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Description Of Business And Basis Of Presentation | 6 Months Ended
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Jun. 30, 2023
Description Of Business And Basis Of Presentation [Abstract] |
Description Of Business And Basis Of Presentation | 1.DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Century Casinos, Inc. (the “Company”) is a casino entertainment company with operations primarily in North America. The Company’s operations as of June 30, 2023 are detailed below. The Company owns, operates and manages the following casinos through wholly-owned subsidiaries in North America: The Century Casino & Hotel in Central City, Colorado (“CTL”) The Century Casino & Hotel in Cripple Creek, Colorado (“CRC”) Mountaineer Casino, Resort & Races in New Cumberland, West Virginia (“Mountaineer” or “MTR”) (1) The Century Casino Cape Girardeau, Missouri (“Cape Girardeau” or “CCG”) (1) The Century Casino Caruthersville, Missouri (“Caruthersville” or “CCV”) (1) Nugget Casino Resort in Sparks, Nevada (“Nugget”) (2) The Century Casino & Hotel in Edmonton, Alberta, Canada (“Century Resorts Alberta” or “CRA”) The Century Casino St. Albert in Edmonton, Alberta, Canada (“CSA”); and Century Mile Racetrack and Casino in Edmonton, Alberta, Canada (“CMR” or “Century Mile”) (3) (1)Subsidiaries of VICI Properties Inc. (“VICI”), an unaffiliated third party, own the real estate assets underlying these properties. (2)Smooth Bourbon, LLC (“Smooth Bourbon”), a 50% owned subsidiary of the Company, owns the real estate assets underlying this property. Smooth Bourbon is consolidated as a subsidiary for which the Company has a controlling financial interest. See discussion below. (3)CMR leases the land on which CMR’s racing and entertainment centre (“REC”) and racetrack are located. After selling the casino operations of Century Casino Calgary in August 2020, the Company continued to own the land and building and continued to operate Century Sports, a sports bar, bowling and entertainment facility located on the property. In February 2022, the Company sold the land and building in Calgary, transferred the lease agreement for the casino premises to the buyer, and ceased operating Century Sports. See “Terminated Projects” below in this Note 1 for additional information about the Calgary property. The Company’s Colorado and West Virginia subsidiaries have partnered with sports betting and iGaming operators to offer sports wagering and online betting through mobile apps. The Company has a controlling financial interest through its wholly-owned subsidiary Century Resorts Management GmbH (“CRM”) in the following majority-owned subsidiaries: The Company owns 66.6% of Casinos Poland Ltd (“CPL” or “Casinos Poland”). As of June 30, 2023, CPL owned and operated eight 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. The Company owns 75% of 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. Through its wholly owned subsidiary Century Nevada Acquisition, Inc., the Company has a 50% equity interest in Smooth Bourbon. The Company reported this interest as an equity investment through April 2, 2023. On April 3, 2023, following the Company’s acquisition of Nugget Casino Resort, the Company began consolidating Smooth Bourbon as a subsidiary for which it has a controlling financial interest. The Company determined it has a controlling financial interest in Smooth Bourbon based on the Nugget being the primary beneficiary of Smooth Bourbon. The remaining 50% of Smooth Bourbon is owned by Marnell Gaming, LLC (“Marnell”) and is reported as a non-controlling financial interest. See “Equity Investment” below in this Note 1 for additional information regarding the consolidation of Smooth Bourbon and Note 3 for additional information about Smooth Bourbon. The Company previously operated several ship-based casinos. The Company’s last concession agreement to operate ship-based casinos ended on April 16, 2023. The table below illustrates the ships operating during the three and six months ended June 30, 2023 and 2022.
Ship | Operated From | Operated To
Mein Schiff Herz | April 5, 2022 | April 16, 2023
Mein Schiff 6 | June 11, 2021 | April 18, 2022
Recent Developments Related to COVID-19 Since the inception of the COVID-19 pandemic in March 2020, the Company varied its casinos’ operations based on the governmental health and safety requirements in the jurisdictions in which they are located. The COVID-19 pandemic impacted the Company’s results of operations in 2020 and the first half of 2021, and into the first quarter of 2022 for its Canada properties. Currently, the Company’s operations have no health and safety requirements for entry and few other COVID-19 related restrictions. The duration and impact of the COVID-19 pandemic remains uncertain. The Company cannot predict the negative impacts that COVID-19 will have on its consumer demand, workforce, suppliers, contractors and other partners and whether future closures will be required. Such closures have had a material impact on the Company’s financial results and the effects of COVID-19, ongoing governmental health and safety requirements and any future closures could have a material impact on the Company. The Company will continue to monitor its liquidity and make reductions to marketing and operating expenditures, where possible, if future government mandates or closures are required that would have an adverse impact on the Company. Other Projects and Developments Nugget Casino Resort in Sparks, Nevada In February 2022, the Company entered into a definitive agreement with Marnell, pursuant to which a newly formed subsidiary of the Company agreed to purchase from Marnell (i) 50% of the membership interests in Smooth Bourbon, and (ii) 100% of the membership interests in Nugget. Nugget owns and operates the Nugget Casino Resort in Sparks, Nevada, and Smooth Bourbon owns the real property on which the casino is located. The Company purchased 50% of the membership interests in Smooth Bourbon for approximately $95.0 million (the “Smooth Bourbon Acquisition”) at the first closing, which occurred on April 1, 2022 (the “First Closing”). The Company used approximately $29.3 million of cash on hand and borrowings under the Goldman Credit Agreement (see Note 5) in connection with the First Closing. On April 3, 2023 (the “Second Closing”), the Company purchased 100% of the membership interests in Nugget for approximately $104.7 million (subject to certain adjustments) (the “OpCo Acquisition” and, together with the Smooth Bourbon Acquisition, the “Nugget Acquisition”). The purchase price for the OpCo Acquisition was paid from proceeds of the term loan under the Goldman Credit Agreement deposited in escrow (“Acquisition Escrow”) on the First Closing date. Following the Second Closing, the Company owns the Nugget Casino Resort and 50% of the membership interests in Smooth Bourbon. The Company also has a five year option through April 1, 2027 to acquire the remaining 50% of the membership interests in Smooth Bourbon for $105.0 million plus 2% per annum. At the First Closing, Smooth Bourbon entered into a lease with Nugget for an annual rent of $15.0 million. Rocky Gap Casino Resort in Flintstone, Maryland In August 2022, the Company entered into a definitive agreement with Golden Entertainment Inc. (“Golden”), Lakes Maryland Development, LLC, a subsidiary of Golden (“Lakes Maryland”), and VICI Properties, L.P., an affiliate of VICI (“VICI PropCo”), pursuant to which the Company agreed to acquire the operations of Rocky Gap Casino Resort (“Rocky Gap” and, such transaction, the “Rocky Gap Acquisition”). Pursuant to a real estate purchase agreement, dated August 24, 2022, by and between Evitts Resort, LLC, a subsidiary of Golden (“Evitts”), and an affiliate of VICI PropCo (“VICI PropCo Buyer”), VICI PropCo Buyer agreed to acquire a related interest in the land and building associated with Rocky Gap from Evitts. On July 25, 2023, the Company purchased the operations of Rocky Gap for approximately $61.2 million (subject to certain adjustments), and VICI PropCo Buyer purchased a related interest in the land and building associated with Rocky Gap for approximately $203.9 million. In connection with the Rocky Gap Acquisition, subsidiaries of the Company and a subsidiary of VICI PropCo entered into an amendment to their triple net lease agreement (the “Master Lease”) that (i) adds Rocky Gap to the Master Lease, (ii) provides for an increase in initial annualized rent of approximately $15.5 million and (iii) extends the initial Master Lease term for 15 years from the date of the amendment (subject to the existing four five year renewal options). See Note 15 for additional information. ‎ Canadian Real Estate Sale On May 16, 2023, the Company entered into definitive agreements for subsidiaries of VICI to acquire the real estate assets of Century Casino & Hotel Edmonton in Edmonton, Alberta, Century Casino St. Albert in Edmonton, Alberta, Century Mile Racetrack and Casino in Edmonton, Alberta and Century Downs Racetrack and Casino in Calgary, Alberta (collectively, the “Century Canadian Portfolio”) for an aggregate purchase price of CAD 221.7 million ($167.3 million based on the exchange rate on June 30, 2023) in cash (the “Canada Real Estate Sale”). Simultaneous with the closing of the transaction, the Century Canadian Portfolio will be added to the Master Lease and annual rent will increase by CAD 17.3 million ($13.1 million based on the exchange rate on June 30, 2023). Additionally, the term of the Master Lease will be extended such that, upon closing of the transaction, the lease will have a full 15-year initial base lease term, with four 5-year renewal options. The transaction is subject to customary regulatory approvals and closing conditions and is expected to close in the third quarter of 2023. Recent Developments Related to Century Casino Caruthersville The Caruthersville casino had operated on a riverboat and barge since 1994. On October 13, 2022, the riverboat had to be closed as it was no longer accessible from the barge because of the record low water levels in the Mississippi River. On October 26, 2022, the Missouri Gaming Commission (“MGC”) approved the relocation of the casino at Century Casino Caruthersville from the riverboat and barge to a land-based pavilion until the new land-based casino and hotel are completed, as discussed below. The riverboat had 519 slot machines and seven table games. From October 2022 to December 2022, the casino operated only from the barge with 299 slot machines and four table games. The move to the pavilion, which has 416 slot machines and six table games, was completed in December 2022. The pavilion building will not be affected by water levels, is protected by a flood wall and provides for easier access to the casino for customers than the riverboat. The riverboat and barge were removed on February 25, 2023. Caruthersville Land-Based Casino and Hotel The Company is building a new land-based casino with a 38 room hotel adjacent to and connected with the existing casino pavilion building. Construction on the project began in December 2022 and it is expected to be completed in the second half of 2024 with an estimated project cost of $51.9 million. The Company is financing this project through financing provided by VICI PropCo. As of June 30, 2023, the Company has received $19.8 million in financing from VICI PropCo and has spent $9.9 million of those funds on this project. Caruthersville Hotel In July 2021, the Company announced that it had purchased land and a small two-story hotel near Century Casino Caruthersville with plans to refurbish the existing hotel’s 36 rooms. The Company opened the hotel, called The Farmstead, on October 30, 2022 with a total project cost of $3.6 million. Cape Girardeau Hotel The Company is building a 69 room hotel at its Cape Girardeau location. The hotel is planned as a six story building with 68,000 square feet that will be adjacent to and connected with the existing casino building. Construction on the project began in September 2022, and it is expected to be completed in the first half of 2024. The Company estimates a project cost of approximately $30.5 million. The Company is financing the project with cash on hand. As of June 30, 2023, the Company has spent $12.1 million on this project. Terminated Projects Century Sports In August 2020, the Company announced that it had entered into an agreement to sell the casino operations of Century Casino Calgary for CAD 10.0 million ($7.5 million based on the exchange rate on August 5, 2020) plus a three year quarterly earn out as specified in the agreement. The transaction closed on December 1, 2020. The Company received earn out payments of CAD 0.9 million ($0.7 million based on the exchange rate on June 30, 2023) and CAD 1.7 million ($1.3 million based on the exchange rate of June 30, 2023) for the three and six months ended June 30, 2023, respectively, that are recorded to gain on sale of casino operations in its condensed consolidated statement of (loss) earnings. After the sale, the Company continued to operate Century Sports and to own the underlying real estate. On February 10, 2022, the Company sold the land and building in Calgary for CAD 8.0 million ($6.3 million based on the exchange rate on February 10, 2022) at which time the Company transferred the lease agreement for the casino premises to the buyer and ceased operating Century Sports. Century Sports was included in the Canada reportable segment. ‎ Preparation of Financial Statements 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. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated. In the opinion of management, all adjustments considered necessary for the 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, 2022. The results of operations for the six months ended June 30, 2023 are not necessarily indicative of the operating results for the full year. Reclassifications – Certain prior period amounts have been reclassified to conform to the current presentation in the condensed consolidated financial statements and the accompanying notes thereto. Cash, Cash Equivalents and Restricted Cash – A reconciliation of cash, cash equivalents and restricted cash as stated in the Company’s condensed consolidated statements of cash flows is presented in the following table:
|  | June 30, |  | June 30,
Amounts in thousands |  | 2023 |  | 2022
Cash and cash equivalents |  | $ | 108,595 |  | $ | 96,168
Restricted cash |  |  | — |  |  | 100,050
Restricted cash included in deposits and other |  |  | 247 |  |  | 193
Total cash, cash equivalents, and restricted cash shown in the consolidated statement of cash flows |  | $ | 108,842 |  | $ | 196,411
As of June 30, 2023, the Company had $0.2 million related to payment of prizes and giveaways for Casinos Poland and less than $0.1 million related to an insurance policy in restricted cash included in deposits and other on its condensed consolidated balance sheet. As of June 30, 2022, the Company had $100.1 million related to the Acquisition Escrow in restricted cash on its condensed consolidated balance sheet and $0.2 million related to payments of prizes and giveaways for Casinos Poland, and less than $0.1 million related to an insurance policy in restricted cash included in deposits and other on its condensed consolidated balance sheet. Use of Estimates – The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. Management’s use of estimates includes estimates for property and equipment, goodwill, intangible assets and income tax. Presentation of Foreign Currency Amounts – The Company’s functional currency is the US dollar (“USD” or “$”). Foreign subsidiaries with a functional currency other than the US 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 US dollar used to translate balances at the end of the reported periods are as follows:
|  | As of June 30, |  | As of December 31,
Ending Rates |  | 2023 |  | 2022
Canadian dollar (CAD) |  | 1.3253 |  | 1.3550
Euros (EUR) |  | 0.9200 |  | 0.9393
Polish zloty (PLN) |  | 4.0879 |  | 4.4004
‎ The average exchange rates to the US dollar used to translate balances during each reported period are as follows:
|  | For the three months |  |  |  | For the six months |  |
|  | ended June 30, |  |  |  | ended June 30, |  |
Average Rates |  | 2023 |  | 2022 |  | % Change |  | 2023 |  | 2022 |  | % Change
Canadian dollar (CAD) |  | 1.3437 |  | 1.2754 |  | (5.4%) |  | 1.3480 |  | 1.2711 |  | (6.0%)
Euros (EUR) |  | 0.9181 |  | 0.9380 |  | 2.1% |  | 0.9252 |  | 0.9145 |  | (1.2%)
Polish zloty (PLN) |  | 4.1758 |  | 4.3599 |  | 4.2% |  | 4.2835 |  | 4.2390 |  | (1.0%)
Source: Xe Currency Converter |  |  |  |
Equity Investment – On April 1, 2022, the Company purchased 50% of the membership interests in Smooth Bourbon. Smooth Bourbon owns the real property on which the Nugget Casino is located. The additional 50% of the membership interests in Smooth Bourbon is held by Marnell. At the time of the purchase of its 50% membership interests in Smooth Bourbon, the Company completed an assessment of whether Smooth Bourbon is a variable interest entity in which it has a financial interest. Based on this assessment, the Company concluded that Smooth Bourbon was not subject to consolidation under the guidance for variable interest entities prior to the Nugget Acquisition because Nugget is the primary beneficiary of Smooth Bourbon. After the Second Closing on April 3, 2023, the Company began consolidating Smooth Bourbon as a subsidiary for which it has a controlling financial interest. See Note 3 for additional information about Smooth Bourbon.

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