,344)
(10.7%)
(7,091)
(128.9%)
Income Tax Benefit (Expense)
19,935
(4,858)
(578)
24,793
510.4%
(4,280)
(740.5%)
Net Loss Attributable to Century Casinos, Inc. Shareholders
(28,664)
(30,570)
(18,609)
1,906
6.2%
(11,961)
(64.3%)
Adjusted EBITDA
$
(7,227)
$
(9,973)
$
(10,642)
$
2,746
27.5%
$
6.3%
The following operations and agreements make up the reporting unit Cruise Ships & Other in the Corporate and Other reportable segment:
As of December 31, 2022, we had a concession agreement with TUI Cruises for one ship-based casino that ends in the second quarter of 2023. The table below illustrates the ships operating during the years ended December 31, 2020, 2021 and 2022.
Ship
Closure Date
Reopen Date
Contract Expiration
Mein Schiff Herz
March 11, 2020
April 5, 2022
Second Quarter 2023
Mein Schiff 3
March 14, 2020
N/A
May 2020
Mein Schiff 4
March 13, 2020
N/A
May 2021
Mein Schiff 5
March 12, 2020
N/A
May 2021
Mein Schiff 6
March 7, 2020
June 11, 2021
April 2022
We have decreased our operation of ship-based casinos on cruise ships over the past few years, and mutually agreed with cruise lines with which we had concession agreements not to extend certain agreements at their termination dates.
We operated Century Casino Bath from May 2018 through March 2020. The casino was closed in March 2020 due to COVID-19 and CCB’s board of directors determined that CCB would enter into creditors voluntary liquidation, which occurred in May 2020. CCB was deconsolidated as a subsidiary in May 2020 and the company was officially dissolved in October 2022. We recorded a $7.4 million gain related to the deconsolidation to general and administrative expenses for the year ended December 31, 2020. For additional information related to CCB, see Note 1 to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this report.
Through our subsidiary CRM, we had a 7.5% ownership interest in MCE that was sold in November 2021 for nominal consideration. In addition, the consulting services agreement under which CRM provided advice to MCE on casino matters was terminated in November 2021. In March 2020, due to the impact of COVID-19 on MCE, we impaired the $1.0 million MCE investment and wrote-down a $0.3 million receivable related to MCE. For additional information related to MCE, see Note 1 to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this report.
Revenue Highlights
Net operating revenue decreases are due to the cessation of operations at CCB and the decrease in the number of ship-based casinos operated as detailed above.
Operating Expense Highlights
Years ended December 31, 2022 and 2021
General and administrative expenses increased by $4.3 million, or 33.7%, due primarily to increased payroll and stock compensation expense during the year ended December 31, 2022 as well as $3.1 million in acquisition costs related to the pending Nugget Acquisition and Rocky Gap Acquisition. These increased corporate expenses were offset by decreased expenses due to the decrease in the number of ship-based casinos operated as detailed above.
Earnings from our equity investment in Smooth Bourbon were $3.2 million for the year ended December 31, 2022.
Years ended December 31, 2021 and 2020
Gaming and food and beverage expenses for the year ended December 31, 2020 decreased due to casino closures for the ship operations and CCB. General and administrative expenses increased by $8.1 million, or 181.0%, due primarily to the deconsolidation of CCB that resulted in a gain of $7.4 million that we recognized in general and administrative expenses on our statements of earnings (loss) for the year ended December 31, 2020. In addition, payroll and stock compensation expense increased during the year ended December 31, 2021 offset by the write-down of a receivable related to MCE of $0.3 million and a receivable related to LOT of $0.7 million during the year ended December 31, 2020. In March 2020, we assessed the collectability of a receivable from LOT, which previously owned a 33.3% interest in CPL that we acquired in 2013, related to the Poland contingent liability and determined that, due to COVID-19, it was more likely than not that LOT would be unable to repay us for LOT’s portions of payments made by CPL to the Polish Internal Revenue Service (“Polish IRS”) for tax periods in January 2009 to March 2013. Due to COVID-19, LOT grounded flights in March 2020. Based on past efforts to collect on the receivable and analysis of LOT’s ability to pay, we wrote-down the receivable to general and administrative expenses for the year ended December 31, 2020. For additional information related to the Poland contingent liability, see Note 16 to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this report.
In March 2020, we impaired the MCE investment due to an assessment of MCE’s operations resulting from COVID-19. As a result of the impairment, we recorded $1.0 million to impairment - intangible and tangible assets during the year ended December 31, 2020.
A reconciliation of net loss attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the “Non-GAAP Measures - Adjusted EBITDA” discussion above in this Item 7.
‎
Non-Operating Income (Expense)
Non-operating income (expense) for the years ended December 31, 2022, 2021 and 2020 was as follows:
For the year
ended December 31,
2022/2021
2021/2020
Amounts in thousands
$ Change
% Change
$ Change
% Change
Interest Income
$
$
$
$
389.1%
$
2800.0%
Interest Expense
(65,831)
(42,832)
(43,104)
22,999
53.7%
(272)
(0.6%)
Gain (Loss) on Foreign Currency Transactions, Cost Recovery Income and Other
3,378
2,289
(63)
1,089
47.6%
2,352
3733.3%
Non-Operating (Expense)
$
(61,602)
$
(40,369)
$
(43,161)
$
(21,233)
(52.6%)
$
2,792
6.5%
Interest income
Interest income is related to interest earned on our cash reserves and, for 2022, the Acquisition Escrow. In addition, PLN 2.0 million ($0.4 million) and PLN 0.6 million ($0.2 million) in interest income relates to the Polish IRS reimbursement of CPL after CPL prevailed in court challenges of tax audits for the years ended December 31, 2022 and 2021, respectively. See Note 16 to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this report.
Interest expense
Interest expense is related to interest owed on our borrowings under our Goldman Credit Agreement, Macquarie Credit Agreement, our financing obligation with VICI PropCo, our CPL and CRM borrowings, our capital lease agreements and interest expense related to the CDR land lease. We wrote off approximately $7.3 million of deferred financing costs to interest expense in the year ended December 31, 2022 in connection with the prepayment of the Macquarie Term Loan.
Gain (loss) on foreign currency transactions, cost recovery income and other
Cost recovery income of $1.9 million, $0.7 million and $0.2 million was received by CDR for the years ended December 31, 2022, 2021 and 2020, respectively, related to infrastructure built during the development of the Century Downs REC project. The distribution to CDR’s non-controlling shareholders through non-controlling interest is part of a credit agreement between CRM and CDR.
We adjusted the contingent liability related to the CPL tax audits to remove the estimated taxes accrued due to the expiration of the statute of limitations for each tax year. This adjustment reduced the contingent liability by PLN 1.8 million ($0.5 million) and PLN 2.8 million ($0.7 million) for the years ended December 31, 2021 and 2020, respectively. In addition, the Polish IRS reimbursed CPL PLN 1.8 million ($0.4 million) and PLN 0.8 million ($0.2 million) for the years ended December 31, 2022 and 2021, respectively. See Note 16 to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this report.
Taxes
Income tax expense is recorded relative to the jurisdictions that recognize book earnings. During the year ended December 31, 2022, we recognized an income tax benefit of ($7.7) million on pre-tax income of $6.0 million, representing an effective income tax rate of (127.5%), compared to income tax expense of $6.4 million on pre-tax income of $28.1 million, representing an effective income tax rate of 22.6%, and income tax expense of $4.8 million on pre-tax loss of ($43.3) million, representing an effective income tax rate of 11.2% for the years ended December 31, 2021 and 2020, respectively. For further discussion of our effective income tax rates and an analysis of our effective income tax rate compared to the US federal statutory income tax rate, see Note 13 to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this report.
‎
LIQUIDITY AND CAPITAL RESOURCES
Our business is capital intensive, and we rely heavily on the ability of our casinos to generate operating cash flow. We use the cash flows that we generate to maintain operations, fund reinvestment in existing properties for both refurbishment and expansion projects, repay third party debt, 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 bank borrowings or other debt or equity financing activities. In 2020, our liquidity was adversely affected by temporary closures of all of our casinos, hotels and other facilities to comply with quarantines issued by governments to contain the spread of COVID-19, as discussed below.
Cash Flows - Summary
Our cash flows; cash, cash equivalents and restricted cash; and working capital consisted of the following:
For the year
ended December 31,
Amounts in thousands
Net cash provided by operating activities
$
37,397
$
59,190
$
9,005
Net cash used in investing activities
(103,140)
(9,992)
(5,287)
Net cash provided by (used in) financing activities
161,162
(4,713)
3,129
Cash, cash equivalents and restricted cash (1)
$
202,131
$
108,041
$
63,677
Working capital (2)
$
162,606
$
80,247
$
34,459
(1)Cash, cash equivalents and restricted cash as of December 31, 2022 includes $100.2 million related to the Acquisition Escrow.
(2)Working capital is defined as current assets minus current liabilities and includes the $100.2 million related to the Acquisition Escrow.
Operating Activities
Our cash flows from operations have historically been positive and sufficient to fund ordinary operations. Cash flows from operations decreased in the year ended December 31, 2022 compared to the year ended December 31, 2021 because of increased interest payments. We entered into the Goldman Credit Agreement on April 1, 2022 in connection with the Nugget Acquisition, and the principal amount of our debt increased by $183.8 million. Cash flows from operations improved in the year ended December 31, 2021 compared to the year ended December 31, 2020 because our US facilities were open and operating for the entire period and our casinos in Canada and Poland reopened in June 2021 and May 2021, respectively. Cash flow from operations for the year ended December 31, 2020 was favorably impacted by the operations of the properties we acquired in the 2019 Acquisition and negatively impacted by the suspension of our operations due to COVID-19. Trends in our operating cash flows tend to follow trends in earnings from operations, excluding non-cash charges. Please refer also to the consolidated statements of cash flows in the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this report and to management’s discussion of the results of operations above in this Item 7 for a discussion of earnings (loss) from operations.
Investing Activities
Net cash used in investing activities for the year ended December 31, 2022 consisted of $95.0 million for the purchase of the 50% equity interest in Smooth Bourbon, $0.4 million for the purchase of a casino license in Poland, $1.7 million for slot machine purchases, $0.2 million in gaming-related purchases, $0.1 million for outdoor pool and patio furniture and $0.1 million for hotel carpet in West Virginia, $2.4 million for our hotel remodel in Cape Girardeau, $1.6 million for our casino project in Caruthersville, $2.9 million for our stand-alone hotel project in Caruthersville, $0.4 million for renovations to the pavilion in Caruthersville to relocate the casino from the riverboat and barge, $1.8 million for slot machine purchases at our Missouri properties, $0.7 million for slot machine purchases, $0.2 million in gaming-related purchases and $0.3 million in camera upgrades at our Colorado properties, $1.6 million for employee housing in Cripple Creek, $0.7 million in slot machine and table game purchases in Poland, $0.2 million for carpet at Century Downs, $0.2 million for drainage at Century Mile, and $4.1 million in other fixed asset additions at our properties, offset by $6.3 million in proceeds from the sale of the land and building in Calgary, $5.0 million in dividends from Smooth Bourbon and $0.1 million in proceeds from the disposition of assets.
Net cash used in investing activities for the year ended December 31, 2021 consisted of $0.4 million for slot machine purchases, $0.2 million in energy efficiency upgrades, and $0.4 million in gaming floor upgrades at our West Virginia property; $1.3 million for slot machine purchases, $0.4 million in other gaming equipment, $0.4 million in surveillance equipment, $0.6 million in a restaurant remodel, $0.6 million in a hotel remodel, and $0.9 million related to our hotel and land-based casino project at our Missouri properties; $0.1 million in building and improvements, $0.1 million for slot machine purchases and $0.2 million in server upgrades at our Colorado properties; $0.6 million to build employee housing in Cripple Creek; $0.3 million for recreational vehicle stalls at Century Mile and $3.5 million in other fixed asset additions at our properties and $0.1 million in working capital adjustments paid to the buyer of Century Casino Calgary, offset by less than $0.1 million in proceeds from the Century Casino Calgary sale earn out and less than $0.1 million in proceeds from the sale of fixed assets.
Net cash used in investing activities for the year ended December 31, 2020 consisted of a $1.2 million payment related to the working capital adjustment in the 2019 Acquisition; $0.6 million for slot machine purchases at our Colorado properties; $0.1 million for slot chairs at CTL; $1.0 million for slot machine purchases, $0.2 million in rebranding signage, $1.8 million for player tracking systems and upgrades to the slot accounting systems, and $0.6 million in computer upgrades at our Missouri properties; $0.2 million for surveillance upgrades, $1.1 million for slot machine purchases, $0.2 million for racetrack reconditioning, and $0.3 million in computer upgrades at our West Virginia property; $0.5 million for table game equipment, $0.9 million in building updates, and $0.2 million in racetrack and barn updates at our Edmonton properties; $0.2 million for table game equipment at our Calgary properties; $0.3 million in casino improvements in Poland; and $2.5 million in other fixed asset additions at our properties; offset by $6.6 million from the sale of Century Casino Calgary, net of cash assumed by the buyer.
Financing Activities
Net cash provided by financing activities for the year ended December 31, 2022 consisted of $178.5 million in proceeds from borrowings net of principal payments, $5.0 million proceeds from borrowing from VICI PropCo for construction at CCV and $0.3 million in proceeds from the exercise of stock options, offset by $18.9 million in payments of deferred financing costs, $0.4 million to repurchase shares to satisfy tax withholding related to our performance stock unit awards and $3.3 million in distributions to non-controlling interests in CDR and CPL.
Net cash used in financing activities for the year ended December 31, 2021 consisted of $4.2 million in principal payments and a $0.8 million distribution to non-controlling interests in CDR, offset by $0.2 million from the exercise of stock options.
Net cash provided by financing activities for the year ended December 31, 2020 consisted of $4.2 million in proceeds from borrowings net of principal payments, offset by $0.9 million in deferred financing costs and a $0.2 million distribution to non-controlling interests in CDR.
Borrowings and Repayments of Long-Term Debt and Lease Agreements
As of December 31, 2022, our total debt under bank borrowings and other agreements net of $16.8 million related to deferred financing costs was $349.6 million, of which $344.3 million was long-term debt and $5.3 million was the current portion of long-term debt. The current portion relates to payments due within one year under our Goldman Credit Agreement and term loans with UniCredit Bank Austria AG (“UniCredit”). On April 1, 2022, we entered into the Goldman Credit Agreement, which provides for a $350.0 million term loan (“Goldman Term Loan”) and a $30.0 million revolving line of credit. We drew the $350.0 million under the Goldman Term Loan on April 1, 2022 and used the proceeds as well as approximately $29.3 million of cash on hand to fund the PropCo Acquisition, repay the $166.2 million outstanding on the Macquarie Credit Agreement, fund $100.0 million of Acquisition Escrow for the Nugget Acquisition and for related fees and expenses. We intend to repay the current portion of our debt obligations with available cash. For a description of our debt agreements, see Note 6 to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this report. Net Debt was $264.6 million as of December 31, 2022 compared to $81.4 million as of December 31, 2021. The increase in Net Debt was primarily due to a $177.2 million increase in total principal amount of debt. For the definition and reconciliation of Net Debt to the most directly comparable GAAP measure, see “Non-GAAP Measures - Net Debt” above in this Item 7.
The following table lists the 2023 maturities of our debt:
Amounts in thousands
Goldman Credit
Agreement (1)
UniCredit Term Loans
Century Downs
‎Land Lease
Total
$
3,500
$
1,822
$
-
$
5,322
(1)The Term Loan under the Goldman Credit Agreement requires scheduled quarterly payment of $875,000, equal to 0.25% of the original aggregate principal amount of the Term Loan, with the balance due at maturity.
‎
Estimated interest payments based on principal amounts and expected maturities of long-term debt outstanding and management’s forecasted rates for our long-term debt agreements for the year ended December 31, 2023 are $37.6 million. Estimated interest payments do not reflect the impact of future foreign exchange rate changes. The estimate excludes the variable payments related to the CDR land lease and payments under the Master Lease. Cash payments due under the Master Lease for the year ended December 31, 2023 are $27.5 million.
The first option to purchase the land that is currently leased at CDR is on July 1, 2023.
The following table lists the amount of 2023 payments due under our operating and finance lease agreements:
Amounts in thousands
Operating Leases
Finance Leases
$
5,091
$
Common Stock Repurchase Program
The total amount remaining under our stock repurchase program was $14.7 million as of December 31, 2022. We did not repurchase any common stock in 2022, 2021 or 2020. The repurchase program has no set expiration or termination date.
Potential Sources and Uses of Liquidity, and Short-Term and Long-Term Liquidity
Historically, our primary source of liquidity and capital resources has been cash flow from operations. As of December 31, 2022, we had $101.8 million in cash and cash equivalents compared to $107.8 million in cash and cash equivalents at December 31, 2021. We also have $100.2 million of restricted cash in the Acquisition Escrow to fund the purchase price for the OpCo Acquisition. When necessary and available, we supplement the cash flows generated by our operations with funds provided by bank borrowings or other debt or equity financing activities. As of December 31, 2022, we had $30.0 million available on our Revolving Facility. In addition, we have generated cash from sales of existing casino operations and proceeds from the issuance of equity securities upon the exercise of stock options.
Impact of COVID-19
The COVID-19 pandemic had an adverse effect on our results of operations, financial condition and liquidity for 2020 and the first half of 2021. The table below provides a summary of the time periods in which our casinos, hotels and other facilities were closed to comply with quarantines issued by governments to contain the spread of COVID-19.
Operating Segment
Closure Date
Reopen Date
Colorado
March 17, 2020
June 15 and June 17, 2020
Missouri
March 17, 2020
June 1, 2020
West Virginia
March 17, 2020
June 5, 2020
Edmonton
March 17, 2020
June 13, 2020
December 13, 2020
June 10, 2021
Calgary
March 17, 2020
June 13, 2020
December 13, 2020
June 10, 2021
Poland
March 13, 2020
May 18, 2020
December 29, 2020
February 12, 2021
March 20, 2021
May 28, 2021
We estimate that the net cash outflows related to operations during the time they were fully suspended in the first two quarters of 2020 were, on average, approximately $8.0 million per month and that the net cash outflows related to Canada and Poland operations during the time they were fully suspended in 2021 were, on average, approximately $2.7 million per month. As described in “Results of Operations” above, our casinos varied their operations based on the governmental health and safety requirements in the jurisdictions in which they are located.
In March 2020, as a proactive measure to increase our cash position and preserve financial flexibility in light of the uncertainty resulting from the COVID-19 pandemic, we borrowed $9.95 million on our revolving credit facility with Macquarie and $7.4 million on our credit agreement with UniCredit. We repaid the Macquarie revolving credit facility in July 2020 except for a $50,000 letter of credit that we repaid in May 2021. The $7.4 million credit agreement with UniCredit was refinanced in June 2021 to a EUR 6.0 million term loan repayable through December 31, 2025. See Note 6 to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this report for further discussion of the Macquarie Credit Agreement and the UniCredit credit agreement.
We continue to monitor our liquidity and plan to make reductions to marketing and operating expenditures, where possible, if future government mandates or closures are required that would have an adverse impact on us.
Planned Projects, the Nugget Acquisition, the Rocky Gap Acquisition and Sources of Liquidity
Planned capital expenditures in 2023 include approximately $18.2 million in gaming equipment and renovations to various properties. We are constructing a new land-based casino with a small hotel adjacent to and connected with the existing building in Caruthersville. Construction began in December 2022 with completion expected in late 2024. We estimate this project will cost $51.9 million. This project is being financed through VICI PropCo. As of December 31, 2022, we have spent approximately $2.2 million on this project. We estimate that we will spend approximately $38.5 million on this project in 2023, which will be financed by VICI PropCo. We also are building a hotel at our Cape Girardeau location. Construction began in September 2022 and is expected to be completed in the first half of 2024. We estimate this project will cost approximately $30.5 million. We plan to fund the project with cash on hand. As of December 31, 2022, we have spent approximately $2.8 million on this project. We estimate that we will spend approximately $27.4 million on this project in 2023.
In February 2022, we entered into a definitive agreement to purchase (i) 50% of the membership interests in PropCo, and (ii) 100% of the membership interests in OpCo. OpCo owns and operates the Nugget Casino Resort in Sparks, Nevada, and PropCo owns the real property on which the casino is located. At the First Closing, on April 1, 2022, we purchased 50% of the membership interests in PropCo for approximately $95.0 million and PropCo entered into a lease with OpCo for an annual rent of $15.0 million. We used approximately $29.3 million of cash on hand in connection with the First Closing. Subject to approval from the Nevada Gaming Commission, our purchase of 100% of the membership interests in OpCo for approximately $100.0 million (subject to certain adjustments) is expected to close in the second quarter of 2023, at which point we will own the operating assets of Nugget Casino Resort and 50% of the membership interests in PropCo. We also have a five-year option to acquire the remaining 50% of the membership interests in PropCo for $105.0 million plus 2% per annum.
As stated above, in connection with the Nugget Acquisition, we have entered into the Goldman Credit Agreement for (i) $350.0 million in senior secured term loan debt financing to refinance our existing debt under the Macquarie Credit Agreement, fund the Nugget Acquisition, and to pay related expenses, and (ii) a $30.0 million senior secured revolving credit facility. The purchase price for the OpCo Acquisition will be paid from $100.0 million of proceeds of the Goldman Term Loan that were borrowed and deposited in the Acquisition Escrow on the First Closing date.
On August 24, 2022, we entered into a definitive agreement with Lakes Maryland, Golden, and VICI PropCo, pursuant to which we agreed to acquire the operations of Rocky Gap for approximately $56.1 million subject to the conditions and terms set forth therein. Pursuant to a real estate purchase agreement, dated August 24, 2022, by and between Evitts and an affiliate of VICI PropCo, VICI PropCo agreed to acquire the real estate assets relating to Rocky Gap for approximately $203.9 million, subject to the conditions and terms set forth therein. In connection with the closing of this transaction, one of our subsidiaries and a subsidiary of VICI PropCo will enter into an amendment to the Master Lease to (i) add Rocky Gap to the Master Lease, (ii) provide for an initial annual rent for Rocky Gap of approximately $15.5 million, and (iii) extend the initial Master Lease term for 15 years from the date of the amendment (subject to the existing four five-year renewal options). We plan to fund the acquisition with cash on hand.
We may be required to raise additional capital to address our liquidity and capital needs. We have a shelf registration statement with the SEC that became effective in July 2020 under which we may issue, from time to time, up to $100 million of common stock, preferred stock, debt securities and other securities. We intend to renew the shelf registration statement in 2023.
If necessary, we may seek to obtain further term loans, mortgages or lines of credit with commercial banks; sell and leaseback property at our casinos in which we own the land and buildings; or other debt or equity financings to supplement our working capital and investing requirements. Our access to and cost of financing will depend on, among other things, global economic conditions, conditions in the financing markets, the availability of sufficient amounts of financing, our prospects and our credit ratings. A financing transaction may not be available on terms acceptable to us, or at all, and a financing transaction may be dilutive to our current stockholders. The failure to raise the funds necessary to fund our debt service and rent obligations and finance our operations and other capital requirements could have a material and adverse effect on our business, financial condition and liquidity.
In addition, we expect our US domestic cash resources will be sufficient to fund our US operating activities and cash commitments for investing and financing activities. While we currently do not have an intent nor foresee a need to repatriate funds, we could require more capital in the US than is generated by our US operations for operations, capital expenditures or significant discretionary activities such as acquisitions of businesses and share repurchases. If so, we could elect to repatriate earnings from foreign jurisdictions in the form of a cash dividend, which would generally be exempt from taxation with the exception of the adverse impact of withholding taxes. We also could elect to raise capital in the US through debt or equity issuances. We estimate that approximately $37.1 million of our total $101.8 million in cash and cash equivalents at December 31, 2022 is held by our foreign subsidiaries and is not available to fund US operations unless repatriated.
‎
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, transactions, obligations or other relationships with unconsolidated entities that would be expected to have a material current or future effect upon our consolidated financial statements.
Tax Act
During 2018, the Company completed its accounting of the one-time transition tax on undistributed and previously untaxed post-1986 foreign earnings and profits imposed by the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act permits a company to pay the one-time transition tax over eight years on an interest free basis. The remaining cash payments due related to the transition tax total $0.9 million and are expected to be paid $0.2 million in 2023, $0.3 million in 2024, and $0.4 million in 2025.
Critical Accounting Estimates
Management's discussion and analysis of our results of operations and liquidity and capital resources are based on our consolidated financial statements. To prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, we must make estimates and assumptions that affect the amounts reported in the consolidated financial statements. On an ongoing basis, we evaluate these estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions. Our significant accounting policies are discussed in Note 2 to the Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary Data” of this report. Critical estimates inherent in these accounting policies are discussed in the following paragraphs.
Property and Equipment - We have significant capital invested in our property and equipment, which represented approximately 56% of our total assets as of December 31, 2022. Judgments are made in determining the estimated useful lives of assets, salvage values to be assigned to assets and if or when an asset has been impaired. The accuracy of these estimates affects the amount of depreciation expense recognized in our financial results and the extent to which we have a gain or loss on the disposal of the asset. We assign lives to our assets based on our standard policy, which we believe is representative of the useful life of each category of assets. As of December 31, 2022, we have made no changes to our estimates related to useful lives.
We use judgment in estimating future cash flows when we review the carrying value of our property and equipment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable. The factors we consider in performing this assessment include current operating results, trends and prospects, as well as the effect of obsolescence, demand, competition and other economic factors. The accuracy of these estimates affects the carrying value of our property and equipment on our consolidated balance sheets. As of December 31, 2022, we believe that our investments in property and equipment are recoverable.
Goodwill and Intangible Assets - We test goodwill and indefinite-lived intangible assets for impairment as of October 1 each year, or more frequently as circumstances indicate it is necessary. Our identifiable intangible assets include trademarks, player’s club lists and casino licenses. Testing compares the estimated fair values of our reporting units to the reporting units’ carrying values. Assessing goodwill and intangible assets for impairment requires significant judgment and involves detailed qualitative and quantitative business-specific analysis and many individual assumptions that may fluctuate between assessments. Our properties’ estimated future cash flows are a primary assumption in the respective impairment analyses. Cash flow estimates include assumptions regarding factors such as recent and budgeted operating performance, growth percentages as well as competitive impacts from current and anticipated competition, operating margins and current regulatory, social and economic climates. The most significant of the assumptions used in our valuations include revenue growth/decline percentages, discount rates, future terminal values and capital expenditure assumptions. These assumptions are developed for each property based on historical trends, the current markets in which they operate and projections of future performance and competition.
We believe we have used reasonable estimates and assumptions to calculate the fair value of our goodwill and indefinite-lived intangible assets; however, these estimates and assumptions could be materially different from actual results. Unforeseen events, changes in circumstances and market conditions and material differences in estimates of future cash flows could negatively affect the fair value of our assets. If actual market conditions are less favorable than those projected, or if events occur or circumstances change that could reduce the fair value of our goodwill of intangible assets below the carrying value, we will recognize an impairment for the amount by which the carrying value exceeds the reporting unit’s fair value, which may be material.
Our reporting units with goodwill balances as of December 31, 2022 are included within Canada and Poland reportable segments. For the quantitative goodwill impairment test, the current fair value of each reporting unit with goodwill balances is estimated using a combination of (i) the income approach using the discounted cash flow method for projected revenue, EBITDA and working capital, (ii) the market approach observing the price at which comparable companies or shares of comparable companies are bought or sold, and (iii) fair value measurements using either quoted market price or an estimate of fair value using a present value technique. The cost approach, estimating the cost of reproduction or replacement of an asset, was considered but not used because it does not adequately capture an operating company’s intangible value. We make a variety of estimates and judgments about the relevance of these factors to the reporting units in estimating their fair values. During 2020, as a result of the COVID-19 pandemic and associated closures of our casinos, we determined that goodwill was impaired related to certain reporting units. For information about the 2020 impairments, see Note 5 to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this report. As of December 31, 2022, the estimated fair value of our CDR reporting unit exceeded its carrying value by 38%. Goodwill related to our CDR reporting unit was $0.1 million as of December 31, 2022. Key assumptions in the valuation of the CDR reporting unit relate to future earnings at CDR. A downturn in the Alberta economy could negatively affect the key assumptions management used in its analysis.
Our Century Casinos and Casinos Poland trademarks and our casino licenses, with the exception of CPL, are indefinite-lived intangible assets and therefore are not amortized. The fair values are determined primarily using the multi-period excess earnings methodology (“MPEEM”) and the relief from royalty method under the income approach. For information about impairments in 2020, see Note 5 to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this report. As of December 31, 2022, the fair value of our indefinite-lived intangible assets at our CSA reporting unit was 8% in excess of its related carrying value. Intangible assets related to our CSA reporting unit were $9.0 million as of December 31, 2022. Key assumptions in the valuation of intangible assets at the CSA reporting unit relate to future earnings at CSA. A downturn in the Alberta economy could negatively affect the key assumptions management used in its analysis.
Our casino licenses related to CPL, our Mountaineer trademark and our player’s club lists are finite-lived intangible assets and are amortized over their respective useful lives. Finite-lived intangibles are evaluated for impairment annually or more frequently if necessary. There were no impairment charges recorded for the finite-lived intangible assets for the periods presented in this report.
Income Taxes - The determination of our provision for income taxes requires management’s judgment in the use of estimates and the interpretation and application of complex tax laws. Judgment is also required in assessing the timing and amounts of deductible and taxable items. We establish contingency reserves for material, known tax exposures relating to deductions, transactions and other matters involving some uncertainty as to the proper tax treatment of the item. Our reserves reflect our judgment as to the resolution of the issues involved if subject to judicial review. Several years may elapse before a particular matter, for which we have established a reserve, is audited and finally resolved or clarified. While we believe that our reserves are adequate to cover reasonably expected tax risks, issues raised by a tax authority may be finally resolved at an amount different from the related reserve. Such differences could materially increase or decrease our income tax provision in the current and/or future periods. When facts and circumstances change (including a resolution of an issue or statute of limitations expiration), these reserves are adjusted through the provision for income taxes in the period of change. To the extent we determine that we will not realize the benefit of some or all of the deferred tax assets, then these assets will be adjusted through our provision for income taxes in the period in which this determination is made.
Additionally, evaluating the need for, and amount of, a valuation allowance for deferred tax assets often requires significant judgment and extensive analysis of all the positive and negative evidence available to determine whether all or some portion of deferred tax assets will not be realized. Because management believes it is more likely than not that the benefit from certain deferred tax assets will not be realized, a valuation allowance of $9.9 million in foreign jurisdictions has been provided in recognition of these risks. If our assumptions change and it is determined that we will be able to realize tax benefits related to these deferred tax assets, we will realize a reduction in income tax expense in the year such valuation allowances are reversed.
The Tax Act created a new requirement that certain income earned by a controlled foreign corporation (“CFC”) referred to as global intangible low-taxed income (“GILTI”) must be included currently in the gross income of the CFC’s US shareholder. We have elected to account for GILTI in the year the tax is incurred as a current period expense. A tax expense, net of foreign tax credits, of $0.1 million was recorded in income tax (benefit) expense on our consolidated statement of earnings for the year ended December 31, 2022. We did not record a net tax expense related to GILTI for the years ended December 31, 2021 and 2020.
Based on our estimate of future domestic cash generation, debt, liquidity position, and specific plans for reinvestment of foreign subsidiary earnings, there is no expected need for cash repatriation. Therefore, we continue to consider our foreign earnings indefinitely reinvested outside the United States, and no US taxes have been provided for.
See Note 13 to the Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this report for additional discussion of the Tax Act.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Our earnings, cash flows and financial position are exposed to market risks relating to fluctuations in interest rates and foreign currency exchange rates. All of the potential changes noted below are based on information available at December 31, 2022. The majority of our $349.6 million face value of debt outstanding as of December 31, 2022 is variable-rate debt. Each one percentage point change associated with the variable rate debt would result in a $3.5 million change to our annual cash interest expenses.
Foreign Currency Exchange Risk
As a result of our international business presence, we are exposed to foreign currency exchange risk. We transact in foreign currencies and have assets and liabilities denominated in foreign currencies. Therefore, our earnings experience volatility related to movements in foreign currency exchange rates. We have not hedged against foreign currency exchange rate changes related to our international operations. Our foreign subsidiaries transact in their local currencies and hold the majority of their assets and liabilities in their local currency.
The majority of our foreign currency exposure is related to the US dollar versus the Canadian dollar and the Polish zloty. The assets and liabilities of our foreign subsidiaries that are measured in foreign currencies are translated at the applicable period-end exchange rate on our consolidated balance sheets. The resulting translation adjustment is included in accumulated other comprehensive loss as a component of shareholders’ equity. During the years ended December 31, 2022, 2021 and 2020, the change in the relative value of the US dollar against all foreign currencies in which our foreign subsidiaries operate resulted in a $9.7 million increase, $0.5 million increase, and ($3.4) million decrease in accumulated other comprehensive loss within shareholder’s equity, respectively.
We translate revenue and expenses at each period’s average exchange rate on our consolidated statement of earnings (loss) and the gains and losses from translation are included in the results of operations as incurred. A depreciation in the value of the US dollar in relation to all foreign currencies in which our foreign subsidiaries operate would increase the earnings from our foreign operations when translated into US dollars. The timing of the changes in the relative value of the US dollar combined with the operations that are impacted by that change can affect the magnitude of the impact that fluctuations in foreign exchange rates have on our earnings from operations. In 2022, earnings from operations were $67.6 million. For the year ended December 31, 2022, a 10% depreciation in the value of the US dollar relative to the Canadian dollar and the Polish zloty would have resulted in an increase in earnings from operations of $2.3 million.
As of December 31, 2022, our debt is primarily held in US dollars.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data.
See Index to Financial Statements on page.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures - Our management, with the participation of our principal executive officers and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of December 31, 2022. Based on such evaluation, our principal executive officers and principal financial officer have concluded that as of December 31, 2022, our disclosure controls and procedures were effective.
Management’s Annual Report on Internal Control over Financial Reporting - Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control system was designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements.
Our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, our management used the criteria set forth in the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework (2013). Based on this assessment, our management believes that, as of December 31, 2022, our internal control over financial reporting was effective based on those criteria.
The effectiveness of our internal control over financial reporting as of December 31, 2022 has been audited by Grant Thornton LLP, an independent registered public accounting firm, as stated in their report which is included herein on the following page.
Changes in Internal Control Over Financial Reporting - There were no changes in our internal control over financial reporting during the three months ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
‎
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Century Casinos, Inc.
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Century Casinos, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in the 2013 Internal Control-Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2022, and our report dated March 9, 2023 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ GRANT THORNTON LLP
San Francisco, California
March 9, 2023
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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information.
None.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by this item will be included in our definitive proxy statement for our 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after December 31, 2022 and is incorporated herein by reference. Information required by Regulation S-K Item 401 concerning executive officers is included in Part I of this Annual Report on Form 10-K under the caption “Information about our Executive Officers.”
We have adopted a Code of Business Conduct and Ethics that applies to all directors, officers and employees, including our Co-Chief Executive Officers, our Principal Financial Officer and our Principal Accounting Officer. A complete text of this Code of Business Conduct and Ethics is available on our web site (www.cnty.com/investor/governance/facts-overview). Any future amendments to or waivers of the Code of Business Conduct and Ethics will be posted to the Corporate Governance section of our web site.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation.
The information required by this item will be included in our definitive proxy statement for our 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after December 31, 2022 and is incorporated herein by reference.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this item relating to securities ownership of certain beneficial owners and management will be included in our definitive proxy statement for our 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after December 31, 2022 and is incorporated herein by reference. Information relating to securities authorized for issuance under equity compensation plans as of December 31, 2022 is as follows:
Plan Category
Number of securities to be issued upon exercise of outstanding options, warrants and rights
Weighted-average exercise price of outstanding options, warrants and rights
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(a)
(b)
(c)
Equity compensation plans approved by security holders (1)
2,158,862 (2)
$5.18 (3)
2,437,838
Equity compensation plans not approved by security holders
-
-
-
Total
2,158,862
$5.18
2,437,838
(1)These plans consist of the 2005 Equity Incentive Plan, as amended (the “2005 Plan”), which expired in June 2015, and the 2016 Equity Incentive Plan (the “2016 Plan”), which was approved by our stockholders on June 9, 2016.
(2)As of December 31, 2022, there were (i) 1,096,700 shares of our common stock issuable upon exercise of outstanding options issued under the 2005 Plan, (ii) 75,000 shares of our common stock issuable upon exercise of outstanding options issued under the 2016 Plan, and (iii) 987,162 performance stock units (the “PSUs”) issued under the 2016 Plan that, if and when vested, will be settled in shares of our common stock. The amount reported in the table assumes target level performance for the PSUs. Assuming maximum level performance for the PSUs, the number of shares of common stock would increase by 987,162.
(3)The weighted-average exercise price relates only to outstanding stock options.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item will be included in our definitive proxy statement for our 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after December 31, 2022 and is incorporated herein by reference.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accounting Fees and Services.
The information required by this item will be included in our definitive proxy statement for our 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after December 31, 2022 and is incorporated herein by reference.
‎
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits and Financial Statement Schedules.
(a)
List of documents filed with this report
1.
Financial Statements
The financial statements and related notes, together with the reports of our independent registered public accounting firm, appear in Part II, Item 8, “Financial Statements and Supplementary Data”, of this Form 10-K.
2.
Financial Statement Schedules
None.
3.
List of Exhibits
(b)
Exhibits Filed Herewith or Incorporated by Reference to Previous Filings with the Securities and Exchange Commission
(2) Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
2.1
Equity Purchase Agreement, dated as of June 17, 2019, by and among Century Casinos, Inc., MTR Gaming Group, Inc., Isle of Capri Casinos LLC, VICI Properties L.P. and Eldorado Resorts, Inc. is hereby incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on June 17, 2019.
2.2
Membership Interest Purchase Agreement, dated as of February 22, 2022, by and among Marnell Gaming, LLC, as seller, Century Nevada Acquisition, Inc., as buyer, and Century Casinos, Inc., as guarantor, is hereby incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on February 23, 2022.
2.3
Equity Purchase Agreement, dated as of August 24, 2022, by and among Lakes Maryland Development, LLC, Century Casinos, Inc., VICI Properties L.P. and Golden Entertainment, Inc., is hereby incorporated by reference to the Company’s Current Report on Form 8-K filed on August 26, 2022.
(3) Articles of Incorporation and Bylaws
3.1P
Certificate of Incorporation of Century Casinos, Inc. is hereby incorporated by reference to the Company’s Proxy Statement in respect of the 1994 Annual Meeting of Stockholders.
3.2
Amended and Restated Bylaws of Century Casinos, Inc., is hereby incorporated by reference to Exhibit 11.14 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002.
(4) Instruments defining the rights of security holders, including indentures
4.1
Description of Securities, is hereby incorporated by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K filed on March 13, 2020.
4.2
Form of Indenture - Senior Debt Securities is hereby incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-3 filed with the SEC on July 7, 2020.
4.3
Form of Indenture - Subordinated Debt Securities is hereby incorporated by reference to Exhibit 4.5 to the Company’s Registration Statement on Form S-3 filed with the SEC on July 7, 2020.
(10) Material Contracts
10.1
Credit Agreement by and between Century Casinos Europe GmbH and United Horsemen of Alberta Inc., dated October 25, 2012, is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 3, 2012.
10.2
Management Agreement by and between Century Casinos Europe GmbH and United Horsemen of Alberta Inc., dated November 30, 2012, is hereby incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 3, 2012.
10.3
Credit Agreement dated as of November 29, 2013 by and between Century Casinos Europe GmbH and United Horsemen of Alberta Inc., is hereby incorporated by reference to Exhibit 10.2B to the Company’s Current Report on Form 8-K filed on December 3, 2013.
10.4A*
Employment Agreement by and between Century Casinos, Inc. and Erwin Haitzmann as restated on February 18, 2003, is hereby incorporated by reference to Exhibit 10.120 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002.
10.4B*
Amendment No. 1 to Employment Agreement by and between Century Casinos, Inc. and Erwin Haitzmann, dated February 3, 2005, is hereby incorporated by reference to Exhibit 10.143 to the Company’s Current Report on Form 8-K filed on February 10, 2005.
10.4C*
Amendment No. 2 to Employment Agreement by and between Century Casinos, Inc. and Erwin Haitzmann, effective September 1, 2006, is hereby incorporated by reference to Exhibit 10.178 to the Company’s Current Report on Form 8-K filed on October 19, 2006.
10.4D*
Amendment No. 3 to Employment Agreement by and between Century Casinos, Inc. and Erwin Haitzmann, effective November 5, 2009, is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 10, 2009.
10.4E*
Amendment No. 4 to Employment Agreement by and between Century Casinos, Inc. and Erwin Haitzmann, effective November 3, 2014, is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 12, 2014.
10.4F*
Amendment to Employment Agreement, by and among Century Casinos, Inc., Century Resorts International Ltd., Century Casinos Europe GmbH and Erwin Haitzmann, effective September 30, 2015, is hereby incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on November 6, 2015.
10.5A*
Employment Agreement by and between Century Casinos, Inc. and Peter Hoetzinger as restated on February 18, 2003, is hereby incorporated by reference to Exhibit 10.121 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002.
10.5B*
Amendment No. 1 to Employment Agreement by and between Century Casinos, Inc. and Peter Hoetzinger, dated February 3, 2005, is hereby incorporated by reference to Exhibit 10.144 to the Company’s Current Report on Form 8-K filed on February 10, 2005.
10.5C*
Amendment No. 2 to Employment Agreement by and between Century Casinos, Inc. and Peter Hoetzinger, effective September 1, 2006, is hereby incorporated by reference to Exhibit 10.179 to the Company’s Current Report on Form 8-K filed on October 19, 2006.
10.5D*
Amendment No. 3 to Employment Agreement by and between Century Casinos, Inc. and Peter Hoetzinger, effective November 5, 2009, is hereby incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 10, 2009.
10.5E*
Amendment No. 4 to Employment Agreement by and between Century Casinos, Inc. and Peter Hoetzinger effective November 3, 2014, is hereby incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 12, 2014.
10.6*
Revised and Restated Management Agreement, effective September 30, 2006, by and between Century Resorts International Ltd, Century Casinos, Inc. and Flyfish Casino Consulting AG, is hereby incorporated by reference to Exhibit 10.176 to the Company’s Current Report on Form 8-K filed on October 19, 2006.
10.7*
Revised and Restated Management Agreement, effective September 30, 2006, by and between Century Resorts International Ltd, Century Casinos, Inc. and Focus Casino Consulting AG, is hereby incorporated by reference to Exhibit 10.177 to the Company’s Current Report on Form 8-K filed on October 19, 2006.
10.8*
Century Casinos, Inc. Amended and Restated 2005 Equity Incentive Plan, as amended and restated as of December 26, 2014, is hereby incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.
10.9*
Century Casinos, Inc. 2016 Equity Incentive Plan is hereby incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed on April 29, 2016.
10.10A
Share and Real Property Purchase Agreement, dated as of June 29, 2016, by and among Century Casinos Europe GmbH, 851896 Alberta Ltd., Game Plan Developments Ltd., Casino St. Albert Inc., Action ATM Inc., MVP Sports Bar Ltd. and Bruce McPherson, is hereby incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on August 5, 2016.
10.10B
Assignment of Share and Real Property Purchase Agreement, dated July 22, 2016, by and between Century Casinos Europe GmbH and Century Casino St. Albert Inc., is hereby incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on November 1, 2016.
10.10C
First Amendment to Share and Real Property Purchase Agreement, dated as of August 24, 2016, by and among Century Casino St. Albert Inc., Casino St. Albert Inc., Action ATM Inc., MVP Sports Bar Ltd., Game Plan Developments Ltd., 851896 Alberta Ltd. and Bruce McPherson, is hereby incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on November 1, 2016.
10.10D
Second Amendment to Share and Real Property Purchase Agreement, dated as of September 19, 2016, by and among Century Casino St. Albert Inc., Casino St. Albert Inc., Action ATM Inc., MVP Sports Bar Ltd., Game Plan Developments Ltd., 851896 Alberta Ltd. and Bruce McPherson, is hereby incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on November 1, 2016.
10.11*
Form of Century Casinos, Inc. Performance Stock Unit Award Agreement is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 8, 2017.
10.12
Loan Agreement dated August 13, 2018, by and among Century Resorts Management GmbH, Century Casinos, Inc. and UniCredit Bank Austria AG is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 16, 2018.
10.13*
Employment Agreement by and between Century Casinos, Inc. and Margaret Stapleton, effective November 18, 2019 is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 20, 2019.
10.14A
Credit Agreement, dated as of December 6, 2019, among the Company, as borrower, the Company’s subsidiaries party thereto, Macquarie Capital Funding LLC, as swingline lender, administrative agent and collateral agent, Macquarie Capital (USA) Inc., as sole lead arranger and sole bookrunner, and the Lenders and L/C Lenders party thereto is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 9, 2019.
10.14B
Amendment No. 2 and Waiver to Credit Agreement, dated as of September 30, 2020, among the Company, as borrower, the Company’s subsidiaries party thereto, Macquarie Capital Funding LLC, as swingline lender, administrative agent and collateral agent, Macquarie Capital (USA) Inc., as sole lead arranger and sole bookrunner, and the Lenders and L/C Lenders party thereto, is hereby incorporated by reference to the Company’s Current Report on Form 8-K/A filed with the SEC on October 16, 2020.
10.14C
Amendment No. 3 to Credit Agreement, dated as of December 15, 2020, among the Company, as borrower, the Company’s subsidiaries party thereto, and Macquarie Capital Funding LLC, as administrative agent, collateral agent and Lender, is hereby incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on December 17, 2020.
10.15A
Lease, dated as of December 6, 2019, among certain of the Company’s subsidiaries named therein, as tenant, and certain of VICI Properties Inc.’s subsidiaries named therein, as landlord is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 11, 2019.
10.15B†
First Amendment to Memorandum of Lease, dated as of May 5, 2020, among certain of the Company’s subsidiaries named therein, as tenant, and certain of VICI Properties Inc.’s subsidiaries named therein, as landlord.
10.15C†
Second Amendment to Lease, dated as of December 14, 2021, among certain of the Company’s subsidiaries named therein, as tenant, and certain of VICI Properties Inc.’s subsidiaries named therein, as landlord.
10.15D
Third Amendment to Lease, dated as of December 1, 2022, among certain of the Company’s subsidiaries named therein, as tenant, and certain of VICI Properties Inc.’s subsidiaries named therein, as landlord is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 5, 2022.
10.16*
Form of Century Casinos, Inc. Option Agreement is hereby incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K filed on March 13, 2020.
10.17
Credit Agreement, dated as of April 1, 2022, among Century Casinos, Inc., as borrower, the subsidiaries of Century Casinos, Inc. party thereto, Goldman Sachs Bank USA, as administrative agent and collateral agent, Goldman Sachs Bank USA and BOFA Securities, Inc., as joint lead arrangers and joint bookrunners, and the Lenders and L/C Lenders party thereto, is hereby incorporated by reference to the Company’s Current Report on Form 8-K filed on April 5, 2022.
(21) Subsidiaries of the Registrant
21†
Subsidiaries of the Registrant
(23) Consents of Experts and Counsel
23†
Consent of Independent Registered Public Accounting Firm - Grant Thornton LLP
(31) Rule 13a-14(a)/15d-14(a) Certifications
31.1†
Certification of Erwin Haitzmann, Co-Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2†
Certification of Peter Hoetzinger, President and Co-Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.3†
Certification of Margaret Stapleton, Chief Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
(32) Section 1350 Certifications
32.1††
Certification of Erwin Haitzmann, Co-Chief Executive Officer, pursuant to 18 U.S.C. Section 1350.
32.2††
Certification of Peter Hoetzinger, President and Co-Chief Executive Officer, pursuant to 18 U.S.C. Section 1350.
32.3††
Certification of Margaret Stapleton, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350.
(99) Additional Exhibits
99.1†
Governmental Regulation and Licensing.
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File, formatted in Inline XBRL and contained in Exhibit 101
* A management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 15(a)(3) of Form 10-K.
† Filed herewith.
†† Furnished herewith.
PFiled on Paper