Edgar Filing: CENTURY CASINOS INC /CO/

form10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2011

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ___________

Commission file number 0-22900

CENTURY CASINOS, INC.

(Exact name of registrant as specified in its charter)

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

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

(Address of principal executive offices, including zip code)

(719) 527-8300

(Registrant’s telephone number, including area code)

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

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

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


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

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

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

23,877,362 shares of common stock, $0.01 par value per share, were outstanding as of November 1, 2011.

CENTURY CASINOS, INC.

FORM 10-Q INDEX

		Page
PART I	FINANCIAL INFORMATION	Number

Item 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets as of September 30, 2011 (unaudited) and December 31, 2010	3
	Condensed Consolidated Statements of Earnings for the Three and Nine Months ended September 30, 2011 and 2010	4
	Condensed Consolidated Statements of Comprehensive (Loss) Earnings for the Three and Nine Months ended September 30, 2011 and 2010	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2011 and 2010	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

PART II	OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 6.	Exhibits	31
	SIGNATURES	31

PART I – FINANCIAL INFORMATION

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
Amounts in thousands, except for share information	2011			2010
	(unaudited)				**
ASSETS
Current Assets:
Cash and cash equivalents	$	21,306		$	21,461
Receivables, net		950			1,088
Prepaid expenses		830			413
Inventories		274			305
Other current assets		1			3
Deferred income taxes		443			197
Total Current Assets		23,804			23,467

Property and equipment, net		99,357			103,956
Goodwill		4,731			4,942
Equity investment		3,034			2,806
Deferred income taxes		1,263			1,219
Other assets		311			336
Total Assets	$	132,500		$	136,726

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt	$	2,106		$	4,203
Accounts payable and accrued liabilities		5,024			5,151
Accrued payroll		2,111			2,329
Taxes payable		1,984			2,277
Deferred income taxes		100			97
Total Current Liabilities		11,325			14,057

Long-term debt, less current portion		7,339			9,305
Deferred income taxes		2,055			1,866
Total Liabilities		20,719			25,228

Commitments and Contingencies

Shareholders’ Equity:
Preferred stock; $0.01 par value; 20,000,000 shares authorized;
no shares issued or outstanding		0			0
Common stock; $0.01 par value; 50,000,000 shares authorized; 23,993,174 and 23,977,061 shares issued, respectively; 23,877,362 and 23,861,249 shares outstanding, respectively		240			240
Additional paid-in capital		75,141			74,930
Accumulated other comprehensive earnings		2,623			4,982
Retained earnings		34,059			31,628
		112,063			111,780
Treasury stock – 115,812 shares at cost		(282	)		(282	)
Total Shareholders’ Equity		111,781			111,498
Total Liabilities and Shareholders’ Equity	$	132,500		$	136,726

** Derived from the Company's audited consolidated balance sheet at December 31, 2010.
See notes to condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

	For the three months ended September 30,						For the nine months ended September 30,
Amounts in thousands, except for per share information	2011			2010			2011			2010
Operating revenue:
Gaming	$	16,236		$	14,348		$	46,989		$	40,169
Hotel, bowling, food and beverage		3,152			2,789			9,536			8,311
Other		956			773			2,895			2,122
Gross revenue		20,344			17,910			59,420			50,602
Less: Promotional allowances		(2,198	)		(1,926	)		(6,157	)		(5,541	)
Net operating revenue		18,146			15,984			53,263			45,061
Operating costs and expenses:
Gaming		7,543			6,289			21,815			17,578
Hotel, bowling, food and beverage		2,565			2,404			7,629			6,742
General and administrative		5,213			4,986			16,429			15,082
Depreciation		1,526			1,529			4,832			4,542
Total operating costs and expenses		16,847			15,208			50,705			43,944
Earnings from equity investment		249			(32	)		723			316
Earnings from operations		1,548			744			3,281			1,433
Non-operating income (expense):
Interest income		6			17			13			39
Interest expense		(186	)		(280	)		(629	)		(861	)
(Losses) gains on foreign currency transactions & other		(27	)		14			162			26
Non-operating income (expense), net		(207	)		(249	)		(454	)		(796	)
Earnings before income taxes		1,341			495			2,827			637
Income tax provision		(82	)		174			396			446
Net earnings	$	1,423		$	321		$	2,431		$	191

Earnings per share:
Basic	$	0.06		$	0.01		$	0.10		$	0.01
Diluted	$	0.06		$	0.01		$	0.10		$	0.01

See notes to condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) EARNINGS

(Unaudited)

	For the three months					For the nine months
	ended September 30,					ended September 30,

Amounts in thousands	2011			2010		2011			2010

Net earnings	$	1,423		$	321	$	2,431		$	191
Foreign currency translation adjustments		(3,733	)		1,259		(2,359	)		339
Comprehensive (loss) earnings	$	(2,310	)	$	1,580	$	72		$	530

See notes to condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	For the nine months ended September 30,
Amounts in thousands	2011			2010

Cash Flows from Operating Activities:

Net earnings	$	2,431		$	191
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		4,832			4,542
Loss on disposition of fixed assets		55			68
Amortization of stock-based compensation		196			386
Amortization of deferred financing costs		51			24
Deferred tax expense		(113	)		479
Earnings from equity investment		(723	)		(316	)

Changes in operating assets and liabilities:
Receivables	$	124		$	78
Prepaid expenses and other assets		(425	)		43
Accounts payable and accrued liabilities		(323	)		(45	)
Inventories		16			(9	)
Other operating assets		(36	)		(83	)
Accrued payroll		(180	)		129
Taxes payable		(252	)		(869	)
Net cash provided by operating activities		5,653			4,618

Cash Flows from Investing Activities:
Purchases of property and equipment	$	(2,128	)	$	(6,441	)
Proceeds from disposition of Century Casino Millennium		0			200
Acquisition of Century Casino Calgary, net of $1,193 cash acquired		0			(9,301	)
Proceeds from disposition of assets		16			64
Net cash used in investing activities		(2,112	)		(15,478	)

Cash Flows from Financing Activities:
Principal repayments	$	(3,680	)	$	(1,298	)
Repurchase of common stock		0			(141	)
Proceeds from equity investment dividend		163			0
Proceeds from exercise of options		15			57
Net cash used in financing activities		(3,502	)		(1,382	)

Continued -

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (continued)

Effect of Exchange Rate Changes on Cash		(194	)		54

(Decrease) in Cash and Cash Equivalents		(155	)		(12,188	)

Cash and Cash Equivalents at Beginning of Period		21,461			36,992
Cash and Cash Equivalents at End of Period	$	21,306		$	24,804
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	607		$	845
Income taxes paid	$	188		$	201

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Please refer to Note 2 of the Company's condensed consolidated financial statements for details of the Company’s acquisition of the Century Casino Calgary in Alberta, Canada in 2010. See notes to condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Century Casinos, Inc. (together with its wholly owned subsidiaries, the “Company”) is an international casino entertainment company. As of September 30, 2011, the Company owned casino operations in North America; operated cruise ship-based casinos on international waters; and owned the management agreement to manage the casino in the Radisson Aruba Resort, Casino & Spa. The Company also owns a 33.3% ownership interest in Casinos Poland Ltd (“CPL”), the owner and operator of seven casinos in Poland. The Company continues to pursue other projects in various stages of development.

The accompanying condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial reporting, the rules and regulations of the Securities and Exchange Commission which apply to interim financial statements and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated.

In the opinion of management, all adjustments considered necessary for fair presentation of financial position, results of operations and cash flows of the Company have been included. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. The results of operations for the period ended September 30, 2011 are not necessarily indicative of the operating results for the full year.

Presentation of Foreign Currency Amounts

Transactions that are denominated in a foreign currency are translated and recorded at the exchange rate in effect on the date of the transaction. Commitments that are denominated in a foreign currency and all balance sheet accounts other than shareholders’ equity are translated and presented based on the exchange rate between such foreign currency and the U.S. dollar at the end of the reported periods. Current period transactions affecting the profit and loss of operations conducted in foreign currencies are valued at the average exchange rate between such foreign currency and the U.S. dollar for the period in which they are incurred.

The exchange rates to the U.S. dollar used to translate balances at the end of the reported periods are as follows:

	September 30,		December 31
Ending Rates	2011		2010
Canadian dollar		1.0389		0.9946
Euros		0.7436		0.7468
Polish zloty		3.2574		2.9641
Source: Pacific Exchange Rate Service

The average exchange rates to the U.S. dollar used to translate balances during each reported period are as follows:

	For the three months ended September 30,				For the nine months ended September 30,
Average Rates	2011		2010		2011		2010
Canadian dollar		0.9797		1.0395		0.9778		1.0362
Euros		0.7077		0.7741		0.7113		0.7612
Polish zloty		2.9369		3.1036		2.8576		3.0492
Source: Pacific Exchange Rate Service

2.	ACQUISITIONS

Century Casino Calgary

On January 13, 2010, the Company, through Century Casinos Europe (“CCE”), acquired 100% of the issued and outstanding shares of Frank Sisson's Silver Dollar Ltd. (“FSSD”) and 100% of the issued and outstanding shares of EGC Properties Ltd. (“EGC”). FSSD and EGC collectively owned and operated the Silver Dollar Casino and related land in Calgary, Alberta, Canada. In November 2010, the Company rebranded the casino under the name Century Casino Calgary.

The total consideration for the transaction was $11.5 million, which consisted of a $10.7 million purchase price plus a net working capital adjustment of $0.8 million. CCE paid $1.0 million of the consideration in November 2009 and the remaining $10.5 million in January 2010. The purchase price was paid from cash on hand. There was no contingent consideration for the transaction.

The Company incurred acquisition costs of approximately $0.3 million. The majority of these costs, which include legal, accounting and valuation fees, were recorded as general and administrative expenses during the fourth quarter of 2009.

The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed based on their estimated fair values on January 13, 2010, the date of acquisition:

	Amounts in thousands
	Acquisition Date	January 13, 2010
	Cash	$1,193
	Accounts receivable	202
	Prepaid expenses	207
	Inventory	56
	Property and equipment	10,977
	Deferred tax asset, net	690
	Total assets acquired	13,325
	Accounts payable and accrued liabilities	429
	Accrued payroll	222
	Total liabilities assumed	651
	Net assets	12,674
	Excess of net assets over purchase consideration (bargain purchase)	(1,180)
	Purchase consideration	11,494

	Cash acquired	(1,193)
	Cash deposit made in 2009	(1,000)
	Net cash paid in 2010	$9,301

During the year ended December 31, 2010, the Company recognized a $1.2 million gain on the bargain purchase associated with the Century Casino Calgary acquisition. The bargain purchase was the result of the fair market value of the assets acquired exceeding the purchase price. Pro forma results of operations for 2010 have not been presented, as the impact on consolidated financial results would not have been material.

3. EQUITY INVESTMENT IN UNCONSOLIDATED SUBSIDIARY

Following is the summarized financial information of CPL as of September 30, 2011, December 31, 2010 and the three and nine months ended September 30, 2011 and 2010:


Amounts in thousands (in USD):	September 30, 2011		December 31, 2010
Balance Sheet:
Current assets	$	4,444	$	4,197
Noncurrent assets	$	11,327	$	10,927
Current liabilities	$	5,624	$	5,503
Noncurrent liabilities	$	3,388	$	3,842

	For the three months ended September 30,					For the nine months ended September 30,
	2011		2010			2011		2010
Operating Results
Net operating revenue	$	13,648	$	8,955		$	38,847	$	33,682
Net earnings	$	747	$	(95	)	$	2,169	$	949

The Company’s maximum exposure to losses in CPL at September 30, 2011 was $3.0 million, the value of its equity investment in CPL.

Changes in the carrying amount of the investment in CPL during the nine months ended September 30, 2011 are as follows:

	Amounts in thousands (in USD)
	Balance – December 31, 2010	$2,806
	Equity Earnings	723
	Effect of foreign currency translation	(332)
	Dividend	(163)
	Balance – September 30, 2011	$3,034

4. GOODWILL

Changes in the carrying amount of goodwill for the nine months ended September 30, 2011 are as follows:

	Amounts in thousands
	Balance – December 31, 2010	$4,942
	Effect of foreign currency translation	($211)
	Balance – September 30, 2011	$4,731

5. PROMOTIONAL ALLOWANCES

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

The Company issues coupons for the purpose of generating future revenue. The cost of the coupons redeemed is applied against the revenue generated on the day of the redemption. In addition, members of the Company’s casinos’ player clubs earn points based on, among other things, their volume of play at the Company’s casinos. Players can accumulate points over time that they may redeem at their discretion under the terms of the program. Points can be redeemed for cash and/or various amenities at the casino, such as meals, hotel stays and gift shop items. The cost of the points is offset against the revenue in the period in which the revenue generated the points. The value of unused or unredeemed points is included in accounts payable and accrued liabilities on the Company’s consolidated balance sheets. The expiration of unused points results in a reduction of the liability.

Promotional allowances presented in the condensed consolidated statement of earnings include the following:

	For the three months ended September 30,				For the nine months ended September 30,
	2011		2010		2011		2010
Amounts in thousands
Hotel, Bowling, Food & Beverage	$	960	$	834	$	2,701	$	2,328
Free Plays or Coupons		566		556		1,513		1,665
Player Points		672		536		1,943		1,548
Total Promotional Allowances	$	2,198	$	1,926	$	6,157	$	5,541

6. INCOME TAXES

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

As of September 30, 2011, the Company has established a valuation allowance for its U.S. deferred tax assets of $5.6 million and a valuation allowance for its foreign deferred tax assets of $0.8 million. The Company assesses the continuing need for a valuation allowance that results from uncertainty regarding its ability to realize the benefits of the Company’s deferred tax assets. The ultimate realization of deferred income tax assets depends on generation of future taxable income during the periods in which those temporary differences become deductible. If the Company concludes that its prospects for the realization of its deferred tax assets are more likely than not, the Company will then reduce its valuation allowance as appropriate and credit income tax expense after considering the following factors:

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

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

·	Tax planning strategies.

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

	For the nine months ended
	September 30,
Amounts in thousands	2011			2010
U.S. Federal - Current	$	72		$	112
U.S. Federal - Deferred		0			0
Provision for U.S. federal income taxes		72			112

Foreign - Current	$	437		$	0
Foreign - Deferred		(113	)		334
Provision for foreign income taxes		324			334
Total provision for income taxes	$	396		$	446

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

Amounts in thousands	For the three months ended September 30, 2011			For the three months ended September 30, 2010
	Pre-tax income (loss)	Income tax	Effective	Pre-tax income (loss)	Income tax	Effective
			tax rate			tax rate
Canada	$557	($130)	(23.3%)	$311	$85	27.3%
United States	(31)	20	(64.5%)	403	81	20.1%
Mauritius	496	27	5.4%	243	7	3.0%
Austria	90	1	0.5%	(338)	1	(0.3%)
Poland *	229	0	0.0%	(124)	0	0.0%
Total	$1,341	($82)	(6.1%)	$495	$174	35.2%
* Poland includes earnings from the equity investment in CPL.

Amounts in thousands	For the nine months ended September 30, 2011			For the nine monhts ended September 30, 2010
	Pre-tax income (loss)	Income tax	Effective	Pre-tax income (loss)	Income tax	Effective
			tax rate			tax rate
Canada	$1,814	$273	15.1%	$1,279	$319	25.0%
United States	(1,087)	72	(6.6%)	(305)	112	(36.7%)
Mauritius	1,629	49	3.0%	453	13	2.9%
Austria	(132)	2	(1.5%)	(992)	2	(0.2%)
South Africa	0	0	0.0%	(6)	0	0.0%
Poland *	603	0	0.0%	208	0	0.0%
Total	$2,827	$396	14.0%	$637	$446	70.0%
* Poland includes earnings from the equity investment in CPL.

7. EARNINGS PER SHARE

The calculation of basic earnings per share considers only weighted average outstanding common shares in the computation. The calculation of diluted earnings per share gives effect to all potentially dilutive securities. The calculation of diluted earnings per share is based upon the weighted average number of common shares outstanding during the period, plus, if dilutive, the assumed exercise of stock options using the treasury stock method and the assumed conversion of other convertible securities (using the “if converted” method) at the beginning of the year, or for the period outstanding during the year for current year issuances. Weighted average shares outstanding for the three and nine months ended September 30, 2011 and 2010 were as follows:

	For the three months ended September 30,				For the nine months ended September 30,
	2011		2010		2011		2010
Weighted average common shares, basic		23,877,362		23,678,795		23,715,224		23,584,079
Dilutive effect of stock options		313,890		172,315		299,915		187,851
Weighted average common shares, diluted		24,191,252		23,851,110		24,015,139		23,771,930

The following stock options are anti-dilutive and have not been included in the calculation of weighted average shares outstanding:

	For the three months ended September 30,				For the nine months ended September 30,
	2011		2010		2011		2010
Stock options		886,710		926,710		886,710		926,710

8. SEGMENT INFORMATION

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

	Long Lived Assets
	As of September 30,		As of December 31,
Amounts in thousands	2011		2010
United States	$	56,263	$	57,904
International:
Canada	$	47,658	$	50,474
Europe		3,281		3,102
Cruise Ships & Other		1,494		1,779
Total international		52,433		55,355
Total	$	108,696	$	113,259

	Net Operating Revenue				Net Operating Revenue
	For the three months ended September 30,				For the nine months ended September 30,
Amounts in thousands	2011		2010		2011		2010
United States	$	8,257	$	7,858	$	23,227	$	21,123
International:
Canada	$	8,301	$	7,256	$	25,294	$	21,953
Cruise Ships & Other	$	1,588		870	$	4,742		1,985
Total international		9,889		8,126		30,036		23,938
Total	$	18,146	$	15,984	$	53,263	$	45,061

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 Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. In addition, Century Casinos, Inc. (together with its subsidiaries, 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 at the time such statements are made. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. These statements are based on the beliefs and assumptions of the management of the Company based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, among others, the risks described in the section entitled “Risk Factors” under Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2010. We caution the reader to carefully consider such factors. Furthermore, such forward-looking statements speak only as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

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

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

OVERVIEW

Since our inception in 1992, we have been primarily engaged in developing and operating gaming establishments and related lodging, 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 the hotel, restaurant, bowling and entertainment facilities that are a part of the casinos.

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

	The Century Casino & Hotel in Edmonton, Alberta, Canada;
	The Century Casino Calgary, Alberta, Canada;
	The Century Casino & Hotel in Cripple Creek, Colorado; and
	The Century Casino & Hotel in Central City, Colorado.

We also operate ship-based casinos on international waters aboard several cruise ships. The following table summarizes the cruise lines for which we have entered into agreements and the associated ships on which we currently operate ship-based casinos.

Cruise Line	Ship
Oceania Cruises	Regatta
Oceania Cruises	Nautica
Oceania Cruises	Insignia
Oceania Cruises	Marina
TUI Cruises	Mein Schiff 1
TUI Cruises	Mein Schiff 2
Windstar Cruises	Wind Surf
Windstar Cruises	Wind Star
Windstar Cruises	Wind Spirit
Regent Seven Seas Cruises	Seven Seas Voyager
Regent Seven Seas Cruises	Seven Seas Mariner
Regent Seven Seas Cruises	Seven Seas Navigator

We hold a 33.3% ownership interest in and actively participate in the management of CPL, the owner and operator of seven full casinos in Poland and account for this investment under the equity method.

In April 2011, CPL was granted a license for a new casino in Sosnowiec, Poland. Sosnowiec is a city of more than 200,000 inhabitants located nearby Katowice, the capital of the province Silesia, which we believe is one of the strongest economic regions in Poland. CPL expects to begin operations in this new casino during the second quarter of 2012. In addition, the license for the existing CPL casino in Wroclav was renewed on June 7, 2011.

In December 2010, we entered into a long-term management agreement to assist in the operation of a casino at the Radisson Aruba Resort, Casino & Spa. We receive a management fee consisting of a fixed fee, plus a percentage of the casino’s gross revenue and a percentage of the casino’s earnings before interest, taxes, depreciation and amortization. We were not required to invest any amounts under the management agreement.

Presentation of Foreign Currency Amounts - The average exchange rates to the U.S. dollar used to translate balances during each reported period are as follows:

	For the three months ended September 30,				For the nine months ended September 30,
Average Rates	2011		2010		2011		2010
Canadian dollar		0.9797		1.0395		0.9778		1.0362
Euros		0.7077		0.7741		0.7113		0.7612
Polish zloty		2.9369		3.1036		2.8576		3.0492
Source: Pacific Exchange Rate Service

RECENT DEVELOPMENTS

Developments that we believe have impacted or will impact our results of operations are discussed below.

Century Casino & Hotel (Edmonton, Alberta, Canada)

The Alberta Gaming and Liquor Commission approved the addition of 16 slot machines to the gaming floor during the third quarter of 2011. The 16 additional machines bring the total slot machine count to 700 at our property in Edmonton.

Century Casino Calgary (Calgary, Alberta, Canada)

During the third quarter of 2011, an additional Ultimate Texas Hold’em table and a Craps table were added to the gaming floor at our property in Calgary.

In addition, we intend to invest $0.2 million to add a 24-hour poker room to the casino in Calgary. The property plans to begin construction of this room during the fourth quarter of 2011 and expects the room to be completed and operational during the first quarter of 2012.

Century Casino & Hotel (Central City, Colorado)

A competitor in Central City, the Johnny Z Casino, completed an expansion project during the third quarter of 2011, adding 50 additional slot machines and a VIP lounge. Management believes the expansion will increase competition in the already competitive Black Hawk and Central City market.

In addition, in September 2011, our property in Central City was voted the second best casino in the greater Denver area by ABC Channel 7 in Denver, Colorado. The Central City property placed second only behind Ameristar Casino in Black Hawk, Colorado.

DISCUSSION OF RESULTS

Century Casinos, Inc. and Subsidiaries

	For the three months ended September 30,												For the nine months ended September 30,
Amounts in thousands	2011			2010			Change			% Change			2011			2010			Change			% Change
Gaming Revenue	$	16,236		$	14,348		$	1,888			13.2	%	$	46,989		$	40,169		$	6,820			17.0	%
Hotel, Bowling, Food and Beverage Revenue		3,152			2,789			363			13.0	%		9,536			8,311			1,225			14.7	%
Other Revenue		956			773			183			23.7	%		2,895			2,122			773			36.4	%
Gross Revenue		20,344			17,910			2,434			13.6	%		59,420			50,602			8,818			17.4	%
Less Promotional Allowances		(2,198	)		(1,926	)		(272	)		14.1	%		(6,157	)		(5,541	)		(616	)		11.1	%
Net Operating Revenue		18,146			15,984			2,162			13.5	%		53,263			45,061			8,202			18.2	%
Gaming Expenses		(7,543	)		(6,289	)		(1,254	)		19.9	%		(21,815	)		(17,578	)		(4,237	)		24.1	%
Hotel, Bowling, Food and Beverage Expenses		(2,565	)		(2,404	)		(161	)		6.7	%		(7,629	)		(6,742	)		(887	)		13.2	%
General and Administrative Expenses		(5,213	)		(4,986	)		(227	)		4.6	%		(16,429	)		(15,082	)		(1,347	)		8.9	%
Total Operating Costs and Expenses		(16,847	)		(15,208	)		(1,639	)		10.8	%		(50,705	)		(43,944	)		(6,761	)		15.4	%
Earnings from Equity Investment		249			(32	)		281			878.1	%		723			316			407			128.8	%
Earnings from Operations		1,548			744			804			108.2	%		3,281			1,433			1,848			129.0	%
Net Earnings	$	1,423		$	321		$	1,102			343.3	%	$	2,431		$	191		$	2,240			1172.8	%

Earnings Per Share
Basic	$	0.06		$	0.01		$	0.05			500.0	%	$	0.10		$	0.01		$	0.09			900.0	%
Diluted	$	0.06		$	0.01		$	0.05			500.0	%	$	0.10		$	0.01		$	0.09			900.0	%

Net operating revenue increased by $2.2 million, or 13.5%, and $8.2 million, or 18.2%, for the three and nine months ended September 30, 2011 compared to the three and nine months ended September 30, 2010, respectively. Net operating revenue increased at all properties except Central City for the three months ended September 30, 2011 compared to the three months ended September 30, 2010. Net operating revenue increased at all properties for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. Following is a breakout of net operating revenue by property for the three and nine months ended September 30, 2011 compared to the three and nine months ended September 30, 2010, respectively:

·	Net operating revenue at our property in Edmonton increased by $0.6 million, or 10.6%, and $1.6 million, or 10.2%

·	Net operating revenue at our property in Calgary increased by $0.5 million, or 24.5%, and $1.7 million, or 29.3%

·	Net operating revenue at our property in Central City decreased by $0.1 million, or 2.0%, and increased by $0.4 million, or 3.3%

·	Net operating revenue at our property in Cripple Creek increased by $0.5 million, or 16.5%, and $1.7 million, or 21.0%

·	Net operating revenue from our ship-based casinos and other increased by $0.7 million, or 82.5%, and $2.8 million, or 138.8%

Total operating costs and expenses increased by $1.6 million, or 10.8%, and $6.8 million, or 15.4%, for the three and nine months ended September 30, 2011 compared to the three and nine months ended September 30, 2010, respectively. Total operating costs increased at all of our properties for both the three and nine months ended September 30, 2011 compared to the three and nine months ended September 30, 2010. Following is a breakout of total operating costs and expenses by property for the three and nine months ended September 30, 2011 compared to the three and nine months ended September 30, 2010, respectively:

·	Total operating costs and expenses at our property in Edmonton increased by $0.3 million, or 8.4%, and $0.9 million, or 7.2%

·	Total operating costs and expenses at our property in Calgary increased by $0.4 million, or 19.4%, and $1.8 million, or 31.0%

·	Total operating costs and expenses at our property in Central City increased by less than $0.1 million, or 0.8%, and $0.5 million, or 4.3%

·	Total operating costs and expenses at our property in Cripple Creek increased by $0.3 million, or 11.2%, and $0.9 million, or 11.5%

·	Total operating costs and expenses for our ship-based casinos and other increased by $0.6 million, or 75.8%, and $2.5 million, or 130.2%

·	Total operating costs and expenses for corporate other decreased by $0.1 million, or 5.8%, and $0.2 million, or 4.9%

Net earnings increased by $1.1 million and $2.2 million for the three and nine months ended September 30, 2011 compared to the three and nine months ended September 30, 2010, respectively. Net earnings increased at all of our properties except Central City for the three months ended September 30, 2011 compared to the three months ended September 30, 2010. Net earnings increased at all of our properties except for Central City and Calgary for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. Following is a breakout of net earnings by property for the three and nine months ended September 30, 2011 compared to the three and nine months ended September 30, 2010, respectively:

·	Net earnings at our property in Edmonton increased by $0.4 million and $0.9 million

·	Net earnings at our property in Calgary increased by $0.2 million and decreased by $0.1 million

·	Net earnings at our property in Central City decreased by $0.1 million and less than $0.1 million

·	Net earnings at our property in Cripple Creek increased by $0.1 million and $0.5 million

·	Net earnings from our ship-based casinos increased by $0.1 million and $0.3 million

Results by property are discussed in further detail in the following pages.

Casinos

Edmonton

	For the three months ended September 30,												For the nine months ended September 30,
Amounts in thousands	2011			2010			Change			% Change			2011			2010			Change			% Change
Gaming	$	4,285		$	3,788		$	497			13.1	%	$	12,821		$	11,453		$	1,368			11.9	%
Hotel, Food and Beverage		1,359			1,237			122			9.9	%		4,230			3,828			402			10.5	%
Other		447			446			1			0.2	%		1,445			1,380			65			4.7	%
Gross Revenue		6,091			5,471			620			11.3	%		18,496			16,661			1,835			11.0	%
Less Promotional Allowances		(239	)		(179	)		(60	)		33.5	%		(705	)		(513	)		(192	)		37.4	%
Net Operating Revenue		5,852			5,292			560			10.6	%		17,791			16,148			1,643			10.2	%
Gaming Expenses		(1,593	)		(1,554	)		(39	)		2.5	%		(4,886	)		(4,663	)		(223	)		4.8	%
Hotel, Food and Beverage Expenses		(980	)		(847	)		(133	)		15.7	%		(2,862	)		(2,558	)		(304	)		11.9	%
General & Administrative Expenses		(1,343	)		(1,204	)		(139	)		11.5	%		(4,104	)		(3,829	)		(275	)		7.2	%
Total Operating Costs and Expenses		(4,289	)		(3,955	)		(334	)		8.4	%		(12,966	)		(12,097	)		(869	)		7.2	%
Earnings from Operations		1,563			1,337			226			16.9	%		4,825			4,051			774			19.1	%
Net Earnings	$	1,149		$	769		$	380			49.4	%	$	3,242		$	2,340		$	902			38.5	%

Three Months Ended September 30, 2011 and 2010

Net operating revenue at our property in Edmonton increased by $0.6 million, or 10.6%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010. The increase is primarily due to an increase in the average exchange rate between the U.S. dollar and Canadian dollar of 5.8% for the three months ended September 30, 2011 as compared to the three ended September 30, 2010. In Canadian dollars, net operating revenue increased $0.2 million, or 4.2%, for the three months ended September 30, 2011 as compared to the three months ended September 30, 2010. The increase in net operating revenue is also due to increased gaming revenue of $0.5 million, or 13.1%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010 due to 16 additional slot machines added to the floor during the third quarter of 2011, increased customer volumes and an increase in table games hold percentage.

Net operating revenue also increased due to higher hotel, food and beverage revenue of $0.1 million, or 9.9%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010. The increase in hotel, food and beverage revenue is mainly the result of an increase in the average exchange rate between the U.S. dollar and Canadian dollar of 5.8% for the three months ended September 30, 2011 as compared to the three months ended September 30, 2010. In Canadian dollars, hotel, food and beverage revenue increased less than $0.1 million, or 3.6%, for the three months ended September 30, 2011 as compared to the three months ended September 30, 2010.

Total operating costs and expenses increased by $0.3 million, or 8.4%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010. In Canadian dollars, total operating costs and expenses increased by $0.1 million, or 2.4%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010. Total operating costs increased mainly due to increased property taxes and maintenance service contracts.

Net earnings increased by $0.4 million for the three months ended September 30, 2011 compared to the three months ended September 30, 2010. In Canadian dollars, net earnings decreased by $0.2 million for the three months ended September 30, 2011 as compared to the three months ended September 30, 2010.

Nine Months Ended September 30, 2011 and 2010

Net operating revenue at our property in Edmonton increased by $1.6 million, or 10.2%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. The increase is primarily due to an increase in the average exchange rate between the U.S. dollar and Canadian dollar of 5.6% for the nine months ended September 30, 2011 as compared to the nine months ended September 30, 2010. In Canadian dollars, net operating revenue increased $0.6 million, or 4.0%, for the nine months ended September 30, 2011 as compared to the nine months ended September 30, 2010. The increase in net operating revenue is also due to increased gaming revenue of $1.4 million, or 11.9%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. The increase in gaming revenue is due to an overall increase in customer volumes and table games hold percentages during 2011.

Net operating revenue also increased due to higher hotel, food and beverage revenue of $0.4 million, or 10.5%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. The increase in hotel, food and beverage revenue was the result of an overall increase in customer volumes during the year, increased food and beverage revenue from the Yuk Yuk’s Comedy Club and an increase in the average exchange rate between the U.S. dollar and Canadian dollar of 5.6% for the nine months ended September 30, 2011 as compared to the nine months ended September 30, 2010. In Canadian dollars, hotel, food and beverage revenue increased $0.2 million, or 4.3%, for the nine months ended September 30, 2011 as compared to the nine months ended September 30, 2010, respectively.

Promotional allowances increased by $0.2 million, or 37.4%, for the nine month ended September 30, 2011 compared to the nine months ended September 30, 2010. In Canadian dollars, promotional allowances increased by $0.2 million, or 29.8%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2011 due to increased player’s club point redemption.

Total operating costs and expenses increased by $0.9 million, or 7.2%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010 primarily due to the increase in the average exchange rate between the U.S. dollar and Canadian dollar of 5.6% for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. In Canadian dollars, total operating costs and expenses increased by $0.2 million, or 1.2%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010.

Net earnings increased by $0.9 million for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. In Canadian dollars, net earnings decreased by $0.2 million for the nine months ended September 30, 2011 as compared to the nine months ended September 30, 2010.

Calgary

	For the three months ended September 30,												For the nine months ended September 30,
Amounts in thousands	2011			2010			Change			% Change			2011			2010			Change			% Change
Gaming	$	1,661		$	1,373		$	288			21.0	%	$	4,825		$	3,878		$	947			24.4	%
Bowling, Food and Beverage		652			491			161			32.8	%		2,363			1,727			636			36.8	%
Other		259			193			66			34.2	%		695			428			267			62.4	%
Gross Revenue		2,572			2,057			515			25.0	%		7,883			6,033			1,850			30.7	%
Less Promotional Allowances		(126	)		(93	)		(33	)		35.5	%		(380	)		(229	)		(151	)		65.9	%
Net Operating Revenue		2,446			1,964			482			24.5	%		7,503			5,804			1,699			29.3	%
Gaming Expenses		(1,018	)		(660	)		(358	)		54.2	%		(2,876	)		(2,033	)		(843	)		41.5	%
Bowling, Food and Beverage Expenses		(592	)		(647	)		55			(8.5	%)		(1,975	)		(1,658	)		(317	)		19.1	%
General & Adminstrative Expenses		(740	)		(747	)		7			(0.9	%)		(2,334	)		(2,051	)		(283	)		13.8	%
Total Operating Costs and Expenses		(2,544	)		(2,131	)		(413	)		19.4	%		(7,762	)		(5,927	)		(1,835	)		31.0	%
Losses from Operations		(98	)		(167	)		69			(41.3	%)		(259	)		(123	)		(136	)		110.6	%
Net Earnings (Loss)	$	74		$	(119	)	$	193			162.2	%	$	(152	)	$	(87	)	$	(65	)		(74.7	%)

Three Months Ended September 30, 2011 and 2010

Net operating revenue at our property in Calgary increased by $0.5 million, or 24.5%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010. Net operating revenue increased due to higher gaming and bowling, food and beverage revenue of $0.5 million, or 24.1%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010. The increase in gaming revenue is due to increased customer volumes and an increase in table games hold percentage. The increase in bowling, food and beverage revenue is due to an increase in the number and types of shows offered in the property’s showrooms, increased food quality at each restaurant and bar, additional customer volumes in the casino and improved customer service.

The increase in net operating revenue is also due to an increase in the average exchange rate between the U.S. dollar and Canadian dollar of 5.8% for the three months ended September 30, 2011 as compared to the three months ended September 30, 2010. In Canadian dollars, net operating revenue increased $0.4 million, or 17.4%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010.

Total operating costs and expenses increased by $0.4 million, or 19.4%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010. The increase in operating costs and expenses is due to additional marketing costs for promotional prizes and events, increased loyalty membership direct mailing costs and additional staffing costs in order to provide improved customer service. In addition, total operating costs and expenses increased due to an increase in the average exchange rate between the U.S. dollar and Canadian dollar for the three months ended September 30, 2011 compared to the three months ended September 30, 2010 of 5.8%. In Canadian dollars, total operating costs and expenses in Calgary increased by $0.3 million, or 12.4%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010.

Net earnings increased by $0.2 million for the three months ended September 30, 2011 compared to the three months ended September 30, 2010. In Canadian dollars, the net earnings decreased by $0.2 million for the three months ended September 30, 2011 compared to the three months ended September 30, 2010.

Nine Months Ended September 30, 2011 and 2010

Net operating revenue at our property in Calgary increased by $1.7 million, or 29.3%. for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. Net operating revenue increased due to higher gaming and bowling, food and beverage revenue of $1.6 million, or 28.2%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010, respectively. The increase in gaming revenue is due to new and converted slot machines added to the gaming floor and overall increased customer volumes during 2011. The increase in bowling, food and beverage revenue is due to new bowling lanes, bowling leagues that utilize our facility, an increase the number and types of shows offered in the property’s showrooms, increased food quality at each restaurant and bar, additional customer volumes in the casino and improved customer service. The increase is also due to an increase in the average exchange rate between the U.S. dollar and Canadian dollar of 5.6% for nine months ended September 30, 2011 as compared to the nine months ended September 30, 2010. In Canadian dollars, net operating revenue increased $1.3 million, or 22.1%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010.

Promotional allowances increased by $0.2 million, or 65.9%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. In Canadian dollars, promotional allowances increased by $0.1 million, or 56.5%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2011 due to the addition of a player’s club point redemption program during the year.

Total operating costs and expenses increased by $1.8 million, or 31.0%, at the Century Casino Calgary during the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. The increase in operating costs and expenses is due to additional marketing costs for radio advertising, promotional prizes and events as well as increased loyalty membership direct mailing costs and additional staffing costs in order to provide improved customer service. In addition, total operating costs and expenses increased due to an increase in the average exchange rate between the U.S. dollar and Canadian dollar of 5.6% for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. In Canadian dollars, total operating costs and expenses in Calgary increased by $1.5 million, or 23.7%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010.

Net earnings decreased by $0.1 million for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. In Canadian dollars, net earnings increased by $0.3 million for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010.

Central City

	For the three months ended September 30,												For the nine months ended September 30,
Amounts in thousands	2011			2010			Change			% Change			2011			2010			Change			% Change
Gaming	$	5,203		$	5,193		$	10			0.2	%	$	14,897		$	14,311		$	586			4.1	%
Hotel, Food and Beverage		701			654			47			7.2	%		1,860			1,758			102			5.8	%
Other		44			38			6			15.8	%		119			113			6			5.3	%
Gross Revenue		5,948			5,885			63			1.1	%		16,876			16,182			694			4.3	%
Less Promotional Allowances		(1,194	)		(1,036	)		(158	)		15.3	%		(3,202	)		(2,951	)		(251	)		8.5	%
Net Operating Revenue		4,754			4,849			(95	)		(2.0	%)		13,674			13,231			443			3.3	%
Gaming Expenses		(2,208	)		(2,162	)		(46	)		2.1	%		(6,424	)		(6,016	)		(408	)		6.8	%
Hotel, Food and Beverage Expenses		(584	)		(519	)		(65	)		12.5	%		(1,622	)		(1,480	)		(142	)		9.6	%
General & Administrative Expenses		(952	)		(885	)		(67	)		7.6	%		(2,724	)		(2,584	)		(140	)		5.4	%
Total Operating Costs and Expenses		(4,279	)		(4,243	)		(36	)		0.8	%		(12,624	)		(12,103	)		(521	)		4.3	%
Earnings from Operations		475			606			(131	)		(21.6	%)		1,050			1,128			(78	)		(6.9	%)
Net Earnings	$	302		$	377		$	(75	)		(19.9	%)	$	673		$	716		$	(43	)		(6.0	%)

Three Months Ended September 30, 2011 and 2010

Net operating revenue at our property in Central City decreased by $0.1 million, or 2.0%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010. The decrease in net operating revenue for the third quarter of 2011 is due to a decrease in slot machine hold percentage and a decrease in the Central City market of 1.29% for the three months ended September 30, 2011 compared to the three months ended September 30, 2011.

Promotional allowances increased by $0.2 million, or 15.3%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010. The increase in promotional allowances is due to a more aggressive player point redemption program offered during the third quarter of 2011. Total operating costs and expenses increased by less than $0.1 million, or 0.8%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010. The increase in total operating costs and expenses is due to increased marketing costs for promotional prizes and giveaways and additional staffing costs.

Net earnings decreased by $0.1 million for the three months ended September 30, 2011 compared to the three months ended September 30, 2010.

Nine Months Ended September 30, 2011 and 2010

Net operating revenue at our property in Central City and increased by $0.4 million, or 3.3%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. The increase in net operating revenue is mainly due to an increase in gaming revenue for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010 due to increased table games revenue generated from craps and player banked poker, increased customer volumes that we believe resulted from the disruption at the Fortune Valley Casino in Central City during the transition of its ownership during the first and second quarters of 2011 and increased revenue from slot machines that were moved from the lower level to the main level of the casino.

Promotional allowances increased by $0.3 million, or 8.5%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. The increase in promotional allowances was due to a more aggressive player point redemption program offered during the third quarter of 2011.

Total operating costs and expenses increased by $0.5 million, or 4.3%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. The increase in total operating costs and expenses is due to increased marketing costs for promotional prizes and giveaways, player participation in bus ridership rewards in which the casino reimburses a portion of players’ bus fare to the casino, increased gaming taxes as a result of higher gaming revenue, and increased staffing costs in order to provide greater customer service.

Net earnings decreased by less than $0.1 million for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010.

Cripple Creek

	For the three months ended September 30,												For the nine months ended September 30,
Amounts in thousands	2011			2010			Change			% Change			2011			2010			Change			% Change
Gaming	$	3,674		$	3,191		$	483			15.1	%	$	10,262		$	8,662		$	1,600			18.5	%
Hotel, Food and Beverage		439			408			31			7.6	%		1,083			998			85			8.5	%
Other		32			28			4			14.3	%		79			80			(1	)		(1.3	%)
Gross Revenue		4,145			3,627			518			14.3	%		11,424			9,740			1,684			17.3	%
Less Promotional Allowances		(639	)		(617	)		(22	)		3.6	%		(1,870	)		(1,847	)		(23	)		1.2	%
Net Operating Revenue		3,506			3,010			496			16.5	%		9,554			7,893			1,661			21.0	%
Gaming Expenses		(1,493	)		(1,225	)		(268	)		21.9	%		(4,013	)		(3,368	)		(645	)		19.2	%
Hotel, Food and Beverage Expenses		(409	)		(391	)		(18	)		4.6	%		(1,170	)		(1,050	)		(120	)		11.4	%
General & Administrative Expenses		(800	)		(755	)		(45	)		6.0	%		(2,347	)		(2,154	)		(193	)		9.0	%
Total Operating Costs and Expenses		(2,957	)		(2,659	)		(298	)		11.2	%		(8,301	)		(7,443	)		(858	)		11.5	%
Earnings from Operations		549			351			198			56.4	%		1,253			450			803			178.4	%
Net Earnings	$	341		$	217		$	124			57.1	%	$	777		$	279		$	498			178.5	%

Three Months Ended September 30, 2011 and 2010

Net operating revenue at our property in Cripple Creek increased by $0.5 million, or 16.5%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010. The increase in net operating revenue is primarily due to an increase in gaming revenue of $0.5 million, or 15.1%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010 due to higher slot revenue from new slot machines, additional table games revenue generated after moving the table games pit from the back of the casino to the front, improved customer service and targeted and higher frequency marketing strategies improving the customer volumes and differentiating our casino from competitors.

Total operating costs and expenses increased by $0.3 million, or 11.2%, for the three months ended September 30, 2011 compared to the three months ended September 30, 2010. The increase in total operating costs and expenses is due to increased marketing costs for more aggressive marketing campaigns, increased slot machine royalty fees in order to provide the latest slot machine products, increased gaming taxes as a result of higher gaming revenue and increased staffing costs in order to provide greater customer service.

Net earnings increased by $0.1 million for the three and nine months ended September 30, 2011 compared to the three months ended September 30, 2010.

Nine Months Ended September 30, 2011 and 2010

Net operating revenue at our property in Cripple Creek increased by $1.7 million, or 21.0%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. The increase is primarily due to an increase in gaming revenue of $1.6 million, or 18.5%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. The increase in gaming revenue is due to higher slot revenue from new slot machines, additional table games revenue generated after moving the table games pit from the back of the casino to the front, improved customer service and targeted and higher frequency marketing strategies improving the customer volumes and differentiating our casino from competitors. Finally, we believe slot gaming revenue also improved partly due to a disruption in operations at the J.P. McGills casino in Cripple Creek during a remodeling project which took place during the first quarter of 2011.

Total operating costs and expenses increased by $0.9 million, or 11.5%, for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. The increase in total operating costs and expenses is due to increased marketing costs for more aggressive marketing campaigns, increased slot machine royalty fees in order to provide the latest slot machine products, increased gaming taxes as a result of higher gaming revenue, increased staffing costs in order to provide greater customer service and increased utility costs from colder temperatures during the first quarter of 2011.

Net earnings increased by $0.5 million for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010.

Cruise Ships and Other

	For the three months ended September 30,											For the nine months ended September 30,
Amounts in thousands	2011			2010			Change		% Change			2011		2010		Change		% Change
Gaming	$	1,413		$	803		$	610		76.0	%	$	4,185	$	1,865	$	2,320		124.4	%
Other		175			67			108		161.2	%		557		121		436		360.3	%
Net Operating Revenue		1,588			870			718		82.5	%		4,742		1,986		2,756		138.8	%
Gaming Expenses		(1,231	)		(689	)