Summary of CENTURY CASINOS INC /CO/

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements, Business Environment and Risk Factors

This quarterly report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, Century Casinos, Inc. (the "Company") may make other written and oral communications from time to time that contain such statements. Forward-looking statements include statements as to industry trends and future expectations of the Company and other matters that do not relate strictly to historical facts and are based on certain assumptions by management. These statements are often identified by the use of words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate," or "continue," and similar expressions or variations. These statements are based on the beliefs and assumptions of the management of the Company based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, among others, the risks described in the section entitled "Risk Factors" under Item 1A in our Annual Report on Form 10-K filed on March 16, 2007. We caution the reader to carefully consider such factors. Furthermore, such forward-looking statements speak only as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

This report includes amounts translated into U.S. dollars from certain foreign currencies. For a description of the currency conversion methodology and exchange rates used for certain transactions, see Note 1 to the condensed consolidated financial statements included elsewhere in this report.

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.

OVERVIEW

Our executive officers review operating results, assess performance and make decisions related to the allocation of resources on a property-by-property basis. We, therefore, believe that each property is an operating segment. In order to provide more detail than would be possible on a consolidated basis, our properties have been grouped as follows to facilitate discussion of our operating results:

Cripple Creek, Colorado includes the operating results of WMCK Venture Corp. ("WMCK") and subsidiaries, which own Womacks Casino and Hotel ("Womacks") in Cripple Creek, Colorado.

Edmonton, Canada includes the operating results of Century Resorts Alberta, Inc. (and its sister company 1214741 Alberta Ltd.), which owns and operates the Century Casino & Hotel in Edmonton, Alberta, Canada.

Caledon, South Africa includes the operating results of Century Casinos Caledon (Pty) Ltd. ("CCAL"), which operates the Caledon Hotel, Spa and Casino, and its related food service operation.

Newcastle, South Africa includes the operating results of Century Casino Newcastle (Pty) Ltd. ("CNEW"), which owns and operates Century Casino Newcastle in Newcastle, South Africa and its related food service operation.

Central City, Colorado includes the operating results of Century Casinos Tollgate, Inc., which owns a majority interest in and operates a casino and hotel in Central City, Colorado.

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All Other Operating Segments includes the operating results of the shipboard operations for which the Company has casino concession agreements and, subsequent to April 13, 2006, the operating results of Century Casino Millennium ("CM") located in Prague, Czech Republic.

Corporate operations include, among other items, the expenses associated with being a public company, including Sarbanes-Oxley Act compliance, the results of our equity investment in Casinos Poland and general corporate overhead expenses.

CONSOLIDATED RESULTS OF OPERATIONS

We reported net operating revenue of $24.7 million and $17.0 million for the three months ended September 30, 2007 and 2006, respectively, and $68.5 million and $38.3 million for the nine months ended September 30, 2007 and 2006, respectively. Casino revenue was $23.2 million and $16.3 million for the three months ended September 30, 2007 and 2006, respectively, and was $64.5 million and $36.7 million for the nine months ended September 30, 2007 and 2006, respectively. Casino expense was $9.2 million and $6.7 million for the three months ended September 30, 2007 and 2006, respectively, and $25.8 million and $14.4 million for the nine months ended September 30, 2007 and 2006, respectively. General and administrative expense was $7.2 million and $5.1 million for the three months ended September 30, 2007 and 2006, respectively. General and administrative expense was $20.0 million and $12.7 million for the nine months ended September 30, 2007 and 2006, respectively. Depreciation expense was $2.0 million and $1.3 million for the three months ended September 30, 2007 and 2006, respectively, and $6.3 million and $3.0 million for the nine months ended September 30, 2007 and 2006, respectively.

Total earnings from operations were $3.6 million and $2.7 million for the three months ended September 30, 2007 and 2006, respectively, and $8.5 million and $5.2 million for the nine months ended September 30, 2007 and 2006, respectively.

We recorded income tax expense of less than $0.1 million and an income tax benefit of less than $0.1 million for the three months ended September 30, 2007 and 2006, respectively. Income tax expense was $0.7 million and $0.4 million for the nine months ended September 30, 2007 and 2006, respectively.

Our net earnings were $1.9 million, or $0.08 per basic share, and $1.9 million, or $0.08 per basic share, for the three months ended September 30, 2007 and 2006, respectively. Net earnings were $4.5 million, or $0.20 per basic share, and $4.9 million, or $0.21 per basic share, for the nine months ended September 30, 2007 and 2006, respectively.

The most significant impacts on reported earnings for the three months ended September 30, 2007 were:

· Our new casinos in Central City, Colorado, Newcastle, South Africa and Edmonton, Canada contributed $7.2 million towards the total increase of $7.7 million in net operating revenue and contributed $4.9 million towards the total increase of $6.9 million in net operating expenses;

· Corporate expenses increased $1.2 million for the three months ended September 30, 2007 compared to the three months ended September 30, 2006, primarily due to a $0.5 million increase in payroll resulting from additional staffing and the amortization of costs associated with restricted stock and stock options issued in July 2007 and $0.1 million in increased legal, accounting and other professional fees expenses. In addition, for the three months ended September 30, 2006, the Company recovered approximately $0.4 million of previously written off loans in conjunction with the sale of our interest in a casino project located in Gauteng, South Africa; and

· Net interest charges increased $0.4 million primarily due to the interest charges on bank debt that funded the construction of the three new casinos.

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The most significant impacts on reported earnings for the nine months ended September 30, 2007 were:

· Our new casinos in Central City, Colorado, Newcastle, South Africa and Edmonton, Canada contributed $29.1 million towards the total increase of $30.1 million in net operating revenue and contributed $22.9 million towards the total increase of $26.9 million in net operating expenses;

· Corporate expenses increased $2.5 million for the nine months ended September 30, 2007 as compared to the nine months ended September 30, 2006 primarily because of $0.5 million in increased travel and communication expenses, $0.7 million in increased professional fees which includes an arbitration with one of our cruise ship based casinos, and $0.6 million in increased payroll due to an increase in the number of corporate employees to support the Company's growth and the amortization of costs associated with restricted stock and stock options issued in July 2007. In addition, for the nine months ended September 30, 2006, the Company recovered approximately $0.4 million of previously written off loans in conjunction with the sale of our interest in a casino project located in Gauteng, South Africa; and

· Net interest charges increased $3.3 million primarily due to the interest charges on bank debt that funded the construction of the three new casinos.

A discussion by segment follows below.

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CRIPPLE CREEK, COLORADO

The operating results of the Cripple Creek, Colorado segment, includes the operations of Womacks. Intercompany transactions, including fees to its parent, interest and their related tax effects have been eliminated within the segment's results. Operational results for the three and nine months ended September 30, 2007 and 2006 are as follows:

                                              For the three months            For the nine months
                                               ended September 30,            ended September 30,
Amounts in thousands                          2007             2006           2007           2006
Operating Revenue
   Casino                                  $     5,392       $   5,126     $    14,742     $  13,768
   Hotel, food and beverage                        444             400           1,104         1,043
 Other (net of promotional allowances)            (825 )          (796 )        (2,336 )      (2,277 )
Net operating revenue                            5,011           4,730          13,510        12,534

Operating Costs and Expenses
   Casino                                        1,716           1,218           4,644         3,590
   Hotel, food and beverage                        450             424           1,211         1,076
   General and administrative                    1,013           1,021           2,851         2,921
   Depreciation                                    399             399           1,183         1,211
      Total operating costs and expenses         3,578           3,062           9,889         8,798
Earnings from operations                         1,433           1,668           3,621         3,736
Interest income                                      3               6               8            12
Interest (expense)                                  28            (103 )            10          (306 )
Other (expense), net                                 -               -              (1 )           -
Earnings before income taxes                     1,464           1,571           3,638         3,442
Income tax expense                                 556             605           1,383         1,307
Net Earnings                               $       908       $     966     $     2,255     $   2,135



Casino Market Data

                                              For the three months             For the nine months
                                               ended September 30,             ended September 30,
                                              2007             2006           2007             2006
Market share of the Cripple Creek gaming
revenue*                                         12.5 %           12.0 %         12.3 %           11.6 %
Average number of slot machines                   586              585            590              584
Market share of Cripple Creek gaming
devices*                                         12.7 %           12.4 %         12.7 %           12.3 %
Average slot machine win per day           $      101       $       94     $       90       $       85
Cripple Creek average slot machine win
per day*                                   $      103       $       96     $       92       $       89

*Source: Colorado Division of Gaming

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The Womacks casino is one of the larger gaming facilities in Cripple Creek. Management continues to focus on the marketing of Womacks through the player's club. Womacks has continued the effort to improve the customer experience by converting 450 slot machines, which represent more than 77% of the total machines on the floor, to Ticket in/Ticket Out ("TITO") devices at September 30, 2007, compared to 63% at September 30, 2006. Management uses points and coupons to attract customers with the expectation of increasing gaming revenue, while monitoring and adjusting the programs as necessary. Based on management's ongoing evaluation of the comp policies at the casino, the cost of points and coupons is in line with management's expectations and prior year results. There were a number of changes made in key management positions at Womacks during the third quarter of 2006, which have contributed to improved results at the property.

In 2008, a casino that is larger than Womacks is expected to open in Cripple Creek. Management believes this casino will have approximately 700 slot machines and 14 table games and will introduce further competition to our casino.

The casino is currently undergoing a $2.0 million renovation project. The Company expects to be able to capitalize a majority of this cost.

During the second quarter of 2007, the Colorado legislature approved a bill banning smoking at Colorado casinos starting January 1, 2008. This could result in fewer customers who smoke or more customers who do not smoke visiting Womacks, which would affect our results.

Three months ended September 30, 2007 compared to 2006

Casino revenue for the three months ended September 30, 2007 was 5.2% higher than during the same period last year, and net operating revenue increased 5.9% as a result of increased marketing efforts which contributed to a 7.4% increase in average slot machine win per day. Womacks' market share of gaming devices increased 2.4% in the three months ended September 30, 2007 over the same period last year. For the entire Cripple Creek market, gaming revenue increased during the three months ended September 30, 2007, closing 2.6% higher than the same period last year.

Casino expense increased by 40.9%, or $0.5 million, for the three months ended September 30, 2007 as compared to the three months ended September 30, 2006, primarily the result of $0.2 million in increased marketing expenditures related to a special promotion in the third quarter of 2007 and a $0.2 million increase in gaming taxes and royalties resulting from the increase in casino revenue for the period.

General and administrative expense remained flat period over period.

Interest expense decreased $0.1 million as the average debt balance for the casino was less than $0.1 million. The casino has repaid a majority of its outstanding debt on the Womacks credit facility, which reduced the casino's average debt balance for the period. The majority of the amount outstanding under the casino's revolving credit facility relates to funding provided to the Corporate segment. Whenever the advances to the Corporate segment exceed the outstanding borrowings, the Cripple Creek segment reports negative interest expense.

Cripple Creek's effective tax rate has remained stable at approximately 38.0% for the three months ended September 30, 2007 as compared to 38.5% for the three months ended September 30, 2006.

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Nine months ended September 30, 2007 compared to 2006

Management believes that January 2007 revenues in Cripple Creek were negatively impacted by a series of winter storms that occurred during the month. Strong revenue growth since that time has offset the January results. Casino revenue for the nine months ended September 30, 2007 was 7.1% higher than during the same period last year and net operating revenue increased 7.8%, the result of successful marketing efforts which contributed to a 5.9% increase in average win per day. Womacks' market share of gaming devices increased 3.3% in the nine months ended September 30, 2007 over the same period in 2006. For the entire Cripple Creek market, gaming revenue increased less than 1% for the nine months ended September 30, 2007 as compared to the nine months ended September 30, 2006.

Casino expense increased by 29.4%, or $1.1 million, for the nine months ended September 30, 2007 as compared to the nine months ended September 30, 2006, primarily the result of $0.3 million in increased marketing expenditures related to a special promotion in the third quarter of 2007, a $0.5 million increase in gaming taxes and royalties resulting from the increase in casino revenue for the period and a $0.2 million increase in payroll.

General and administrative expense remained flat period over period.

Interest expense decreased $0.3 million for the nine months ended September 30, 2007. The casino has repaid a majority of its outstanding debt on the Womacks credit facility, which reduced the casino's average debt balance for the period. The majority of the amount outstanding under the facility relates to funding provided to the Corporate segment. Whenever the advances to the Corporate segment exceed the outstanding borrowings, Cripple Creek segment reports negative interest expense.

Cripple Creek's effective tax rate has remained stable at approximately 38.0% for each of the nine months ended September 30, 2007 and 2006.

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CENTRAL CITY, COLORADO

We opened a casino and hotel in Central City, Colorado on July 11, 2006. Prior to July 11, 2006, operating expenses for this segment consisted primarily of pre-opening and non-capitalizable construction expenditures. Intercompany transactions, including fees to its parent, interest and their related tax effects have been eliminated within the segment's results. The operating results of the Central City, Colorado segment for the three and nine months ended September 30, 2007 and 2006 are as follows:

                                              For the three months           For the nine months
                                              ended September 30,            ended September 30,
Amounts in thousands                          2007            2006           2007           2006
Operating Revenue
   Casino                                  $     6,312      $   4,475     $    16,898     $   4,475
   Hotel, food and beverage                        732            432           1,903           432
 Other (net of promotional allowances)          (1,090 )         (219 )        (3,272 )        (219 )
Net operating revenue                            5,954          4,688          15,529         4,688

Operating Costs and Expenses
   Casino                                        2,441          2,425           6,530         2,468
   Hotel, food and beverage                        597            661           1,709           661
   General and administrative                    1,147            968           3,387         1,663
   Depreciation                                    762            451           2,173           451
      Total operating costs and expenses         4,947          4,505          13,799         5,243
Earnings (loss) from operations                  1,007            183           1,730          (555 )
Interest income                                      6              -               6             -
Interest (expense)                                (734 )       (1,281 )        (2,389 )      (1,766 )
Other (expense), net                                 -              -              (1 )           -
Earnings (loss) before income taxes and
minority interest                                  279         (1,098 )          (654 )      (2,321 )
Income tax expense (benefit)                       191           (247 )           188          (401 )
Earnings (loss) before minority interest            88           (851 )          (842 )      (1,920 )
Minority Interest                                 (224 )         (446 )        (1,149 )      (1,265 )
Net earnings (loss)                        $       312      $    (405 )   $       307     $    (655 )



Casino Market Data
                                              For the three months            For the nine months
                                               ended September 30,            ended September 30,
                                             2007              2006            2007          2006
Market share of the Central City gaming
revenue*                                         28.5 %            21.1 %          27.5 %       N/A
Average number of slot machines                   580               488             572         N/A
Market share of Central City gaming
devices*                                         26.6 %            22.3 %          26.2 %       N/A
Average slot machine win per day          $       115       $       109     $       105         N/A
Central City average slot machine win
per day*                                  $       107       $       115     $       100         N/A

*Source: Colorado Division of Gaming

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Revenue at our Century Casino in Central City has not yet met our expectations. However, gaming revenue has grown consistently since opening, with our highest monthly revenue occurring in September 2007. The property is currently operating with 572 slot machines. We are currently reviewing various strategies to increase revenue, which includes the potential addition of more slot machines in the future. Management has focused on the development of player club memberships, with results being better than expected. We now have approximately 71,000 players in our player club database. Management's marketing strategy continues to focus on direct marketing to the players in our database. After some initially higher than expected costs, casino costs are now in line with management's expectations based on current casino revenue.

Three months ended September 30, 2007 compared to September 30, 2006

Casino revenue for the three months ended September 30, 2007 was 41.1% higher than during the same period last year, and net operating revenue increased 27.0% as a result of increased marketing efforts which contributed to a 5.5% increase in average slot machine win per day. The Century Casino's market share of gaming devices increased 19.3%. For the entire Central City market, gaming revenue increased during the three months ended September 30, 2007, closing 1.6% higher than the same period last year.

Casino expense remained flat period over period. Increases in gaming taxes and other variable expenses were offset by decreases in marketing charges. Our marketing charges for the three months ended September 30, 2006 were higher than usual due to the opening of the casino in July 2006.

General and administrative expense increased 18.5%, or $0.2 million, for the three months ended September 30, 2007 primarily due to increased property taxes and professional fees.

For the three months ended September 30, 2007, the $0.5 million decrease in interest expense relates to interest that we are incurring based on an average debt balance of approximately $22.5 million. In an effort to reduce third party interest charges, we repaid $12.5 million of debt in March 2007, utilizing cash on hand from other Company resources.

The calculation of minority interest is determined prior to the elimination of intercompany management fees and interest.

Because CC Tollgate LLC, the operating company of this segment, is a limited liability company, income taxes are provided for on income that will be allocated to us using an effective tax rate of 38%. Pre-tax income is reduced by the minority interest in determining the income subject to tax.

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Nine months ended September 30, 2007 compared to 2006

Casino revenue and casino expense for the nine months ended September 30, 2007 represent a full nine months of operation. The casino opened in July 2006. Therefore, casino revenue and casino expense for the nine months ended September 30, 2006 is based upon approximately 2.5 months of operation.

General and administrative expense increased $1.7 million for the nine months ended September 30, 2007 as compared to the nine months ended September 30, 2006 primarily due to a $0.8 million increase in property tax assessments, a $0.5 million increase in payroll and a $0.4 million increase in utilities and maintenance fees. The casino opened in July 2006. Prior to this time, a significant portion of general and administrative expenses reflect the cumulative pre-opening costs associated with the project.

For the nine months ended September 30, 2007, the $0.6 million increase in interest expense relates to interest that we are incurring based on an average debt balance of approximately $25.2 million. In an effort to reduce third party interest charges, we repaid $12.5 million of debt in March 2007, utilizing cash on hand from other Company resources. For the nine months ended September 30, 2006, a majority of our interest charges were capitalized towards the cost of the construction of the casino and hotel.

In April 2006, we began allocating pre-tax losses to the minority partner in proportion to its ownership percentage. Prior to this date, by agreement all losses were allocated to the minority partner until its capital account balances were in the same proportion as its ownership percentage. The calculation of minority interest is determined prior to the elimination of intercompany management fees and interest.

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EDMONTON, CANADA

We opened a casino and hotel in Edmonton, Alberta, Canada on November 17, 2006. Prior to this date, operating expenses for this segment consisted primarily of pre-opening and non-capitalizable construction expenditures. Intercompany transactions, including fees to its parent, interest and their related tax effects have been eliminated within the segment's results. The operating results of the Edmonton, Canada segment for the three and nine months ended September 30, 2007 and 2006 are as follows (See next page for results in Canadian dollars):

                                     For the three months        For the nine months
                                     ended September 30,         ended September 30,
Amounts in thousands                  2007          2006          2007          2006
. . .