Forward-Looking Statements, Business Environment and Risk Factors

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

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

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

OVERVIEW

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

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

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

- Womacks Casino & Hotel in Cripple Creek, Colorado;

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

- The Caledon Hotel, Spa & Casino near Cape Town, South Africa; and

- The Century Casino & Hotel in Newcastle, South Africa.

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

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

From time to time, we may sell existing businesses in order to raise capital for future acquisitions, fund new development opportunities or to improve other locations. On December 5, 2008, we entered into an agreement to sell the Century Casino Millennium located in Prague, Czech Republic, for approximately $2.3 million (CZK 22.0 million plus $1.2 million). Approximately $1.5 million (CZK 22.0 million plus $0.4 million) was paid to us at closing on February 11, 2009. The balance is payable over the 12 months following the closing. For the three months ended March 31, 2009, we recognized a gain of $0.9 million related to the disposition of the Century Casino Millennium.

On December 19, 2008, a subsidiary of ours entered into an agreement to sell all of the outstanding shares of Century Casinos Africa (Pty) Limited ("CCA") for a gross selling price of ZAR 460.0 million (approximately $48.3 million) less the balance of third party South African debt and other agreed to amounts. Net proceeds from the transaction are expected to be approximately ZAR 357.3 million (approximately $37.5 million) and are payable at closing, which is expected to occur towards the end of the first half of 2009. CCA owns the Caledon Hotel, Spa & Casino and 60% of the Century Casino & Hotel in Newcastle, Africa. On April 24, 2009, the Competition Tribunal of South Africa approved the transaction. The closing of the transaction is still subject to approval by the Western Cape Gambling and Racing Board and the KwaZulu-Natal Gambling Board.

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

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

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

Beginning July 2, 2009, gaming establishments in Colorado will be permitted to raise the maximum betting limit from $5 to $100, be open for 24-hours and add roulette and craps tables. While management currently cannot project the estimated impact of this change, we believe that our gaming revenues in Cripple Creek, Colorado and Central City, Colorado will be positively impacted.

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

                             For the three months
                                ended March 31,
                                2009       2008
Canadian dollar (CAD)          1.2453     1.0046
Czech koruna (CZK)            21.1428    17.0697
Euros (€)                      0.7673     0.6678
Polish zloty (PLN)             3.4565     2.3871
South African rand (ZAR)       9.9432     7.5502

Source: Pacific Exchange Rate Service

RESULTS OF OPERATIONS

The results of operations for the three months ended March 31, 2009 and 2008 are
below (in thousands):

                                                         For the three months
                                                            ended March 31,
                                                          2009            2008

Gaming revenue                                         $    11,472      $ 12,974
Net operating revenue                                       11,999        13,530
Total operating costs and expenses                          11,912        14,056
Earnings from equity investment                                 89           460
Operating earnings (loss) from continuing operations           176           (66 )
Loss from continuing operations                             (1,473 )        (568 )
Earnings from discontinued operations                        1,818         1,109
Net earnings                                                   345           541
Earnings per share
Basic
Loss from continuing operations                              (0.07 )       (0.02 )
Net earnings                                                  0.01          0.02
Diluted
Loss from continuing operations                              (0.07 )       (0.02 )
Net earnings                                                  0.01          0.02

The decrease in net operating revenue from $13.5 million for the three months ended March 31, 2008 to $12.0 million for the three months ended March 31, 2009 is primarily the result of a $0.7 million decline in gaming revenue at our properties in Colorado, a $0.5 million decline in gaming revenue at our casino in Edmonton and a $0.2 million decline in hotel, food and beverage revenue at our casino in Edmonton. The average exchange rate between the U.S. dollar and Canadian dollar decreased 24.0% from the three months ended March 31, 2008 to the three months ended March 31,2009 and contributed to the decline in revenue at our casino in Edmonton.

The decrease in operating costs and expenses from $14.1 million for the three months ended March 31, 2008 to $11.9 million for the three months ended March 31, 2009 is primarily the result of a decrease in gaming expenses that are directly related to the decline in gaming revenue, a decline in the average exchange rate between the U.S. dollar and Canadian dollar of 24.0% and a decline in general and administrative expenses resulting from cost saving measures.

The increase in losses from continuing operations from a loss of $0.6 million for the three months ended March 31, 2008 to a loss of $1.5 million for the three months ended March 31, 2009 was due to a decline of $0.4 million in earnings from our equity investment in CPL, additional foreign currency losses of $0.6 million and a decrease in tax benefits of $0.9 million as we have not recorded a tax benefit on our U.S. operating losses during the first quarter of 2009. These decreases were offset by a decrease in net interest charges of approximately $0.3 million and an increase in earnings from operations of $0.6 million resulting from cost saving measures.

Net operating revenue by property for the three months ended March 31, 2009 and 2008 is summarized below (in thousands):

                                                       For the three months
                                                        ended March 31, (1)
                                                        2009            2008

Century Casino & Hotel (Edmonton, Alberta, Canada)   $     4,796      $  5,557
Womacks (Cripple Creek, Colorado)                          2,572         2,882
Century Casino & Hotel (Central City, Colorado)            4,163         4,407
Cruise Ships                                                 468           683
Casinos Poland (Poland)(2)                                     -             -
Corporate                                                      -             1
Net operating revenue                                $    11,999      $ 13,530


(1)  Excludes discontinued operations

(2) Accounted for as an equity investment.

Earnings (losses) from operations by property for the three months ended March 31, 2009 and 2008 are summarized below (in thousands):

                                                       For the three months
                                                        ended March 31, (1)
                                                        2009            2008

Century Casino & Hotel (Edmonton, Alberta, Canada)   $     1,476      $  1,557
Womacks (Cripple Creek, Colorado)                             98          (134 )
Century Casino & Hotel (Central City, Colorado)              312            81
Cruise Ships                                                   -            84
Casinos Poland (Poland)(2)                                    89           460
Corporate                                                 (1,799 )      (2,114 )
Earnings (loss) from operations                      $       176      $    (66 )


(1)  Excludes discontinued operations

(2) Accounted for as an equity investment.

Three months ended March 31, 2009 vs 2008

Revenue

The following revenue discussion excludes discontinued operations. Net operating revenue for the three months ended March 31, 2009 and 2008 was as follows (in thousands):

                                  Three months
                                 ended March 31,
                                                                       Percentage
                                2009         2008       Variance        Variance

Gaming                        $ 11,472     $ 12,974     $  (1,502 )          (11.6 %)
Hotel, food and beverage         1,899        2,084          (185 )           (8.9 %)
Other                              409          453           (44 )           (9.7 %)
Gross revenue                   13,780       15,511        (1,731 )          (11.2 %)
Less promotional allowances      1,781        1,981           200            (10.1 %)
Net operating revenue         $ 11,999     $ 13,530     $  (1,531 )          (11.3 %)

Gaming revenue

Gaming revenue decreased by $1.5 million, or 11.6%, from $13.0 million for the three months ended March 31, 2008 to $11.5 million for the three months ended March 31, 2009. Reduced revenue at all of our properties contributed to this decline, as discussed below.

Gaming revenue at the Century Casino & Hotel in Edmonton decreased by $0.5 million, or 13.3%, from $4.1 million for the three months ended March 31, 2008 to $3.6 million for the three months ended March 31, 2009, primarily resulting from a 24.0% decline in the average exchange rate between the U.S. dollar and Canadian dollar compared to the average exchange rate for the three months ended March 31, 2008. Gaming revenue in Canadian dollars increased by CAD 0.3 million, or 7.4%, from CAD 4.1 million for the three months ended March 31, 2008 to CAD 4.4 million for the three months ended March 31, 2009. This increase is the result of an increase of 15.7% in table revenue and an increase in slot revenue of 1.5%.

Gaming revenue at Womacks in Cripple Creek decreased by $0.5 million, or 13.8%, from $3.4 million for the three months ended March 31, 2008 to $2.9 million for the three months ended March 31, 2009. Management believes that the opening of a larger casino in Cripple Creek in May 2008 has impacted our revenue. Management also believes that we lost a significant amount of our customer base due to a renovation that we began during the fourth quarter of 2007 and continued through the first quarter of 2008. We believe the renovation has upgraded the gaming floor and dining area, but may have inconvenienced customers and led them to gamble elsewhere. We are currently reviewing various marketing and other strategies to increase gaming revenue at Womacks. Womacks has continued the effort to improve its customers' experience by converting 100% of the total machines on the floor to Ticket in/Ticket out devices. The Cripple Creek gaming market grew by 4.6% from the three months ended March 31, 2008 to the three months ended March 31, 2009 as a result of the opening of a larger casino in May 2008. Our market share of the Cripple Creek gaming revenue declined from 10.8% for the first quarter of 2008 to 8.8% for the first quarter of 2009. This represents an 18.5% decrease in the market share while our share of the slot machines in the Cripple Creek market declined by 19.7%.

Gaming revenue at the Century Casino and Hotel in Central City decreased by $0.3 million, or 5.7%, from $4.8 million for the three months ended March 31, 2008 to $4.5 million for the three months ended March 31, 2009. Management believes that gaming revenue was negatively impacted by a 9.5% decline in the Central City gaming market for the three months ended March 31, 2009 compared to the three months ended March 31, 2008, which can be attributed to a decline in consumer discretionary spending. Our market share of the Central City gaming revenue increased from 28.2% for the first quarter of 2008 to 29.3% for the first quarter of 2009.

Hotel, food and beverage revenue

Hotel, food and beverage revenue decreased by $0.2 million, or 8.9%, from $2.1 million for the three months ended March 31, 2008 to $1.9 million for the three months ended March 31, 2009, primarily due to a decline in the average exchange rate between the U.S. dollar and the Canadian dollar. In U.S. dollars, hotel, food and beverage revenue at our casino in Edmonton decreased by $0.2 million, or 14.4%, from $1.2 million for the three months ended March 31, 2008 to $1.0 million for the three months ended March 31, 2009. In Canadian dollars, hotel, food and beverage revenue increased CAD 0.1 million, or 6.4%, from CAD 1.2 million for the three months ended March 31, 2008 to CAD 1.3 million for the three months ended March 31, 2009.

Promotional allowances

Promotional allowances decreased by $0.2 million, or 10.1%, from $2.0 million for the three months ended March 31, 2008 to $1.8 million for the three months ended March 31, 2009. Promotional allowances decreased by $0.2 million at Womacks primarily due to one time costs incurred in 2008 for the implementation of an automated dispensing system used to track beverages and a decline in attendance at the casino during the first quarter of 2009. The retail value of accommodations, food and beverage, and other services furnished to guests without charge ("complimentaries") is included in gross revenue and then deducted as promotional allowances. As a result, complimentaries neither increase nor decrease our overall net operating revenue.

Operating Costs and Expenses

The following operating cost and expense discussion excludes discontinued
operations. Operating costs and expenses for the three months ended March 31,
2009 and 2008 were as follows (in thousands):

                                         Three months
                                        ended March 31,
                                                                              Percentage
                                       2009         2008       Variance        Variance

Gaming                               $  4,469     $  5,392     $    (923 )          (17.1 %)
Hotel, food and beverage                1,540        1,728          (188 )          (10.9 %)
General and administrative              4,331        5,267          (936 )          (17.8 %)
Depreciation                            1,572        1,669           (97 )           (5.8 %)
Total operating costs and expenses   $ 11,912     $ 14,056     $  (2,144 )          (15.3 %)

Gaming expenses

Gaming expenses decreased $0.9 million, or 17.1%, from the three months ended March 31, 2008 to the three months ended March 31, 2009, primarily due to a decrease in expenses at our Colorado casinos that are directly related to decreased gaming revenue and a decline in the average exchange rate between the U.S. dollar and the Canadian dollar.

Gaming expenses at the Century Casino & Hotel in Edmonton decreased $0.3 million, or 17.0%, from $1.6 million for the three months ended March 31, 2008 to $1.3 million for the three months ended March 31, 2009, due to a decline in the average exchange rate between the U.S. dollar and the Canadian dollar. In Canadian dollars, gaming expenses remained flat at CAD 1.6 million when comparing the first quarter of 2009 to the first quarter of 2008. There were no significant increases or decreases in gaming expenses period over period.

Gaming expenses at Womacks decreased $0.3 million, or 24.4%, from $1.3 million for the three months ended March 31, 2008 to $1.0 million for the three months ended March 31, 2009. This decrease is primarily the result of a $0.1 million decrease in gaming taxes resulting from the decrease in gaming revenue, a decline in royalties of $0.1 million and a decline in payroll expenses of $0.1 million. As part of a plan to bring expenses in line with revenue levels, management has reduced gaming staff levels at the casino.

Gaming expenses at the Century Casino & Hotel in Central City decreased $0.2 million, or 10.2%, from $2.0 million for the three months ended March 31, 2008 to $1.8 million for the three months ended March 31, 2009, primarily due to a $0.1 million decrease in gaming taxes resulting from the decrease in gaming revenue and a $0.1 million decrease in payroll expenses. As part of a plan to bring expenses back in line with revenue levels, management has reduced gaming staff levels at the casino.

Gaming expenses aboard the cruise ships on which we operate declined by $0.1 million, or 25.8%, from $0.5 million for the three months ended March 31, 2008 to $0.4 million for the three months ended March 31, 2009, primarily due to a decline in concession fees paid to the cruise ship operators.

Hotel, food and beverage expenses

Hotel, food and beverage expenses decreased by $0.2 million, or 10.9%, from $1.7 million for the three months ended March 31, 2008 to $1.5 million for the three months ended March 31, 2009, primarily due to a decline in the average exchange rate between the U.S. dollar and the Canadian dollar from the first quarter of 2008 to the first quarter of 2009. In U.S. dollars, hotel, food and beverage expenses at our casino in Edmonton decreased by $0.2 million, or 18.2%, from $0.9 million for the three months ended March 31, 2008 to $0.7 million for the three months ended March 31, 2009. In Canadian dollars, hotel, food and beverage expenses remained flat at CAD 0.9 million for the three months ended March 31, 2009 compared to the three months ended March 31, 2008.

General and administrative expenses

General and administrative expenses decreased $1.0 million, or 19.2%, from $5.3 million for the three months ended March 31, 2008 to $4.3 million for the three months ended March 31, 2009. General and administrative expenses include facility maintenance, utilities, property and liability insurance, property taxes, housekeeping, and all administrative departments, such as information technology, accounting, human resources and internal audit.

General and administrative expenses at the Century Casino & Hotel in Edmonton decreased by $0.2 million, or 16.5%, from $1.2 million for the three months ended March 31, 2008 to $1.0 million for the three months ended March 31, 2009, primarily due to the decline in the average exchange rate between the U.S. dollar and the Canadian dollar. In Canadian dollars, general and administrative expenses increased by CAD 0.1 million, or 4.8%, from CAD 1.2 million for the three months ended March 31, 2008 to CAD 1.3 million for the three months ended March 31, 2009, primarily due to an increase in utility charges.

General and administrative expenses at Womacks decreased by $0.2 million, or 22.9%, from $0.9 million for the three months ended March 31, 2008 to $0.7 million for the three months ended March 31, 2009, due to a $0.2 million decrease in payroll related to reduced staffing at the casino.

General and administrative expenses at the Century Casino & Hotel in Central City decreased by $0.2 million, or 20.9%, from $1.1 million for the three months ended March 31, 2008 to $0.9 for the three months ended March 31, 2009. The decrease is primarily the result of a $0.1 million decline in payroll expenses related to reduced staffing at the casino and a $0.1 million decline in property taxes.

Combined general and administrative expenses aboard the cruise ships remained flat at less than $0.1 million for the three months ended March 31, 2009 compared to the three months ended March 31, 2008.

Corporate expenses decreased by $0.3 million, or 19.0%, from $2.0 million for the three months ended March 31, 2008 to $1.7 million for the three months ended March 31, 2009, primarily due to a decrease in payroll expense of $0.2 million and a decline in legal, accounting and other professional fees of $0.1 million.

At March 31, 2009, we had $1.5 million of total unrecognized compensation expense related to unvested stock options and unvested restricted stock. Of this amount, $0.7 million will be recognized over the remainder of 2009, and $0.8 million will be recognized in subsequent years through 2011.

Depreciation

Depreciation expense decreased by $0.1 million, or 5.8%, from $1.7 million for the three months ended March 31, 2008 to $1.6 million for the three months ended March 31, 2009. The decrease is primarily the result of the decline in the average exchange rate between the U.S. dollar and Canadian dollar, which resulted in a decline in depreciation expense of $0.1 million at our casino in Canada. In Canadian dollars, depreciation remained flat at the casino for the three months ended March 31, 2009 compared to the three months ended March 31, 2008. Depreciation expense at our remaining properties remained flat period over period.

Non-operating income (expense)

The following non-operating income (expense) discussion excludes discontinued . . .