CNTY 10-Q Quarter ended Sept. 30, 2015

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

OR

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ___________

Commission file number 0-22900

CENTURY CASINOS, INC.

(Exact name of registrant as specified in its charter)

DELAWARE 84-1271317

(State or other jurisdiction of (I.R.S. Employer Identification No.)

incorporation or organization)

455 E . Pikes Peak Ave . , Suite 210, Colorado Springs, Colorado 80903

(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 ☑ No ☐

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

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

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

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

24,404, 2 63 shares of common stock, $0.01 par value per share, were outstanding as of October 26, 2015.

---

INDEX

---

PART I – FINANCIAL INFORMATION

Item 1 . CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED

BALANCE SHEETS (Unaudited)

See notes to condensed consolidated financial statements.

Continued -

---

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)

See notes to condensed consolidated financial statements.

---

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) (Unaudited)

See notes to condensed consolidated financial statements.

---

CENTURY CASINOS, INC. AND SUBSIDIARIES

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

See notes to condensed consolidated financial statements.

---

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

See notes to condensed consolidated financial statements.

---

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

See notes to condensed consolidated financial statements.

---

CENTURY CASINOS, INC. AND SUBSIDIARIES

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

See notes to condensed consolidated financial statements.

---

CENTURY CASINOS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CON SOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Century Casinos, Inc. (“CCI” or the “Company”) is an international casino entertainment company. As of September 30, 2015 , the Company owned casino operations in North America ; held a majority ownership interest in nine casinos throughout Poland , a racetrack and entertainment center (“REC”) in Canada and the pari-mutuel off-track betting network in s outhern Alberta, Canada ; managed cruise ship-based casinos on international waters; manage d a casino in Aruba and had an agreement to provide gaming services in Argentina .

T he Company owns, operates and manages the following casinos through wholly-owned subsidiaries in North America:

T he Company’s subsidiary Century Casinos Europe GmbH (“CCE”) owns 66.6% of Casinos Poland Ltd (“ CPL ” or “Casinos Poland”). CPL is the owner and operator of nine casinos throughout Poland. CPL is consolidated as a majority-owned subsidiary for which the Company has a controlling financial interest. Polish Airports Company (“Polish Airports”) owns the remaining 33.3% of CPL , which is reported as a non-controlling financial interest.

CCE owns 75% of the outstanding shares issued by United Horsemen of Alberta Inc. dba Century Downs Racetrack and Casino (“CDR” or “Century Downs”). CDR operates Century Downs Racetrack and Casino, a REC in Balzac, a north metropolitan area of Calgary, Alberta, Canada. CDR is consolidated as a majority-owned subsidiary for which the Company has a controlling financial interest. The remaining 25% of CDR is owned by unaffiliated shareholders and is reported as a non-controlling financial interest. The casino at CDR opened in April 2015 and the 2015 horse racing season is from April to November. See Note 3 for additional information related to CDR.

CCE owns 75% of the outstanding shares issued by Century Bets! Inc. (“CBS” or “Century Bets”) and CBS is consolidated as a majority-owned subsidiary for which the Company has a controlling financial interest. Rocky Mountain Turf Club (“RMTC”) owns the remaining 25% of CBS, which is reported as a non-controlling financial interest. CBS began operating the pari-mutuel off-track horse betting network in s outhern Alberta in May 2015.

The Company has concession agreements to operate 1 1 ship-based casinos onboard ships of the following three cruise lines: TUI Cruises, Windstar Cruises, and Nova Star Cruises Ltd . In 2015, the Company began operating the ship-based casinos onboard the following three newly launched cruise ships : Windstar Cruises Star Breeze and Star Legend and TUI Cruises Mein Schiff 4. In September 2015, the Company amended its concession agreement with TUI Cruises to include its operation of the ship-based casino s onboard Mein Schiff 5 and Mein Schiff 6 , two new 2,500 passenger cruise ship s that are currently being built and are expected to begin operations in the second quarter of 2016 and 2017 , respectively .

I n March 2015 , the Company mutually agreed with Norwegian Cruise Line Holdings (“No r wegian”) to terminate its concession agreements with Oceania Cruises (“Oceania”) and Regent Seven Seas Cruises (“Regent”) , indirect subsidiaries of Norwegian , effective June 1, 2015 (the “Termination Agreement”). The Company transition ed operation s of the eight ship-based casinos that it operate d onboard Oceania and Regent vessels to Norwegian in the second quarter of 2015 . As consideration for the early termination of the concession agreements, the Company received $4.0 million in June 2015. In the second quarter of 2015, t he Company recorded this on its condensed consolidated statement of earnings (loss) under operating income less $0.6 million in assets that were sold to Norwegian as part of the Termination Agreement . The Company also entered into a two -year consulting agreement , which bec a me effective on June 1, 2015 , under which the Company is providing limited consulting services for the ship-based casinos of Oceania and Regent in exchange for receiving a consulting fee of $2.0 million , which is payable $250,000 per quarter .

T he Company has a long-term management agreement to direct the operation of the casino at the Hilton Aruba Caribbean Resort and Casino from which t he Company receives a monthly management fee.

---

In October 2014, CCE purchased 7.5% of the shares of Mendoza Central Entretenimientos S.A., a n Argentina company (“MCE”), for $1.0 million. The shares are reported on the condensed consolidated balance sheet using the cost method of accounting. MCE has an exclusive concession agreement with Instituto Provincial de Juegos y Casinos to lease slot machines and provide related services to Mendoza Casino, a casino located in Mendoza, Argentina and owned by the Province of Mendoza. In addition, CCE and MCE have entered into a Consulting Services Agreement pursuant to which CCE provide s advice on casino matters and receive s a service fee consisting of a fixed fee plus a percentage of MCE’s earnings before interest, taxes, depreciation and amortization (“ EBITDA ”) . See Note 4 for additional information related to MCE.

As a result of the Company’s recent and continuing expansion efforts, during the fourth quarter of 2014, the Company reorganized its internal management reporting structure. Although the Company’s condensed consolidated results of operations, financial position and cash flows were not impacted, certain reclassifications of previously reported amounts have been made to conform to the current year presentation in Note 12 “Segment Information”. These reclassifications did not impact previously reported amounts on the Company’s unaudited condensed consolidated balance sheets, statements of earnings (loss) or statements of cash flows.

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.

I n 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, 201 4 . The results of operations for the period ended September 30, 2015 are not necessarily indicative of the operating results for the full year.

---

Presentation of Foreign Currency Amounts

The Company’s functional currency is the U.S. dollar (“USD” or “$”).  Foreign subsidiaries with a functional currency other than the U.S. dollar translate assets and liabilities at current exchange rates at the end of the reporting periods, while income and expense accounts are translated at average exchange rates for the respective periods.  The Company and its subsidiaries enter into various transactions made in currencies different from their functional currencies.  These transactions are typically denominated in the Canadian dollar (“CAD”), Euro (“EUR”) and Polish zloty (“PLN”).  Gains and losses resulting from changes in foreign currency exchange rates related to these transactions are included in income from operations as they occur.

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

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

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT S

In May 2014, the Financial Accounting Standards Board (“ FASB ”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014 ‑09”).  The objective of ASU 2014-09 is to clarify the principles for recognizing revenue and to develop a common revenue standard for US GAAP and International Financial Reporting Standards.  ASU 2014 ‑09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. In August 2015, the FASB issued ASU 2015-14 defer ring the effective date of ASU 2014-09 for one year , which will extend the effective date for public entities to annual reporting periods beginning after December 15, 2017 , including interim reporting periods within those period s , and permit early adoption of the standard on a limited basis . The Company is currently evaluating the impact of adopting ASU 2014 ‑09 , but does not expect the standard to have a material impact on its consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (“ASU 2014-15”). The objective of ASU 2014-15 is to provide guidance on management’s responsibility to evaluate whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for fiscal years beginning after December 15, 2016, and annual and interim periods thereafter. This new standard is not expected to have a material impact on the Company’s consolidated financial statements .

---

In January 2015, the FASB issue d ASU No. 2015-01, Income Statement – Extraordinary and Unusual Items: Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”).  The objective of ASU 2015-01 is to eliminate from US GAAP the concept of an extraordinary item. ASU 2015-01 is effective for fiscal years beginning after December 15, 2015, and interim periods within those annual periods. This new standard is not expected to have a material impact on the Company’s consolidated financial statements.

In February 2015, the FASB issued ASU No. 2015-02, Consolidation: Amendments to the Consolidation Analysis (“ASU 2015-02 ” ).  The objective of ASU 2015-02 is to change the consolidation analysis required under US GAAP. ASU 2015-02 is effective for fiscal years beginning after December 15, 2015, and annual and interim periods thereafter.  Early adoption of ASU 2015-02 is permitted. This new standard is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2015, the FASB issue d ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). The objective of ASU 2015-03 is to present debt issuance costs as a direct deduction from the related debt liability. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of ASU 2015-03 is permitted. This new standard is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2015, the FASB issue d ASU No. 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015-05”). The objective of ASU 2015-05 is to provide guidance on accounting for cloud computing fees. ASU 2015-05 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of ASU 2015-05 is permitted. This new standard is not expected to have a material impact on the Company’s consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”). The objective of ASU 2015-11 is to simplify the current guidance under which an entity must measure inventory at the lower of cost or market by requiring entities to measure most inventory at the lower of cost and net realizable value . ASU 2015- 11 is effective for fiscal years beginning after December 15, 201 6 , and interim periods within those fiscal years. Early adoption of ASU 2015- 11 is permitted. This new standard is not expected to have a material impact on the Company’s consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”). The objective of ASU 2015-16 is to simplify the accounting for measurement-period adjustments. ASU 2015-16 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoptio n of ASU 2015-16 is permitted. This new standard is not expected to have a material impact on the Company’s consolidated financial statements.

3. CENTURY DOWNS RACETRACK AND CASINO

In November 2012, the Company’s subsidiary CCE signed credit and management agreements with CDR in connection with the development of a REC project in Balzac, north metropolitan area of Calgary, Alberta, Canada, which the Company operate s as Century Downs Racetrack and Casino. On November 29, 2013, CCE and CDR amended the credit agreement . Under the amended credit agreement with CDR, CCE acquired 15% of CDR, controls the CDR board of directors and manages the development and operation of the REC project and had the right to convert CAD 11 million of the amounts loaned to CDR into an additional ownership position in CDR of up to 60% . As of November 29, 2013, the Company began consolidating CDR as a minority owned subsidiary for which it has a controlling financial interest and, as a result , the loans between CDR and CCE are considered an intercompany transaction and eliminated upon consolidation . On March 20, 2015, CCE converted CAD 11 million that it had loaned to CDR into an additional 60% ownership interest in CDR. As of March 20, 2015, the Company , through its subsidiary, CCE, ha d a 75% ownership interest in CDR . Unaffiliated shareholders own the remaining 2 5% of CDR . The Company accounts for and reports the remaining 2 5% CDR ownership interest as a non-controlling financial interest.

---

The REC project has the only horse race track in the Calgary area and consist s of a 5.5 furlongs ( 0.7 mile) racetrack, a gaming floor with 550 slot machines , seven video lottery terminals , a bar, a lounge, restaurant facilities, an off-track-betting area and an entertainment area. The Alberta Gaming and Liquor Commission (“AGLC”) and HRA ha ve issued license s to the REC . The casino at the REC opened on April 1, 2015 , and the 2015 racing season i s from April to November .

Equity Conversion

On March 20, 2015, CCE converted CAD 11 million that it had loaned to CDR into an additional 60% ownership interest in CDR . As a result of the conversion , the Company recognized $0. 6 million in additional paid-in capital and $0.1 million in accumulated other comprehensive income that was previously attributed to non -controlling interest.

Distribution to Non-Controlling Interest

CDR has an agreement with its non-controlling shareholders to distribute any funds received by CDR related to infrastructure built during the development of the REC project . After CCE ’s conversion of CAD 11 million that it had loaned to CDR into an additional 60% ownership interest in CDR , a ll funds received related to the infrastructure are distributed to CDR’s non-controlling shareholders as stated in the Credit Agreement between CCE and CDR . In the second quarter of 2015, the Company distributed $0.5 million related to the infrastructure to CDR’s non-controlling shareholders.

4. ACQUISITIONS AND INVESTMENTS

Mendoza Central Entretenimientos S.A.

On October 31, 2014, CCE entered into the MCE Agreement with Gambling and Entertainment LLC and its affiliates, pursuant to which CCE purchased 7.5% of the shares of MCE, a company formed in Argentina, for $1.0 million. Pursuant to the MCE Agreement, CCE will work with MCE to utilize MCE’s exclusive concession agreement with Instituto Provincial de Juegos y Casinos to lease slot machines and provide related services to Mendoza Casino, a casino located in Mendoza, Argentina, and owned by the Province of Mendoza. MCE may also pursue other gaming opportunities. Under the MCE Agreement, CCE has appointed one director to MCE’s board of directors. In addition, CCE has a three -year option to purchase up to 50% of the shares of MCE and to appoint additional directors to MCE’s board of directors based on its ownership percentage of MCE.

The Company accounts for the $1.0 million investment in MCE using the cost method. Acquisition costs of $0.2 million were incurred for the year ended December 31, 2014 in connection with the MCE investment. These costs include legal and accounting fees and have been recorded as general and administrative expenses in the fourth quarter of 2014.

Century Bets! Inc.

On January 6, 2015, CCE, together with RMTC, formed a new subsidiary, CBS, to operate the pari-mutuel off-track betting network in s outhern Alberta. CCE ha s a 75% ownership interest in CBS and RMTC ha s a 25% ownership interest in CBS. CCE has appoint ed three of the four directors on the board of directors of CBS. The Company accounts for and reports the 25% ownership interest of RMTC as a non-controlling financial interest.

Acquisition costs of less than $0.1 million were incurred in connection with forming CBS. These costs include legal fees and were recorded as general and administrative expenses in the fourth quarter of 2014.

---

5. GOODWILL AND INTANGIBLE ASSETS

Goodwill

We test goodwill for impairment as of October 1 each year, or more frequently as circumstances indicate it is necessary. Testing compares the estimated fair values of our reporting units to the reporting units’ carrying values. Our reporting units with goodwill balances as of September 30, 2015 include our Edmonton casino property and our CDR and CPL operations . We consider a variety of factors when estimating the fair value of our reporting units, including estimates about the future operating results of each reporting unit, multiples of earnings, various market analyses, and recent sales of comparable businesses, if such information is available to us. The Company makes a variety of estimates and judgments about the relevance and comparability of these factors to the reporting units in estimating their fair values. If the carrying value of a reporting unit exceeds its estimated fair value, the fair value of each reporting unit is allocated to the reporting unit’s assets and liabilities to determine the implied fair value of the reporting unit’s goodwill and whether impairment is necessary. No impairment charges related to goodwill have been recorded at our Edmonton property, CDR or CPL.

Changes in the carrying amount of goodwill related to the Company’s Edmonton property, CDR and CPL for the nine months ended September 30, 2015 were as follows:

Intangible Assets

Trademarks

The Company currently owns two trademarks, the Century Casinos trademark and the Casinos Poland trademark, which are reported as intangible assets on the Company’s condensed consolidated balance sheets.

As of September 30, 2015 , the carrying amounts of the trademarks were as follows:

The Company has determined both trademarks have indefinite useful lives and therefore the Company does not amortize the trademarks. Rather, the Company tests its trademarks for impairment annually or more frequently as circumstances indicate it is necessary. The Company tests trademarks for impairment using the relief-from-royalty method. If the fair value of an indefinite-lived intangible asset is less than its carrying amount, the Company would recognize an impairment charge equal to the difference. No impairment charges related to the Company’s Century Casinos and Casinos Poland trademarks have been recorded.

---

Casino Licenses

Casinos Poland

Casinos Poland currently has nine casino licenses, each with an original term of six years, which are reported as finite-lived intangible assets on the Company’s condensed consolidated balance sheets. The Company impaired $0.2 million in the second quarter of 2014 related to the Casinos Poland casino licenses . Changes in the carrying amount of the Casinos Poland licenses for the nine months ended September 30, 2015 were as follows:

As of September 30, 2015 , estimated amortization expense for the CPL casino licenses over the next five years was as follows:

Such estimates do not reflect the impact of future foreign exchange rate changes or the renewal of the licenses. The weighted average period before the next renewal is 2. 1 years.

Century Downs Racetrack and Casino

CDR currently has two licenses, one from the AGLC and one from HRA. The licenses were issued in November 2013 pending final approval of the REC project from the AGLC. The AGLC granted the final approval for the licenses on March 19, 2015. The licenses are reported as indefinite lived intangible assets on the Company’s condensed consolidated balance sheets. No impairment charges related to the CDR licenses have been recorded. Changes in the carrying amount of the CDR licenses for the nine months ended September 30, 2015 were as follows:

---

6 . PROMOTIONAL ALLOWANCES

Hotel accommodations, and food and beverage furnished without charge to customers are included in gross revenue at retail value and are deducted as promotional allowances to arrive at net operating revenue. The Company issues coupons and downloadable promotional credits to customers for the purpose of generating future revenue. The value of coupons and downloadable promotional credits redeemed is applied against the revenue generated on the day of the redemption. The estimated cost of provided promotional allowances is included in casino expenses. For the three and nine months ended September 30, 2015 and 2014, the cost of providing promotional allowances were as follows:

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. The Company records a liability based on the redemption value of the points earned, and records a corresponding reduction in casino revenue. Points can be redeemed for cash , downloadable promotional credits and/or various amenities at the casino, such as meals, hotel stays and gift shop items. The value of the points is offset against the revenue in the period in which the points were earned. The value of unused or unredeemed points is included in accrued liabilities on the Company’s condensed consolidated balance sheets. The expiration of unused points results in a reduction of the liability. As of September 30, 2015 and December 31, 201 4 , the outstanding balance of this liability was $0 . 7 million and $0.9 million, respecti v ely .

7 .

LONG-TERM DEBT

Long-term debt as of September 30, 2015 and December 31, 201 4 consisted of the following:

---

The consolidated weighted average interest rate on all Company debt was 7 . 80 % for the nine months ended September 30, 2015 . In April 2015, the Company entered into two interest rate swap agreement s to partially hedge the risk of future increases in the variable rate debt under the Company’s c redit a greement with the Bank of Montreal (the “BMO Credit Agreement”) . The outstanding balance for each of t he interest rate swap agreement s is CAD 10 . 7 million ($ 8. 0 million based on the exchange rate in effect on September 30, 2015 ) at a Canadian Dollar Offered Rate (“CDOR”) of 3 . 9 2% and 3 . 8 9% , respectively . The interest rate swap agreements are not designated as hedges for accounting purposes . A s a result , changes in fair value of the interest rate swaps are recognized in i nterest e xpense on the Company’s condensed c onsolidated s tatement of e arnings (loss) . The Company pays a floating interest rate on its remaining CAD 7 . 7 million ($5 . 7 million based on the exchange rate in effect on September 30, 2015 ) in borrowings under the BMO Credit Agreement , and the current interest rate is approximately 3 . 26 % . The Company pays a weighted average interest rate of 3 . 4 1 % on its borrowings under the CPL loan agreements. The weighted average interest rate on all Company debt is higher than the interest rate s of the BMO Credit Agreement and the weighted average interest of 3 . 4 1 % on the CPL loan agreements due to the CDR financing obligation, on which the Company pays an implicit interest rate of 10.0% , and the fair value impact of the interest rate swap agreements on interest expense. See Note 11 for additional information on the interest rate s wap agreements .

Credit Agreement – Bank of Montreal

I n May 2012, the Company, through its Canadian subsidiaries, entered into the CAD 28.0 million credit agreement with the Bank of Montreal. On August 15, 2014, the Company, through its Canadian subsidiaries, entered into an amended and restated BMO Credit Agreement that increased the Company’s borrowing capacity to CAD 39.1 million . As of September 30, 2015 , the Company had borrowed CAD 33 . 9 million , of which th e outstanding balance was CAD 29 . 1 million ( $ 2 1 . 7 million based on the exchange rate in effect on September 30, 2015 ) and the Company had approximately CAD 5 . 2 million ( $ 3 . 9 million based on the exchange rate in effect on September 30, 2015 ) available under the BMO Credit Agreement. The outstanding borrowings cannot be re-borrowed once they are repaid. The Company has used borrowings under the BMO Credit Agreement primarily to repay the Company’s mortgage loan related to the Edmonton property, pay for the additional 33.3% investment in CPL and pay for development costs related to the REC project (Note 3). The Company can also use the proceeds to pursue the development or acquisition of new gaming opportunities and for general corporate purposes. Borrowings bear interest at fixed rates or at BMO’s floating rate plus a margin.  Any funds not drawn down under the BMO Credit Agreement are subject to standby fees ranging from 0.50% to 0.75% payable quarterly in ar r ears. Standby fees of less than CAD 0.1 million (less than $0.1 million based on the exchange rate in effect on September 30, 2015 ) were recorded as general and administrative expense in the condensed consolidated statement of earnings (loss) for each of the three and nine months ended September 30, 2015 and September 30, 2014 . The BMO Credit Agreement has a term of five years through August 2019 and is guaranteed by the Company. The shares of the Company’s subsidiaries in Edmonton and Calgary and the Company's 75% interest in CDR are pledged as collateral for the BMO Credit Agreement. The BMO Credit Agreement contains a number of financial covenants applicable to the Canadian subsidiaries, including covenants restricting their incurrence of additional debt , a debt to EBITDA ratio, a fixed charge coverage ratio, a requirement to maintain a CAD 28.0 million equity balance and a capital expenditure limit of CAD 2.0 million per year . The Company was in compliance with all covenants of the BMO Credit Agreement as of September 30, 2015 .

Amortization expenses relating to deferred financing charges were less than $0.1 million for the three months ended September 30, 2015 and 201 4 and $0.1 million for the nine months ended September 30, 2015 and 2014 . These costs are included in interest expense in the condensed consolidated statements of earnings (loss) .

Casinos Poland

As of September 30, 2015 , CPL had debt totaling PLN 13 . 4 million ($ 3 . 5 million based on the exchange rate in effect on September 30, 2015 ) . The debt includes two credit agreements , one credit facility and four capital lease agreements.

The first credit agreement is with m Bank (formerly known as BRE Bank) . Under this credit agreement, CPL entered into a three year term loan in November 2013 at an interest rate of Warsaw Interbank Offered Rate (“WIBOR”) plus 1.75% . Proceeds from the loan were used to repay the balance of the Bank Pocztowy loan related to the CPL properties, invest in slot equipment and relocate the Company’s Poznan, Poland casino. As of September 30, 2015 , the amount outstanding on the term loan was PLN 5 . 6 million ( $ 1 . 5 million based on the exchange rate in effect on September 30, 2015 ) . CPL ha s no further borrowing availability under the loan , and t he loan matures in November 2016. The m Bank credit agreement contains a number of financial covenants applicable to CPL, including covenants that restrict the incurrence of additional debt and require CPL to maintain debt ratios and current liquidity ratios of 0.6 or higher. On March 26, 2015 , CPL and mBank amended the credit agreement to lower the current liquidity ratio to 0.5 . CPL was in compliance with all covenants of this m Bank agreement as of September 30, 2015 .

---

The second credit agreement is also with m Bank. Under this credit agreement, CPL entered into a three year term loan on September 15, 2014 at an interest rate of WIBOR plus 1 . 70 % . Proc eeds from the loan were used to repay balances outstanding under a prior credit agreement that matured i n September 2014 and to finance current operations. As of September 30, 2015 , the amount outstanding on the term loan was PLN 2 . 4 million ( $0 . 6 million based on the exchange rate in effect on September 30, 2015 ) . CPL ha s no further borrowing availability under the loan , and t he loan matures in September 2017 . The m Bank credit agreement contains a number of financial covenants applicable to CPL, including covenants that restrict the incurrence of additional debt and require CPL to maintain debt ratios and current liquidity ratios of 0.6 or higher. On March 26, 2015 , CPL and mBank amended the credit agreement to lower the current liquidity ratio to 0.5 . CPL was in compliance with all covenants of this mBank agreement as of September 30, 2015 .

The credit facility is a short-term line of credit with BPH Bank used to finance current operations . The bank line of credit bears an interest rate of WIBOR plus 1.85% . The credit facility terminates on February 13, 2016. As of September 30, 2015 , the amount outstanding was PLN 5 . 3 million ( $ 1 . 4 million based on the exchange rate in effect on September 30, 2015 ) and CPL has approximately PL N 5 . 7 million ( $1 . 5 million based on the exchange rate in effect on September 30, 2015 ) available under the facility . The BPH Bank facility contains a number of financial covenants applicable to CPL, including covenants that restrict the incurrence of additional debt and debt to EBITDA ratios. CPL was in compliance with all covenants of the BPH Bank line of credit as of September 30, 2015 .

CPL’s remaining debt consists of four capital lease agreements for various vehicles . As of September 30, 2015 , the amount outstanding was PLN 0. 1 million ( less than $0. 1 million based on the exchange rate in effect on September 30, 2015 ) .

In addition, under Polish gaming law, CPL is required to maintain PLN 3 . 6 million in the form of deposits or bank guarantees for payment of casino jackpots and gaming tax obligations. mBank issued guarantee s to CPL for this purpose totaling PLN 3 . 6 million ( $0 . 9 million based on the exchange rate in effect on September 30, 2015 ) . The mBank guarantees are secured by land owned by CPL in Kolbaskowo, Poland and term inate on October 31, 2019 . In addition, CPL is required to maintain deposits or provide bank guarantees for payment of additional prizes and giveaways at the casinos. The amount of these deposits varies depending on the value of the prizes. CPL maintained $0.3 million in deposits for this purpose as of September 30, 2015 and December 31, 2014. These deposits are included in deposits and other on the Company’s condensed consolidated balance sheet s .

Century Downs Racetrack and Casino

CDR’s land lease is a financing obligation of the Company . Prior to the Company’s acquisition of its ownership interest in CDR , CDR sold a portion of the land on which the REC project has been constructed and then entered into an agreement to lease back a portion of the land sold . The Company accounts for the lease using the financing method , account ing for the land subject to the lease as an asset and the lease payments as interest on the financing obligation. Under the land lease, CDR has four options to purchase the land. The first option date is July 1, 2023. Due to the nature of the CDR land lease financing obligation, there are no principal payments due until the Company exercises its option to purchase the land. Lease payments are applied to interest only, and any change in the outstanding balance of the financing obligation relates to foreign currency translation. As of September 30, 2015 , the outstanding balance on the financing obligation was CAD 19.5 million ( $1 4 . 5 million based on the exchange rate in effect on September 30, 2015 ) and the implicit interest rate was 10.0% .

As of September 30, 2015 , scheduled maturities related to long-term debt are as follows:

---

8. COMMITMENTS AND CONTINGENCIES

Litigation

Casinos Poland

In March 2011, the Polish Internal Revenue Service (“Polish IRS”) began conducting a series of tax audits of CPL to review the calculation and payment of personal income tax by CPL employees. Based on the March 2011 audit, the Polish IRS concluded that CPL should calculate, collect and remit to the Polish IRS personal income tax on tips received by CPL employees from casino customers for the periods from December 1, 2007 to December 31, 2008, January 1, 2009 to December 31, 2009 and January 1, 2011 to January 31, 2011. The Company has recorded a contingent liability on its condensed consolidated balance sheet and the balance for all open periods as of September 30, 2015 is estimated at PLN 12.0 million ($3.2 million based on the exchange rate in effect on September 30, 2015).

After the proceedings with the Polish IRS, the Director of the Tax Chamber in Warsaw upheld the decision of the Polish IRS in November 2012 for review of the period from January 1, 2011 to January 31, 2011. CPL paid PLN 0.1 (less than $0.1 million) to the Polish IRS for taxes and interest owed resulting from the decision. CPL appealed the decision to the Regional Administrative Court in Warsaw in December 2012. In September 2013, the Regional Administrative Court in Warsaw denied CPL’s appeal. CPL appealed the decision to the Supreme Administrative Court and expects a decision in the first quarter of 2016.

After further proceedings and appeals between CPL and the Polish IRS, the Director of the Tax Chamber in Warsaw also upheld the decision of the Polish IRS in December 2013 for review of the period from December 2007 to December 2008. CPL paid PLN 3.5 million ($1.2 million) to the Polish IRS for taxes and interest owed resulting from the decision. CPL appealed the decision to the Voivodship Administrative Court. In January 2014, the Voivodship Administrative Court denied CPL’s appeal. CPL appealed the decision to the Supreme Administrative Court on December 19, 2014 and expects a decision in the first quarter of 2016.

After further proceedings and appeals with the Polish IRS, the Director of the Tax Chamber in Warsaw also upheld the decision of the Polish IRS in December 2014 for review of the period from January 2009 to December 2009. CPL paid PLN 2.8 million ($0.9 million) for taxes and interest owed resulting from the decision. CPL appealed the decision to the Voivodship Administrative Court in January 2015 and received an oral decision in October 2015. The court found in favor of CPL on the procedural grounds that the prior tax proceedings were not conducted by the appropriate tax authority. However, the court also found that CPL’s tax records for 2009 remain open for audit by a different tax authority. CPL expects to receive the written decision from the court within the next several months. Following receipt of the written decision, both CPL and the Director of the Tax Chamber in Warsaw have 30 days to appeal the decision to the Supreme Administrative Court.

9. INCOME TAXES

Income tax expense is recorded relative to the jurisdictions that recognize book earnings. During the nine months ended September 30, 2015 , the Company recognized income tax expense of $0. 4 million on pre-tax income of $12 . 7 million, representing an effective income tax rate of 3 . 2 % compared to an income tax expense of $0. 8 million on pre-tax income of $0. 4 million, representing an effective income tax rate of 208 .5% for the same period in 2014. The estimated effective tax rate for 2015 is 16. 45 % .

The decrease in the effective tax rate compared to the same period in 2014 is primarily the result of the reduction of the Austrian valuation allowance in the second quarter of 2015. The Company analyzed the likelihood of future realization of its deferred tax assets, including recent cumulative earnings by taxing jurisdiction, expectations of future taxable income or loss, the amount of net operating loss carryforwards not subject to limitations, the number of periods it will take to realize the net operating loss carryforwards and other relevant factors. Based on this analysis, the Company concluded that its Austrian operations ha d attained a sustained level of profitability sufficient to reduce its valuation allowance in that jurisdiction. Based on this conclusion, the valuation allowance against deferred tax assets in Austria was reduced to zero during the second quarter of 2015 , resulting in a tax benefit of $1.5 million.

---

Additionally, there is a lower effective tax rate for the Company’s Canadian operations due to exchange rate benefits and a valuation allowance maintained for Century Downs deferred tax assets . The effective tax rate in Canada also is impacted by the fair value measurement of the interest rate swap agreements for the Company’s Edmonton property. The Company continues to maintain a full valuation allowance on all of its U.S. deferred tax assets and on certain Canadian deferred tax assets.

10 . 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. Weighted average shares outstanding for the three and nine months ended September 30, 2015 and 201 4 were as follows:

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

11. FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS REPORTING

Fair Value Measurements

The Company follows fair value measurement authoritative accounting guidance for all assets and liabilities measured at fair value. That authoritative accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Market or observable inputs are the preferred sources of values, followed by assumptions based on hypothetical transactions in the absence of market inputs. The fair value hierarchy for grouping these assets and liabilities is based on the significance level of the following inputs:

---

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.  The Company reflects transfers between the three levels at the beginning of the reporting period in which the availability of observable inputs no longer justifies classification in the original level.

Recurring Fair Value Measurements

The estimated fair value and basis of valuation of our financial liabilities that are measured at fair value on a recurring basis were as follows:

There were no recurring fair value measurements as of December 31, 2014.

Non-Recurring Fair Value Measurements

The Company applies the provision of the fair value measurement standard to its non-recurring, non-financial assets and liabilities measured at fair value. There were no assets or liabilities measured at fair value on a non-recurring basis as of September 30, 2015 and December 31, 2014.

Long-Term Debt – The carrying value of the Company’s BMO Credit Agreement that bears interest at the lenders’ variable rate and the carrying value of the CPL debt approximate fair value as of September 30, 2015 and December 31, 2014. Based on prices for identical or similar instruments in markets that are not active, recently negotiated terms of the debt and a large portion of the debt being current, the estimated fair values of the outstanding balances under the Company’s BMO Credit Agreement and CPL debt are designated as Level 2 measurements in the fair value hierarchy. The carrying value of the CDR debt approximates fair value as of September 30, 2015 and December 31, 2014 because the debt bears interest at a rate implicit in the CDR land lease and, as a result, the estimated fair value of the Company’s CDR debt is designated as a Level 3 measurement in the fair value hierarchy. As of September 30, 2015, the carrying amount of CDR’s land lease was CAD 19.5 million ($14.6 million based on the exchange rate in effect on September 30, 2015) with an effective interest rate of 12 . 9 % .

Other Estimated Fair Value Measurements – The estimated fair value of our other assets and liabilities, such as cash and cash equivalents, accounts receivable, inventory, accrued payroll , accounts payable and accrued liabilities have been determined to approximate carrying value based on the short-term nature of those financial instruments. As of September 30, 2015 and December 31, 2014, the Company had no cash equivalents.

---

Derivative Instruments Reporting

As of April 2015, we began using interest rate swaps to mitigate the risk of variable interest rates under our BMO Credit Agreement. As of September 30, 2015, we had two interest rate swap agreements , each with a n outstanding balance of CAD 10.7 million ($8.0 million based on the exchange rate in effect on September 30, 2015) at a fixed CDOR rate of 3.92% and 3.89% , respectively, that were not designated as accounting hedges. These interest rate swaps reset monthly and expire on August 15, 2019 . The difference to be paid or received under the terms of the interest rate swap agreements is accrued as interest rates change and recognized as an adjustment to interest expense for the related debt. Changes in the variable interest rates to be paid or received pursuant to the terms of the interest rate swap agreements will have a corresponding effect on future cash flows. Changes in fair value of the swap agreements are recognized in interest expense.

The following table summarizes the location and effects of derivative instruments on the condensed consolidated statements of earnings (loss) for the three and nine months ended September 30, 2015 . There were no derivative instruments for the three and nine months ended September 30, 2014.

The following table summarizes the location and fair value amounts of our derivative instruments in the condensed consolidated balance sheets as of September 30, 2015. There were no derivative instruments as of December 31, 2014.

---

12. SEGMENT INFORMATION

The Company reports its financial performance in three reportable segments based on the geographical locations in which its casinos operate: the United States, Canada and Poland. Operating segments are aggregated within reportable segments based on their similar characteristics, types of customers, types of services and products provided, the regulatory environments in which they operate, and their management and reporting structure. The Company’s casino properties provide gaming, hotel accommodations, dining facilities and other amenities to the Company’s customers. The Company’s operations related to concession, management and consulting fee revenues and certain other corporate and management operations have not been identified as separate reportable segments; therefore, these operations are included in Corporate and Other in the following segment disclosures to reconcile to consolidated results. All intercompany transactions are eliminated in consolidation.

The table below provides information about the aggregation of the Company’s operating segments into reportable segments:

The Company’s chief operating decision maker is a management function comprised of two individuals.  These two individuals are our Co Chief Executive Officers. The Company’s chief operating decision makers and management utilize Adjusted EBITDA as a primary profit measure for its reportable segments. Adjusted EBITDA is a non- U . S . GAAP measure defined as net earnings (loss) before interest expense (income), net , income taxes (benefit), depreciation , amortization, non-controlling interest (earnings) loss es and transactions, pre-opening expenses, acquisition costs, non-cash stock - based compensation charges, asset impairment costs, (gain) loss on disposition of fixed assets, discontinued operations, (gain) loss on foreign currency transactions and other , gain on business combination and certain other one-time items. 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) and Adjusted EBITDA reported for each segment. Non-cash stock-based compensation expense is presented under Corporate and Other in the tables below as the expense is not allocated to reportable segments when reviewed by the Company’s chief operating decision makers.

---

The following tables provide information regarding the Company’s segment s for the three and nine months ended September 30, 2015 and 2014:

Net operating revenue for Corporate and Other of $0 . 8 million, $0.1 million and $0.1 million was attributable to cruise ships operating on international waters, the Aruba management agreement and the agreement in Argentina , respectively.

---

Net operating revenue for Corporate and Other of $2 . 1 million and $0.1 million wa s attributable to cruise ships operating on international waters and the Aruba management agreement , respectively. Other one-time (income) costs for the three months ended September 30, 2014 for Poland w ere the costs associated with r elocating the Poznan casino to the Hotel Andersia.

---

Net operating revenue for Corporate and Other of $3 . 2 million , $0. 3 million, $0. 2 million, and $3.4 million wa s attributable to cruise ships operating on international waters , the Aruba management agreement , the agreement in Argentina , and the termination of the Oceania and Regent concession agreements, respectively. Other one-time (income) costs for the nine months ended September 30, 2015 for Corporate and Other were attributable to the termination of the Oceania and Regent concession agreements.

---

Net operating revenue for Corporate and Other of $5 . 4 million and $0. 3 million wa s attributable to cruise ships operating on international waters and the Aruba management agreement , respectively. Other one-time (income) costs for the nine months ended September 30, 2014 for Canada were insurance proceeds received from a damaged barn and for Poland were the costs associated with relocating the Poznan casino to the Hotel Andersia.

---

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, 2014. 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. The term “USD” refers to US dollars, the term “CAD” refers to Canadian dollars and the term “PLN” refers to Polish zloty. Certain terms used in this Item 2 without definition are defined in Item 1.

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.

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), bowling and entertainment facilities that are in most instances a part of the casinos.

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

Through our subsidiary CCE, 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% of 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 is the owner and operator of nine casinos throughout Poland with a total of 499 slot machines and 80 tables. The following table summarizes the Polish cities in which CPL operated as of September 30, 2015, each casino’s location and the number of slots and tables at each casino.

*Operations at the Sosnowiec casino were suspended as of June 30, 2014. The casino reopened on a limited basis on February 3, 2015, and we expect the casino will continue limited operations until its gaming license expires in May 2017.

Through our subsidiary CCE, 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. CDR’s casino opened on April 1, 2015, and the horse racing season began on April 25, 2015. The 2015 horse racing season is from April to November. Century Downs is the only horse race track in the Calgary area and consists of a 5.5 furlongs (0.7 mile) racetrack, a gaming floor with 550 slot machines, seven video lottery terminals, a bar, a lounge, restaurant facilities, an off-track betting area and an entertainment area. It is located less than one mile north of the city limits of Calgary and 4.5 miles from the Calgary International Airport.

Through our subsidiary CCE, we have a 75% ownership interest in CBS and we consolidate CBS as a majority-owned subsidiary for which we have a controlling financial interest. RMTC owns the remaining 25% of CBS. We account for and report the 25% ownership interest of RMTC in CBS as a non-controlling financial interest. CBS began operating the pari-mutuel network on May 4, 2015. The pari-mutuel network consists of the sourcing of common pool pari-mutuel wagering content for racetracks throughout North America and world-wide. CBS also provides pari-mutuel wagering content and live video to off-track betting parlors throughout s outhern Alberta.

We operate 11 ship-based casinos onboard ships of the following three cruise lines: TUI Cruises, Windstar Cruises, and Nova Star Cruises, Ltd. As of September 30, 2015, we had a total of 225 slot machines and 25 tables onboard the 11 cruise ships where we operated casinos. In March 2015, we mutually agreed with Norwegian to terminate our concession agreements with Oceania and Regent, indirect subsidiaries of Norwegian, effective June 1, 2015. We transitioned operations of the eight ship-based casinos that we operated onboard Oceania and Regent vessels to Norwegian in the second quarter of 2015. We also entered into a two-year consulting agreement with Norwegian that became effective on June 1, 2015, under which we are providing limited consulting services for the ship-based casinos of Oceania and Regent in exchange for receiving a consulting fee of $2.0 million payable $250,000 per quarter.

---

The following table summarizes the cruise lines and the associated ships on which we operated ship-based casinos as of September 30, 2015.

We operate the ship-based casinos onboard three new ships that were launched in 2015: Windstar Cruises Star Breeze and Star Legend and TUI Cruises Mein Schiff 4. In September 2015, we amended our concession agreement with TUI Cruises to include our operation of the ship-based casinos onboard Mein Schiff 5 and Mein Schiff 6, two new 2,500 passenger cruise ships that are scheduled to begin operations in the second quarter of 2016 and 2017, respectively.

We have a long-term management agreement to direct the operation of the casino at the Hilton Aruba Caribbean Resort and Casino from which w e receive a monthly management fee.

Through our subsidiary CCE, we have a 7.5% ownership interest in MCE and we report our ownership interest using the cost method of accounting. MCE has an exclusive concession agreement with Instituto Provincial de Juegos y Casinos to lease slot machines and provide related services to Mendoza Casino, a casino located in Mendoza, Argentina and owned by the Province of Mendoza. MCE may also pursue other gaming opportunities. CCE has appointed one director to MCE’s board of directors and has a three - year option to purchase up to 50% of the shares of MCE. In addition, CCE and MCE have entered into a Consulting Services Agreement pursuant to which CCE provides advice on casino matters and receives a service fee consisting of a fixed fee plus a percentage of MCE’s EBITDA.

---

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:

We recognize in our statement of earnings, foreign currency transaction gains or losses resulting from the translation of casino operations and other transactions that are denominated in a currency other than U.S. 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. An increase or decrease in the value of these currencies in relation to the value of the U.S. dollar would increase or decrease the earnings from our foreign operations when translated into U.S. dollars.

---

DISCUSSION OF RESULTS

Consolidated results are discussed in further detail in the following pages.

Century Casinos, Inc. and Subsidiaries

Our operating segments are aggregated into three reportable segments based on the geographical locations in which our casinos operate: Canada, United States and Poland. Each geographical location has similarities among the nature of economic characteristics, services, customers and regulatory environments in which each segment operates. Management views each property as an operating segment based on its business activities, financial information, and operating results, which our chief operating decision maker function uses to assess performance and allocate resources within the Company. Our properties provide gaming, hotel accommodations, dining facilities and other amenities to our customers, which we utilize to drive customer volume. Our operating results are highly dependent on the volume of customers at our casinos, and customer volume affects the price we can charge for our hotel rooms, dining and other amenities.

---

We have additional business activities including concessionaire agreements, management agreements, consulting agreements and certain other corporate and management operations. We report our operating segments that we do not segregate into reportable segments as “corporate and other” operations in our consolidated results.

The table below provides information about the aggregation of the Company’s operating segments into reportable segments:

Century Downs and Century Bets! contributed significantly to t he period over period increases for both the three and nine months ended September 30, 2015 compared to the three and nine months ended September 30, 2014 . The casino and racetrack at Century Downs began operating in April 2015, and Century Bets! began operations in May 2015. We have a 75% ownership interest in both Century Downs and Century Bets!. Century Downs contributed a total of $ 3.9 million in net operating revenue and $0. 5 million in net earnings for the three months ended September 30, 2015 and $8.6 million in net operating revenue and $1.4 million in net earnings for the nine months ended September 30, 2015 . Century Bets! contributed a total of $ 1.1 million in net operating revenue and $ 0.2 million in net earnings for the three months ended September 30, 2015 and $2.0 million in net operating revenue and $0.3 million in net earnings for the nine months ended September 30, 2015 . Century Downs and Century Bets! are included in the Canada reportable segment. Net operating revenue and net earnings attributable to Century Casinos, Inc. shareholders also included $3.4 million for the nine months ended September 30, 2015 due to the termination of the Oceania and Regent concession agreements , which are reported in the Corporate and Other reportable segment .

Net operating revenue increased by $5.4 million, or 19.2% and $13.0 million, or 14.7%, for the three and nine months ended September 30, 2015 compared to the three and nine months ended September 30, 2014 . Following is a breakout of net operating revenue by segment for the three and nine months ended September 30, 2015 compared to the three and nine months ended September 30, 2014 :

---

Operating costs and expenses in creased by $2.0 million, or 7.4% , and $1.0 million, or 1.2% , for the three and nine months ended September 30, 2015 compared to the three and nine months ended September 30, 2014 . Following is a breakout of total operating costs and expenses by segment for the three and nine months ended September 30, 2015 compared to the three and nine months ended September 30, 2014 :

Earnings from operations increased by $3.4 million, or 470.9% , and $12.0 million, or 594.1% , for the three and nine months ended September 30, 2015 compared to the three and nine months ended September 30, 2014 . Following is a breakout of earnings from operations by segment for the three and nine months ended September 30, 2015 compared to the three and nine months ended September 30, 2014 :

Net earnings increased by $1.9 million, or 242.7% , and $9.7 million, or 664.0% , for the three and nine months ended September 30, 2015 compared to the three and nine months ended September 30, 2014 . 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.

Non-GAAP Measures – Adjusted EBITDA

We define Adjusted EBITDA as net earnings (loss) before interest expense (income), net, income taxes (benefit), depreciation, amortization, non-controlling interest (earnings) losses and transactions, pre-opening expenses, acquisition costs, non-cash stock-based compensation charges, asset impairment costs, (gain) loss on disposition of fixed assets, discontinued operations, ( gain ) loss on foreign currency transactions and other, gain on business combination and certain other one-time items. 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) 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 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 compare the relative operating performance of separate operating units 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) is presented below.

---

---

Reportable Segments

The following discussion provides further detail of consolidated results by segment.

Three Months Ended September 30, 2015 and 2014

Net operating revenue in Canada increased by $3.9 million, or 47.6% , for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . The increase in net operating revenue was primarily due to the additional revenue generated from Century Downs, which opened on April 1, 2015, and Century Bets!, which began operating the s outhern Alberta pari-mutuel network in May 2015. Net operating revenue from Century Downs increased by $ 3. 9 million for the three months ended September 30, 2015 compared to the three months ended September 30, 2014. The net operating revenue increase was mainly comprised of gaming revenue of $ 2 . 9 million and food and beverage revenue of $0. 6 million. Century Bets! added $ 1.1 million in net operating revenue for the three months ended September 30, 2015. The comparable differences in CAD and USD were impacted by the decrease in the average exchange rate between the U.S. dollar and Canadian dollar of 20.1 % for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 (the “ 20.1 % exchange rate decrease”).

In CAD, net operating revenue increased by 7.0 million, or 7 7 .3%, primarily due to the increased revenue from Century Downs and the inclusion of revenue from Century Bets! for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . Gaming revenue increased by CAD 4.2 million, or 64.0 %, due to revenue from Century Downs and increased revenue of CAD 0. 4 million, or 7.8 %, at our Edmonton location mainly from increased baccarat revenue for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . Food and beverage revenue increased by CAD 1.0 million, or 54.3 %, and other revenue increased by CAD 1.9 million, or 236.9 %, for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 due to additional revenue from Century Downs and Century Bets! as well as increased food and beverage revenue of CAD 0.1 million, or 8.5%, at our Edmonton location .

---

Total operating costs and expenses increased by $2.6 million, or 40.6% , for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . The increase in total operating costs and expenses was primarily due to the additional expenses generated from Century Downs and Century Bets!. Total operating costs and expenses from Century Downs increased by $2. 7 million for the three months ended September 30, 2015 compared to the three months ended September 30 , 2014. Century Bets! added $0.7 million in total operating costs and expenses for the three months ended September 30, 2015. The comparable differences in CAD and USD were impacted by the 20.1 % exchange rate decrease.

In CAD, total operating costs and expenses increased by 4.8 million, or 68.9 %, primarily due to the increased expenses from Century Downs and the inclusion of expenses from Century Bets! for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . Century Downs total operating costs and expenses increased by CAD 3. 7 million for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 due to the operation of the casino in the 2015 period . Century Bets! added CAD 1.0 million in total operating costs and expenses for the three months ended September 30, 2015. T otal operating costs and expenses in creased by CAD 0. 2 million, or 4.4 %, in Edmonton and by CAD 0.1 million, or 4.2%, in Calgary for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 due to increased payroll costs at both properties as well as increased property tax expense at Calgary .

Because of the foregoing, earnings from operations increased by $1.4 million, or 70.8% , net earnings increased by $0.4 million, or 26.4% , and Adjusted EBITDA increased by $1.5 million, or 63.1% , for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . A reconciliation of net earnings to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

In CAD, earnings from operations increased by 2.2 million, or 105.3 %, net earnings increased by 1.1 million, or 94.2 %, and Adjusted EBITDA increased by 2.5 million, or 95.9 %, for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . The difference between net earnings of CAD 1. 1 million compared to earnings from operations of CAD 2.2 million was due to an increase in interest expense of CAD 0. 3 million at our Edmonton property and at Century Downs , increased income tax expense of CAD 0. 3 million at all Canadian properties except Calgary and increased earnings attributable to non-controlling interest of CAD 0.8 million at Century Downs and Century Bets!, offset by CAD 0. 3 million due to decreased foreign currency losses at all properties .

Nine Months Ended September 30, 2015 and 2014

Net operating revenue in Canada increased by $8.4 million, or 33.0% , for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 . The increase in net operating revenue was primarily due to the additional revenue generated from Century Downs and Century Bets!. Net operating revenue from Century Downs increased by $ 8.1 million for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 . The additional net operating revenue was mainly comprised of gaming revenue of $ 6.7 million and food and beverage revenue of $ 1.4 million. Century Bets! added $ 2.0 million in net operating revenue for the nine months ended September 30, 2015 . The comparable differences in CAD and USD were impacted by the decrease in the average exchange rate between the U.S. dollar and Canadian dollar of 15.1 % for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 (the “ 15.1 % exchange rate decrease”).

In CAD, net operating revenue increased by 14.9 million, or 53.2 %, due to the increased revenue from Century Downs and the inclusion of revenue from Century Bets! for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 . Gaming revenue increased CAD 10.0 million, or 51.8 %, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 due to CAD 8.4 million of gaming revenue generated from Century Downs, increased gaming revenue of CAD 1. 3 million, or 9.2 %, at our Edmonton property and CAD 0. 2 million, or 4.6 %, at our Calgary property. In Edmonton, the increase in gaming revenue was due to increased revenue from baccarat and craps , and i n Calgary, the increase in gaming revenue was due to increased revenue from blackjack for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 . Food and beverage revenue increased by CAD 2.0 million, or 35.0 %, and other revenue increased by CAD 3.0 million, or 95.0 %, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 primarily due to the additional revenue from Century Downs and Century Bets!.

---

Total operating costs and expenses increased by $4.7 million, or 24.1% , for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 , which was primarily due to the additional expenses from Century Downs and Century Bets!. Total operating costs and expenses from Century Downs increased by $ 5.5 million for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 due to the operation of the casino in 2015 . Century Bets! added $ 1.4 million in total operating costs and expenses for the nine months ended September 30, 2015. The comparable differences in CAD and USD were impacted by the 15.1 % exchange rate decrease.

In CAD, total operating costs and expenses increased by 9.2 million, or 43.0 %, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 . Total operating costs and expenses at Century Downs increased by CAD 7.1 million, or 1179.8 %, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. Century Bets! added CAD 1.7 million in total operating costs and expenses for the nine months ended September 30, 2015. In Edmonton, total operating costs and expenses increased by CAD 0. 4 million, or 3.0 %, due to additional payroll costs , increased cost of goods sold, increased general and administrative expenses due in part to increased maintenance costs at the property , and increased depreciation expense for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. In Calgary, total operating costs and expenses decreased by (CAD 0. 1 ) million, or ( 1.1 %), due to decreased payroll and marketing expenses for the nine months ended September 30, 2015 compared to the nine months ended September 2014.

Because of the foregoing, earnings from operations increased by $3.7 million, or 62.0% , net earnings increased by $1.9 million, or 42.6% , and Adjusted EBITDA increased by $4.4 million, or 59.7% , for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 . A reconciliation of net earnings to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

In CAD, earnings from operations increased by 5.7 million, or 86.4 %, net earnings increased by 2.2 million, or 51.5 %, and Adjusted EBITDA increased by 6.5 million, or 79.5 %, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 . The difference between net earnings of CAD 2.2 million compared to earnings from operations of CAD 5.7 million was due to an increase in interest expense of CAD 1.3 million at our Edmonton property and Century Downs, increased foreign currency losses of CAD 0.7 million, increased income tax expense of CAD 0. 3 million, and increased earnings attributable to non-controlling interest of CAD 1. 8 million, offset by CAD 0.6 million of funds received by Century Downs related to infrastructure built during the development of the REC project.

On March 20, 2015, our subsidiary, CCE, converted CAD 11 million of loans it made to Century Downs into an additional 60% ownership interest in Century Downs. We now own 75% of Century Downs. The non-controlling interest in Century Downs was 85% through March 19, 2015, and 25% beginning as of March 20, 2015.

---

Three Months Ended September 30, 2015 and 2014

Net operating revenue in the United States increased by $0.7 million, or 9.7% , due to increased gaming revenue of $0. 4 million, or 4.5 %, increased hotel revenue of $0.1 million, or 35.8%, and de creased promotional allowances of $0.2 million, or 10.3 %, for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . Gaming revenue increased at our property in Central City by $0. 2 million, or 5.4 %, and at our property in Cripple Creek by $0.1 million, or 3.3%, for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 primarily due to increased slot revenue at both properties . At our Cripple Creek property , hotel revenue increased $0.1 million, or 63.7%, for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 due to increased occupancy and on-line bookings . Net operating r evenue also increased as a result of de creased promotional allowances at both properties due to changes made to the level of free play granted to Player’s Club members.

The Central City market increased by 6. 0 % for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 and our property’s share of the Central City market remained constant for the same time period.  The Cripple Creek market increased by 5.4 % for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 , and our property’s share of the Cripple Creek market decreased by 2.3 % for the same time period.

Total operating costs and expenses remained constant at both properties for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 .

---

Because of the foregoing, earnings from operations increased by $0.7 million, or 85.9% , net earnings increased by $0.4 million, or 85.8% , and Adjusted EBITDA increased by $0.7 million, or 47.1% , for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . The difference between the increase in net earnings of $0. 4 million and earnings from operations of $0. 7 million was incr eased income tax expense of $0.3 million for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . A reconciliation of net earnings to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

Nine Months Ended September 30, 2015 and 2014

Net operating revenue in the United States increased by $1.5 million, or 7.4% , due to increased gaming revenue of $1. 5 million, or 6.5 % for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 . Gaming revenue at our property in Central City increased by $ 1.0 million, or 7.2 %, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 due to increased slot revenue that was attributable in part to increased customer volumes due to t he completion of road construction on I-70, the main thoroughfare to the property. At our Cripple Creek property, gaming revenue increased by $0. 5 million, or 5.6 %, due to increased slot revenue for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.

The Central City market increased by 4.6 % for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 , and our property ’s share of the Central City market increased by 2.6 % for the same time period.  The Cripple Creek market increased by 3.4 % for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 , and our property’s share of the Cripple Creek market increased by 2.5 % for the same time period.

Total operating costs and expenses decreased by ($0.1) million, or (0.8%) , for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 due to decreased expenses at our Central City property. The decrease in total operating costs and expenses was due to decrease d payroll costs as a result of staff changes and savings on health plan costs , as well as decreased marketing expenses, offset by increased gaming tax expense . Total operating costs and expenses at our Cripple Creek property remained constant for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.

Because of the foregoing, earnings from operations increased by $1.6 million, or 92.6% , net earnings increased by $1.0 million, or 92.7% , and Adjusted EBITDA increased by $1.8 million, or 49.9% , for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 . The difference between the increase in net earnings of $ 1.0 million and earnings from operations of $ 1.6 million was increased income tax expense of $0. 6 million for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. A reconciliation of net earnings to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

---

Three Months Ended September 30, 2015 and 2014

Net operating revenue from Casinos Poland in creased by $2.0 million, or 19.4% , for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . The in crease in the net operating revenue in USD compared to the increase in net operating revenue in PLN discussed below was due to a decrease in the average exchange rate between the U.S. dollar and the Polish zloty of 19.4 % for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 (the “ 19.4 % exchange rate decrease”).

In PLN, net operating revenue increased by 14. 0 million, or 42.7 %, for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . The increased revenue was primarily due to increased gaming revenue of PLN 14. 6 million, or 45.0%, primarily from increased slot revenue due to an additional 28 slot machines located throughout the casinos as well as increased table game revenue from roulette for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . The increased gaming revenue was offset by increased promotional allowances of PLN 0. 4 million for the three months ended September 30, 2015 compared to the three months ended September 30, 2014. Casinos Poland began offering promotional allowances at a limited number of casinos in the third quarter of 2014.

Total operating costs and expenses in creased by $0.5 million, or 4.5% , for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . The in crease in total operating costs and expenses in USD compared to the in crease in total operating costs and expenses in PLN discussed below was due to the 19.4 % exchange rate decrease.

In PLN, total operating costs and expenses in creased by 8.6 million, or 24.8% , for the for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . The increase in total operating costs and expenses was primarily due to increased gaming tax expense of PLN 7.3 million, or 45.4%, due to increased gaming revenue, increased marketing expenses of PLN 0.5 million, or 54.6%, due to the restructuring of promotional and prize giveaways throughout the casinos to encourage play from VIP players, increased depreciation expense of PLN 0.3 million, or 1 4 .8%, and increased expense from the disposal of slot machines and gaming tables at various casinos of PLN 0.5 million, for the three months ended September 30, 2015 compared to the three months ended September 30, 2014.

---

Because of the foregoing, earnings from operations increased by $1.5 million, or 269.7% , net earnings increased by $0.8 million, or 318.8% , and Adjusted EBITDA increased by $1.5 million, or 581.2% , for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . A reconciliation of net earnings to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

In PLN, earnings from operations increased by 5.4 million, or 302.3 %, net earnings increased by 2.9 million, or 294.1 %, and Adjusted EBITDA increased by 5.8 million, or 708.7 %, for the for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . The increase in net earnings of PLN 2.9 million differs from the increase in earnings from operations of PLN 5.4 million due to increas ed income tax expense of PLN 1.3 million and increased earnings attributable to non- controlling interests of PLN 1.4 million , offset by decreased interest expense of PLN 0.2 million for the three months ended September 30, 2015 compared to the three months ended September 30, 2014.

Nine Months Ended September 30, 2015 and 2014

Net operating revenue from Casinos Poland in creased by $1.8 million, or 4.8% , for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 . The in crease in the net operating revenue in USD compared to the increase in net operating revenue in PLN discussed below was due to a decrease in the average exchange rate between the U.S. dollar and the Polish zloty of 21.0 % for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 (the “21. 0 % exchange rate decrease”).

In PLN, net operating revenue increased by 30.6 million, or 26.9 %, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 . The increased revenue was primarily due to inc reased gaming revenue of PLN 3 1 . 3 million, or 27.5%, from slot machines and table games as a result of offering higher quality slot machines, increasing the number of slot machines throughout the casinos by 28 machines and increased roulette play for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. Food and beverage revenue also increased by PLN 0.2 million, or 18.3% , for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. The increased revenue from gaming and food and beverage w ere offset by increased p romotional allowances of PLN 0.8 million for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 . Casinos Poland began offering promotional allowances in a limited number of casinos in the third quarter of 2014.

Total operating costs and expenses decreased by ($2.6) million, or (6.7%) , for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 . The decrease in total operating costs and expenses in USD compared to the increase in total operating costs and expenses in PLN discussed below was due to the 21.0 % exchange rate decrease.

In PLN, total operating costs and expenses increased by 15.3 million, or 13 .0%, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 . Marketing expenses increased by PLN 1.2 million, or 27.2 %, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 due to the restructuring of promotional and prize giveaways throughout the casinos to encourage play from VIP players. Gaming tax expense increased by PLN 16.0 million, or 28.7 %, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 as a result of increased gaming revenue. The increased marketing expense s and gaming tax expense were offset by decreased payroll costs of (PLN 0.5) million, or (1. 6 %), and decreased operating expenses of (PLN 1.5) million, or (8. 3 %), for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 due to decreased staff and decreased operating expenditures as a result of operating efficiencies from a cost cutting program implemented throughout Casinos Poland.

Because of the foregoing, earnings from operations increased by $4.3 million, or 383.1% , net earnings increased by $2.4 million, or 435.8% , and Adjusted EBITDA increased by $3.4 million, or 168.7% , for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 . A reconciliation of net earnings to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

---

In PLN, earnings from operations increased by 15.4 million, or 437.9 %, net earnings increased by 8.2 million, or 397.2 %, and Adjusted EBITDA increased by 13.9 million, or 225.4 %, for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 . The increase in net earnings of PLN 8.2 million differs from the increase in earnings from operations of PLN 15.4 million due to increased income tax expense of PLN 3.5 million , decreased interest income of PLN 0.1 million and increased earnings attributable to non-controlling interests of PLN 4.1 million, offset by decreased interest expense of PLN 0. 4 million and increased gains on foreign currency translation of PLN 0.1 million for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.

Three Months Ended September 30, 2015 and 2014

Net operating revenue for Corporate and Other de creased by ($1.3) million, or (57.8%) , for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . The de crease in net operating revenue was due to decreased gaming revenue as a result of the termination of the concession agreements with Oceania and Regent, indirect subsidiaries of Norwegian, effective June 1, 2015. We transitioned operations of the eight ship-based casinos that we operated onboard Oceania and Regent vessels to Norwegian during the second quarter of 2015. The decreased gaming revenue was offset by $0.3 million in revenue from the consulting agreement with Norwegian under which we are providing limited consulting services for the ship-based casinos of Oceania and Regent in exchange for receiving a consulting fee of $2.0 million that is payable in eight quarterly installments of $250,000 that commenced in July 2015.

Total operating costs and expenses decreased by ($1.1) million, or (29.2%) , for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 , primarily due to decreased expenses in Cruise Ships and Other of ($ 1.4 ) million, or ( 70.4 %), as a result of the termination of the Oceania and Regent concession agreements . The decrease was offset by increased expenses of $0.3 million, or 19.6%, for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 in Corporate Other, which consist ed primarily of increased amortization of stock-based compensation expense of $0.4 million .

Because of the foregoing, losses from operations for Corporate and Other increased by ($0.2) million, or (14.4%) , net losses decreased by $0.3 million, or 31.0% , and Adjusted EBITDA losses decreased $0.1 million, or 10.8%, for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . The difference between the decreased net losses of $ 0. 3 million and the increased losses from operations of ( $ 0.2) million was due to decreased income tax expense of $0. 5 million for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 . A reconciliation of net earnings to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

---

N ine Months Ended September 30, 2015 and 2014

Net operating revenue for Corporate and Other increased by $1.3 million, or 23.1% , for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 . The increase in net operating revenue was due to the $3.4 million from the termination of the Oceania and Regent concession agreements and $0. 3 million in other revenue earned from the Norwegian consulting agreement, offset by the decrease in net operating revenue received from operating the eight ship-based casinos onboard Regent and Oceania for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.

Total operating costs and expenses de creased by ($1.0) million, or (9.4%) , for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. The de crease was due to de creased expenses as a result of the termination of the Oceania and Regent concession agreements , o ffset by $1.3 million, or 24.9%, of increased operating expense s for Corporate Other . The increase in total operating costs and expenses for Corporate Other was primarily due to increased stock-based compensation expense of $ 1.2 million as well as legal and accounting fees, corporate travel expenses, corporate payroll and other expenses not directly related to any of our individual properties.

Because of the foregoing, losses from operations for Corporate and Other decreased by $2.3 million, or 49.5% , net earnings increased by $4.3 million, or 122.8% , and Adjusted EBITDA losses increased by ($0.1) million, or (1.4%) , for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 . The difference between increased net earnings of $ 4.3 million and decreased losses from operations of $ 2.3 million was due to the decrease in income tax expense of $2.0 million, which included the reduction of the Austrian tax valuation allowance of $1.5 million for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. A reconciliation of net earnings to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

Non-Operating Income (Expense)

Non-operating income (expense) for the three and nine months ended September 30, 2015 and 2014 was as follows:

Interest income

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

Interest expense

Interest expense is directly related to interest owed on our BMO Credit Agreement and CPL borrowings , the fair value adjustments for our interest rate swap agreements and interest expense related to CDR ’s land lease. Prior to the acquisition of our ownership interest in CDR, CDR sold a portion of the land on which the REC project has been constructed and then entered into an agreement to lease back a portion of the land sold. We account for the lease using the financing method, accounting for the land subject to the lease as an asset and the lease payments as interest on the financing obligation.

Gain on Foreign Currency Transactions and Other

Gain on foreign currency transactions and other includes $0.5 million received by CDR related to infrastructure built during the development of the REC project for the nine months ended September 30, 2015. The $0.5 million was distributed to CDR’s non-controlling shareholders through non-controlling interest as part of the credit agreement between CCE and CDR.

---

Taxes

Income tax expense is recorded relative to the jurisdictions that recognize book earnings. During the nine months ended September 30, 2015 , we recognized income tax expense of $0. 4 million on pre-tax income of $ 12.7 million, representing an effective income tax rate of 3.2 % compared to an income tax expense of $0. 8 million on pre-tax income of $0. 4 million, representing an effective income tax rate of 208 .5% for the same period in 2014. The estimated effective tax rate for 2015 is 16. 45 %.

The decrease in the effective tax rate compared to the same period in 2014 is primarily the result of the reduction of the Austrian valuation allowance in the second quarter of 2015. We analyzed the likelihood of future realization of our deferred tax assets, including recent cumulative earnings by taxing jurisdiction, expectations of future taxable income or loss, the amount of net operating loss carryforwards not subject to limitations, the number of periods it will take to realize the net operating loss carryforwards and other relevant factors. Based on this analysis, we concluded that our Austrian operations ha d attained a sustained level of profitability sufficient to reduce our valuation allowance in that jurisdiction. Based on this conclusion, the valuation allowance against deferred tax assets in Austria was reduced to zero during the second quarter of 2015 , resulting in a tax benefit of $1.5 million.

Additionally, there is a lower effective tax rate for our Canadian operations due to exchange rate benefits and a valuation allowance maintained for Century Downs deferred tax assets. The effective tax rate in Canada also is impacted by the fair value measurement of the interest rate swap agreements for our Edmonton property. We continue to maintain a full valuation allowance on all of our U.S. deferred tax assets and on certain Canadian deferred tax assets.

---

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.

As of September 30, 2015, our total debt under the bank borrowings and other agreements described below was $39.8 million, of which $34.4 million was long-term debt and $5.4 million was short-term debt. The short - term debt relates to payments due within one year for our credit agreement with the Bank of Montreal , CPL’s two credit agreements and four capital lease agreements , as well as the entire balance of CPL’s credit facility. Net debt, which is total debt minus cash and cash equivalents, was $10.0 million as of September 30, 2015.

Credit Agreement – Bank of Montreal

In May 2012, through our Canadian subsidiaries, we entered into the CAD 28.0 million credit agreement with the Bank of Montreal. On August 15, 2014, an amended and restated BMO Credit Agreement increased the principal amount of the loan to CAD 39.1 million. As of September 30, 2015 , we had borrowed CAD 33. 9 million, of which the outstanding balance was CAD 29.1 million ($2 1 . 7 million based on the exchange rate in effect on September 30, 2015 ) and we had approximately CAD 5. 2 million ($ 3 . 9 million based on the exchange rate in effect on September 30, 2015 ) available for borrowing under the BMO Credit Agreement.  The outstanding borrowings cannot be re-borrowed once they are repaid. We have used borrowings under the BMO Credit Agreement primarily to repay our mortgage loan related to the Edmonton property, pay for the additional 33.3% investment in CPL and pay for development costs related to the REC project.  We can also use the loan proceeds to pursue the development or acquisition of new gaming opportunities and for general corporate purposes. Borrowings bear interest at fixed rates or at BMO’s floating rate plus a margin. Any funds that are not drawn down under the BMO Credit Agreement are subject to standby fees ranging from 0.50% to 0.75% payable quarterly in arrears. Standby fees of less than CAD 0.1 million (less than $0.1 million based on the exchange rate in effect on September 30, 2015 ) were recorded as general and administrative expense in the condensed consolidated statement of earnings (loss) for the three and nine months ended September 30, 2015 . The BMO Credit Agreement has a term of five years through August 2019 and is guaranteed by the Company.  The shares of our subsidiaries in Edmonton and Calgary and our 75% interest in CDR are pledged as collateral for the BMO Credit Agreement.  The BMO Credit Agreement contains a number of financial covenants applicable to the Canadian subsidiaries, including covenants restricting their incurrence of additional debt, a debt to EBITDA ratio, a fixed charge coverage ratio, a requirement to maintain a CAD 28.0 million equity balance and a capital expenditure limit of CAD 2.0 million per year.  We were in compliance with all covenants of the BMO Credit Agreement as of September 30, 2015 .

Casinos Poland

As of September 30, 2015 , CPL had debt totaling PLN 13.4 million ($ 3.5 million based on the exchange rate in effect on September 30, 2015 ). The debt includes two credit agreements, one credit facility and four capital lease agreements.

The first credit agreement is with mBank (formerly known as BRE Bank). Under this credit agreement, CPL entered into a three year term loan in November 2013 at an interest rate of Warsaw Interbank Offered Rate (“WIBOR”) plus 1.75%. Proceeds from the loan were used to repay the balance of the Bank Pocztowy loan related to the CPL properties, invest in slot equipment and relocate the Company’s Poznan, Poland casino. As of September 30, 2015 , the amount outstanding on the term loan was PLN 5.6 million ($1. 5 million based on the exchange rate in effect on September 30, 2015 ). CPL has no further borrowing availability under the loan, and the loan matures in November 2016. The mBank credit agreement contains a number of financial covenants applicable to CPL, including covenants that restrict the incurrence of additional debt and require CPL to maintain debt ratios and current liquidity ratios of 0.6 or higher. On March 26, 2015, CPL and mBank amended the credit agreement to lower the current liquidity ratio to 0.5. CPL was in compliance with all covenants of this mBank agreement as of September 30, 2015 .

---

The second credit agreement is also with mBank. Under this credit agreement, CPL entered into a three year term loan in September 2014 at an interest rate of WIBOR plus 1.70%. Proceeds from the loan were used to repay balances outstanding under a prior credit agreement with mBank that matured in September 2014 and to finance current operations. As of September 30, 2015 , the amount outstanding was PLN 2.4 million ($0. 6 million based on the exchange rate in effect on September 30, 2015 ). CPL has no further borrowing availability under the loan and the loan matures in September 2017. The mBank credit agreement contains a number of financial covenants applicable to CPL, including covenants that restrict the incurrence of additional debt and require CPL to maintain debt ratios and current liquidity ratios of 0.6 or higher. On March 26, 2015, CPL and mBank amended the credit agreement to lower the current liquidity ratio to 0.5. CPL was in compliance with all covenants of this mBank agreement as of September 30, 2015 .

The credit facility is a short-term line of credit with BPH Bank used to finance current operations. The bank line of credit bears an interest rate of WIBOR plus 1.85%. The credit facility terminates on February 13, 2016. As of September 30, 2015 , the amount outstanding was PLN 5.3 million ($ 1.4 million based on the exchange rate in effect on September 30, 2015 ) and CPL had approximately PLN 5.7 million ($ 1.5 million based on the exchange rate in effect on September 30, 2015 ) available under the facility. The BPH Bank facility contains a number of financial covenants applicable to CPL, including covenants that restrict the incurrence of additional debt and debt to EBITDA ratios. CPL was in compliance with all covenants of the BPH Bank line of credit as of September 30, 2015 .

CPL’s remaining debt consists of four capital lease agreements for various vehicles. As of September 30, 2015 , the amount outstanding was PLN 0.1 million (less than $0.1 million based on the exchange rate in effect on September 30, 2015 ).

In addition, under Polish gaming law, CPL is required to maintain PLN 3.6 million in the form of deposits or bank guarantees for payment of casino jackpots and gaming tax obligations.  mBank has issued guarantees to CPL for this purpose totaling PLN 3.6 million ($ 0.9 million based on the exchange rate in effect on September 30, 2015 ). The mBank guarantees are secured by land owned by CPL in Kolbaskowo, Poland and terminate on October 31, 2019.  In addition, CPL is required to maintain deposits or provide bank guarantees for payment of additional prizes and giveaways at the casinos. The amount of these deposits varies depending on the value of the prizes. CPL maintained $0. 3 million in deposits for this purpose as of September 30, 2015 and December 31, 2014. These deposits are recorded in deposits and other on our condensed consolidated balance sheets.

Century Downs Racetrack and Casino

Prior to our acquisition of an ownership interest in CDR, CDR sold a portion of the land on which the REC project has been constructed and then entered into an agreement to lease back a portion of the land sold. We account for the lease using the financing method by accounting for the land subject to the lease as an asset and the lease payments as interest on a financing obligation. As of September 30, 2015 , the outstanding balance on the financing obligation was CAD 19.5 million ($ 14.5 million based on the exchange rate in effect on September 30, 2015 ) and the implicit interest rate was 10.0%.

Cash Flows

Cash and cash equivalents totaled $2 9 . 8 million at September 30, 2015 , and we had working capital (current assets minus current liabilities) of $ 10. 8 million compared to cash and cash equivalents of $24.7 million and working capital of $2.0 million at December 31, 2014. The increase in cash and cash equivalents is due to $ 13.3 million of net cash provided by operating activities, $ 6.8 million in proceeds from borrowings net of principal payments, $0.7 million in proceeds from the sale of fixed assets and $0.1 million in proceeds from the exercise of stock options. The cash provided by these activities was offset by $ 14.3 million used to purchase property and equipment, mainly for the development of the REC project, a $0.5 million distribution to non-controlling interest and $ 1.0 million in exchange rate changes on cash.

Net cash provided by operating activities was $ 13.3 million for the nine months ended September 30, 2015 and $2. 2 million for the nine months ended September 30, 2014 . The cash provided by operating activities for the nine months ended September 30, 2015 included $3.4 million from the termination of the Oceania and Regent concession agreements. Our cash flows from operations have historically been positive and sufficient to fund ordinary operations. Trends in our operating cash flows tend to follow trends in earnings from operations, excluding non-cash charges. Please refer to the condensed consolidated statements of cash flows in Part I, Item 1 of this Form 10-Q and to management’s discussion of the results of operations above in this Item 2 for a discussion of earnings from operations.

---

Net cash used in investing activities of $ 13. 7 million for the nine months ended September 30, 2015 consisted of $ 11.6 million for development costs related to the REC project, $0. 5 million to purchase slot machines and table game equipment for the casinos operated by Casinos Poland, $0.1 million in improvements to the casinos in Poznan and Katowice operated by Casinos Poland, $0.1 million to purchase new sign displays for the casinos in Warsaw and Wroclaw operated by Casinos Poland, $0.3 million to purchase new slot machines for the Mein Schiff 4, Star Breeze and Star Legend ship-based casinos, $0. 3 million to purchase slot machines for our Cripple Creek and Central City properties, $0.1 million to purchase new surveillance equipment at our Cripple Creek property, $0.1 million in sound equipment for the showroom and $0.1 million in parking lot repairs at our Edmonton property , $0.1 million to remodel the Mid City Grill and kitchen at our Calgary property and $ 1. 1 million in other fixed asset additions at our properties offset by $0.7 million in proceeds from the disposition of assets.

Net cash used in investing activities of $ 8.2 million for the nine months ended September 30, 2014 consisted of $ 2 .6 million to remodel the new Poznan casino location, make improvements to the Katowice location, convert slot machines from cash to ticket in ticket out machines and purchase new slot machines for the casinos operated by Casinos Poland, $ 3.7 million for development costs related to the REC project, $0.8 million to purchase new slot machines, surveillance systems and various gaming equipment for the Mein Schiff 3, Insignia and Nova Star ship-based casinos, $0.4 million to remodel hotel rooms in our Cripple Creek property, $0.1 million to purchase slot machines for our Central City property, $0.1 million to replace slot chairs in our Edmonton property, $0.1 million to remodel the slot bar at our Calgary property and $0.9 million in other fixed asset additions at our properties. The capital expenditures were offset by proceeds from the repayment of a $0.5 million loan made by the Company in connection with a proposed casino project in Southeast Asia that the Company decided not to pursue following its diligence investigation.

Net cash provided by financing activities of $ 6.3 million for the nine months ended September 30, 2015 consisted of $ 6.8 million cash received under various loan agreements net of principal repayments and $0.1 million cash from the exercise of stock options, offset by a $0.5 million distribution to non-controlling interest.

Net cash provided by financing activities of $ 6.4 million for the nine months ended September 30, 2014 consisted of $ 6 .7 million cash received under various loan agreements net of principal repayments offset by a $0.3 million distribution to non-controlling interests in CDR.

Common Stock Repurchase Program

Since 2000, we have had a discretionary program to repurchase our outstanding common stock. In November 2009, we increased the amount available to be repurchased to $15.0 million. We did not repurchase any common stock during the nine months ended September 30, 2015 . The total amount remaining under the repurchase program was $14.7 million as of September 30, 2015 . The repurchase program has no set expiration or termination date.

Potential Sources of Liquidity, Short-Term Liquidity

Historically, our primary sources of liquidity and capital resources have been cash flow from operations, bank borrowings, sales of existing casino operations and proceeds from the issuance of equity securities.

We expect that the primary source of cash will be from our gaming operations. In addition to the payment of operating costs, expected uses of cash within one year include capital expenditures for our existing properties, interest and principal payments on outstanding debt and potential new projects or dividends, if declared by the board of directors. If necessary, we may seek to obtain further term loans, mortgages or lines of credit with commercial banks or other debt or equity financings to supplement our working capital and investing requirements.

We believe that our cash at September 30, 2015 , as supplemented by cash flows from operations, will be sufficient to fund our anticipated operating costs, capital expenditures at existing properties and current debt repayment obligations for at least the next 12 months. We will continue to evaluate our planned capital expenditures at each of our existing locations in light of the operating performance of the facilities at such locations. From time to time we expect to have cash needs for the development or purchase of new properties that exceed our current borrowing capacity and we may be required to seek additional debt, equity or bank financing.

---

In addition, we expect our U.S. domestic cash resources will be sufficient to fund our U.S. 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 U.S. than is generated by our U.S. operations for operations, capital expenditures or significant discretionary activities such as acquisitions or businesses and share repurchases. If so, we could elect to repatriate earnings from foreign jurisdictions or raise capital in the U.S. through debt or equity issuances, which could have adverse tax consequences, as we have not accrued taxes for un-repatriated earnings of our foreign subsidiaries. We estimate that approximately $ 24.6 million of our total $2 9 . 8 million in cash and cash equivalents at September 30, 2015 is held by our foreign subsidiaries and is not available to fund U.S. operations unless repatriated. The determination of the additional deferred taxes that would be provided for undistributed earnings has not been determined because the hypothetical calculation is not practicable.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Pursuant to Item 305(c) of Regulation S-K, we are not required to provide an update on our quantitative and qualitative disclosures about market risk until after we have filed our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures – Our management, with the participation of our principal executive officers and principal financial/accounting officer, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, for the period covered by this report. Based on such evaluation, our principal executive officers and principal financial/accounting officer have concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting – There were no changes in our internal control over financial reporting that occurred during the three months ended September 30, 2015 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In March 2000, our board of directors approved 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 repurchase program has no set expiration or termination date and had approximately $14.7 million remaining as of September 30, 2015 . There were no repurchases of common stock during the three months ended September 30, 2015 .

---

Item 6. Exhibits

* Filed herewith.

** Furnished herewith.

SIGNATURES

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

---

CENTURY CASINOS, INC.

INDEX TO EXHIBITS

* Filed herewith.

** Furnished herewith.

---