CENTURY CASINOS INC CO

Previous wording

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. As of March 31, 2024, CPL had casino licenses for eight casinos and operated seven casinos throughout Poland. The following table summarizes information about CPL’s casinos as of March 31, 2024.

Current wording

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. As of June 30, 2024, CPL had casino licenses for seven casinos and operated six casinos throughout Poland. We closed the Krakow casino in May 2024 due to the expiration of the gaming license. The following table summarizes information about CPL’s casinos as of June 30, 2024.

Previous wording

(1)We closed the casinos in Katowice and Bielsko-Biala in October 2023 due to the expiration of the gaming licenses. We were awarded both licenses in February 2024. The Bielsko-Biala casino reopened in February 2024, and the Katowice casino reopened in March 2024 with a reduced gaming floor. We anticipate reopening the full gaming floor at the Katowice casino in the second quarter of 2024.

Current wording

(2)We closed the casinos in Katowice and Bielsko-Biala in October 2023 due to the expiration of the gaming licenses. We were awarded both licenses in February 2024. The Bielsko-Biala casino reopened in February 2024, and the Katowice casino reopened in March 2024 with a reduced gaming floor. We anticipate reopening the full gaming floor at the Katowice casino in the third quarter of 2024 once we receive approval.

Previous wording

(2)We closed the Wroclaw casino in November 2023 due to the expiration of the gaming license. We were awarded the license in December 2023; however, we have not reopened the casino because we are relocating it to a new location. The Wroclaw casino is expected to reopen in the third quarter of 2024.

Current wording

(3)We closed the Wroclaw casino in November 2023 due to the expiration of the gaming license. We were awarded the license in December 2023; however, we have not reopened the casino because we are relocating it to a new location. The Wroclaw casino is expected to reopen in October 2024.

Previous wording

(3)We were awarded a new license for the Lodz casino in March 2024.

Current wording

(4)We were awarded a new license for the Lodz casino in March 2024.

Previous wording

3, 2023, as a result of closing the Nugget Acquisition, we began consolidating Smooth Bourbon as a subsidiary for which we have a controlling financial interest. The remaining 50% of Smooth Bourbon is owned by Marnell and is reported as a non-controlling financial interest.

Current wording

Through our wholly owned subsidiary Century Nevada Acquisition, Inc., we have a 50% equity interest in Smooth Bourbon. Prior to the Nugget Acquisition, we reported this interest as an equity investment in the Corporate Other reportable segment. On April 3, 2023, as a result of closing the Nugget Acquisition, we began consolidating Smooth Bourbon as a subsidiary for which we have a controlling financial interest. The remaining 50% of Smooth Bourbon is owned by Marnell and is reported as a non-controlling financial interest.

Previous wording

We are building a new land-based casino with a 38 room hotel adjacent to and connected with the existing casino pavilion building. We estimate the project will cost $51.9 million. Construction started in December 2022 with completion expected in the fourth quarter of 2024. We are funding this project with financing provided by VICI PropCo. Following completion, VICI PropCo will own the real estate improvements associated with the Caruthersville project. See Part I, Item 1. Note 6 “Long-Term Financing Obligation” for a discussion of the Master Lease as amended to date. As of March 31, 2024, we had received $46.0 million from VICI PropCo and have spent approximately $27.4 million of those funds on this project.

Current wording

We are building a new land-based casino with a 38 room hotel adjacent to and connected with the existing casino pavilion building. We estimate the project will cost $51.9 million. Construction started in December 2022 with completion expected in mid-November 2024. We are funding this project with financing provided by VICI PropCo. Following completion, VICI PropCo will own the real estate improvements associated with the Caruthersville project. See Part I, Item 1. Note 6, “Long-Term Financing Obligation” for a discussion of the Master Lease as amended to date. As of June 30, 2024, we had received $50.0 million from VICI PropCo and have spent approximately $36.0 million of those funds on this project.

Previous wording

We opened our 69 room hotel at our Cape Girardeau location called The Riverview on April 4, 2024. The Riverview is a six story building with 68,000 square feet that is adjacent to and connected with the existing casino building. Construction on the project began in September 2022, and was completed in April 2024. The project cost approximately $30.5 million. We financed the project with cash on hand. As of March 31, 2024, we have spent approximately $28.9 million on this project.

Current wording

We opened our 69 room hotel at our Cape Girardeau location called The Riverview on April 4, 2024. The Riverview is a six story building with 68,000 square feet that is adjacent to and connected with the existing casino building. Construction on the project began in September 2022, and was completed in April 2024. The project cost approximately $30.5 million. We financed the project with cash on hand.

Previous wording

(1)For a discussion of Adjusted EBITDAR and reconciliation of Adjusted EBITDAR to net earnings attributable to Century Casinos, Inc. shareholders, see “Non-US GAAP Measures – Adjusted EBITDAR” below.

Current wording

(1)For a discussion of Adjusted EBITDAR and reconciliation of Adjusted EBITDAR to net loss attributable to Century Casinos, Inc. shareholders, see “Non-US GAAP Measures Definitions and Calculations – Adjusted EBITDAR” below.

Previous wording

United States (Nugget)– We acquired the operations of the Nugget on April 3, 2023. The Nugget is reported in the United States reportable segment and contributed $18.4 million in net operating revenue and ($3.0) million in net loss attributable to Century Casinos, Inc. shareholders for the three months ended March 31, 2024. The Nugget is in a gaming jurisdiction that is new to us, and we incurred additional general and administrative expenses related to the acquisition in 2023.

Current wording

United States (Nugget)– We acquired the operations of the Nugget on April 3, 2023. The Nugget is reported in the United States reportable segment. Nugget’s operating results for the three and six months ended June 30, 2024 and 2023 were as follows:

Previous wording

United States (Rocky Gap) – We acquired the operations of Rocky Gap on July 25, 2023. Rocky Gap is reported in the United States reportable segment and contributed $14.9 million in net operating revenue and ($2.9) million in net loss attributable to Century Casinos, Inc. shareholders for the three months ended March 31, 2024. Rocky Gap is in a gaming jurisdiction that is new to us, and we incurred additional general and administrative expenses related to the acquisition in 2023.

Current wording

United States (Rocky Gap) – We acquired the operations of Rocky Gap on July 25, 2023. Rocky Gap is reported in the United States reportable segment. Interest expense related to the Master Lease of $4.1 million and $8.3 million for the three and six months ended June 30, 2024 contributed to the net loss attributable to Century Casinos, Inc. shareholders for the same periods. Rocky Gap’s operating results for the three and six months ended June 30, 2024 were as follows:

Previous wording

Increased Interest Expense – Increased interest expense negatively impacted net loss attributable to Century Casinos, Inc. shareholders in 2023 and 2024. Interest expense increased $8.2 million in the three months ended March 31, 2024 compared to the three months ended March 31, 2023 due to additional properties added to the Master Lease and increased interest rates under the Goldman Credit Agreement.

Current wording

Increased Interest Expense – Interest expense increased by $7.4 million and $15.6 million in the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, respectively, due to the addition of Rocky Gap and the Century Canadian Portfolio to the Master Lease and increased interest rates under the Goldman Credit Agreement.

Previous wording

Canada (Calgary) – In March 2023, we received an earn out payment of CAD 0.8 million ($0.6 million based on the exchange rate on March 31, 2023) related to the 2020 sale of our Calgary casino operations. The earn out period ended in August 2023, and we did not receive any earn out payments during the three months ended March 31, 2024.

Current wording

Canada (Calgary) – We received an earn out payment 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, related to the 2020 sale of our Calgary casino operations. The earn out period ended in August 2023, and we did not receive any earn out payments during the six months ended June 30, 2024.

Previous wording

Inflation and Staffing – We have seen material increases in our operating expenses at our properties, including payroll wages and benefits, insurance and utilities, maintenance costs and food and beverage costs. We have also experienced difficulties attracting and retaining staff at some locations in the US and Canada. As a result, we have had to adjust hours of some food and beverage outlets, the number of table games open and the number of rooms available at some of our hotels. We have been able to make adjustments during non-peak times to mitigate some of the impact to our operating results.

Current wording

Inflation and Staffing – During 2023, we saw material increases in our operating expenses at our properties, including payroll wages and benefits, insurance and utilities, maintenance costs and food and beverage costs. We also experienced difficulties attracting and retaining staff at some locations in the US and Canada. As a result, during 2023, we adjusted hours of some food and beverage outlets, the number of table games open and the number of rooms available at some of our hotels. We were able to make adjustments during non-peak times to mitigate some of the impact to our operating results. We have not seen material impacts to our operations in 2024 due to inflation and staffing.

Previous wording

Net operating revenue increased by $27.5 million, or 25.4%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Following is a breakout of net operating revenue by segment for the three months ended March 31, 2024 compared to the three months ended March 31, 2023:

Current wording

Net operating revenue increased by $9.7 million, or 7.1%, and by $37.2 million, or 15.2%, for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023. Following is a breakout of net operating revenue by segment for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023:

Previous wording

Operating costs and expenses increased by $36.5 million, or 40.1%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Following is a breakout of operating costs and expenses by segment for the three months ended March 31, 2024 compared to the three months ended March 31, 2023:

Current wording

Operating costs and expenses increased by $14.0 million, or 11.9%, and by $50.5 million, or 24.1%, for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023. Following is a breakout of operating costs and expenses by segment for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023:

Previous wording

Earnings from operations decreased by ($10.1) million, or (55.0%), for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Following is a breakout of earnings from operations by segment for the three months ended March 31, 2024 compared to the three months ended March 31, 2023:

Current wording

Earnings from operations decreased by ($4.4) million, or (23.4%), and by ($14.5) million, or (39.1%), for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023. Following is a breakout of earnings from operations by segment for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023:

Previous wording

Net earnings attributable to Century Casinos, Inc. shareholders decreased by ($12.3) million, or (989.6%), for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Items deducted from or added to earnings from operations to arrive at net earnings attributable to Century Casinos, Inc. shareholders include interest income, interest expense, gains (losses) on foreign currency transactions and other, income tax expense (benefit) and non-controlling interests. Items that impacted the comparability of the results are discussed above. For a discussion of these items, see “Non-Operating Income (Expense)”and “Taxes”below in this Item 2.

Current wording

Net loss attributable to Century Casinos, Inc. shareholders increased by $39.7 million, or 2024.2%, and by $52.0 million, or 1622.6%, for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023. Items deducted from or added to earnings from operations to arrive at net loss attributable to Century Casinos, Inc. shareholders include interest income, interest expense, gains (losses) on foreign currency transactions and other, income tax expense (benefit) and non-controlling interests. Increased interest expense negatively impacted net loss attributable to Century Casinos, Inc. shareholders. Interest expense increased primarily due to additional properties added to the Master Lease. Net loss attributable to Century Casinos, Inc. shareholders also was impacted by the valuation allowance on our net deferred tax assets related to the United States, resulting in $23.8 million of tax expense. For a discussion of these items, see “Non-Operating Income (Expense)”and “Taxes”below in this Item 2.

Previous wording

(2)Includes $3.5 million cost recovery income for CDR and $0.6 million related to the earn out payment from the sale of casino operations in Calgary in 2020.

Current wording

(2)Includes $1.2 million related to the earn out payment from the sale of casino operations in Calgary in 2020 and $3.5 million related to cost recovery income for CDR.

Previous wording

We partner with sports betting operators that conduct sports wagering at our Colorado, West Virginia and Nevada locations. Each agreement with the sports betting operators provides for a share of net gaming revenue and the Colorado agreements also provide for a minimum revenue guarantee each year. In addition, we operate internet and mobile interactive gaming applications in West Virginia with two iGaming partners. The agreements provide for a share of net iGaming revenue. A petition campaign in Missouri to allow voters to determine whether to amend the state constitution to allow sports wagering in the state has gained sufficient signatures to go to a vote as soon as November 2024. If approved, sports betting could be legalized in Missouri by mid-2025. We have partnered with sports betting operators to conduct sports betting at our Missouri casinos if legalized.

Current wording

We partner with sports betting operators that conduct sports wagering at our Colorado, West Virginia and Nevada locations. Each agreement with the sports betting operators provides for a share of net gaming revenue and the Colorado agreements also provide for a minimum revenue guarantee each year. As stated above, our sports betting agreement with Circa ended in May 2024. In addition, we operate internet and mobile interactive gaming applications in West Virginia with two iGaming partners. The agreements provide for a share of net iGaming revenue. A petition campaign in Missouri to allow voters to determine whether to amend the state constitution to allow sports wagering in the state has gained sufficient signatures and will appear on the November 2024 ballot. If approved, sports betting could be legalized in Missouri by mid-2025. We have partnered with sports betting operators to conduct sports betting at our Missouri casinos if legalized.

Previous wording

In Cripple Creek, a competitor across the street from our casino completed an expansion in late December 2023. The increased availability of hotel rooms in Cripple Creek increased the overall Cripple Creek market, and revenue at our Cripple Creek property increased for the first quarter of 2024 compared to the first quarter of 2023. We believe that we will continue to benefit from any increases in the overall market from nearby expanded hotels or otherwise; however, future periods also could be negatively impacted by this new competitor, either through decreased market share or revenue or increased costs of promotional offers by us in order to compete.

Current wording

In Cripple Creek, a competitor across the street from our casino completed an expansion in late December 2023. The increased availability of hotel rooms in Cripple Creek increased the overall Cripple Creek market, and revenue at our Cripple Creek property increased for the first quarter of 2024 compared to the first quarter of 2023 but remained constant for the second quarter of 2024 compared to the second quarter of 2023. We believe that we will continue to benefit from any increases in the overall market from nearby expanded hotels or otherwise; however, future periods also could be negatively impacted by this new competitor, either through decreased market share or revenue or increased costs of promotional offers by us in order to compete.

Previous wording

In Central City, two potential competing casinos may open in late 2024. An increase in competitors in that market could lead to a decrease in visitors at our casino and have a negative impact on our results of operations in Central City.

Current wording

In Central City, one potential competing casino may open in late 2024. An increase in competitors in that market could lead to a decrease in visitors at our casino and have a negative impact on our results of operations in Central City.

Previous wording

East – Increased net operating revenue and operating costs and expenses were due to the acquisition of Rocky Gap. Net operating revenue from our West Virginia operations decreased due to decreased gaming, hotel and food and beverage revenue. In Maryland and West Virginia, snow and inclement weather negatively impacted revenue over three weekends, which are generally our busier days of the week. Moreover, revenue in West Virginia has not rebounded to the levels we saw prior to the legalization of sports betting in Ohio in January 2023. Operating expenses in West Virginia decreased primarily due to gaming-related expenses.

Current wording

East – Increased net operating revenue and operating costs and expenses were due to the acquisition of Rocky Gap. Net operating revenue from our West Virginia operations decreased due to decreased gaming, hotel and food and beverage revenue, offset by increased pari-mutuel revenue. In Maryland and West Virginia, snow and inclement weather negatively impacted revenue in the first quarter of 2024 over three weekends, which are generally our busier days of the week. Moreover, revenue in West Virginia has not rebounded to the levels we saw prior to the legalization of sports betting in Ohio in January 2023. Operating expenses in West Virginia decreased primarily due to gaming-related expenses.

Previous wording

Midwest – Net operating revenue decreased primarily due to decreased gaming revenue at our Cape Girardeau location. Revenue at our Central City property was negatively impacted by inclement weather in the first quarter of 2024. Despite the casino closing for two days due to inclement weather, revenue at our Cripple Creek property increased during the first quarter of 2024 compared to the first quarter of 2023 due to the increase in the Cripple Creek market size from our competitor’s casino and hotel expansion as well as events in the city. Operating expenses in the Midwest operating segment increased due to increased payroll costs.

Current wording

Midwest – Net operating revenue increased primarily due to increased hotel and food and beverage revenue at our Cape Girardeau location due to the opening of The Riverview in April 2024. In addition, net operating revenue increased by $0.7 million due to a breakage fee from the termination of our sports betting agreement with Circa. Revenue at our Central City property was negatively impacted by inclement weather in the first quarter of 2024. Despite the casino closing for two days due to inclement weather, revenue at our Cripple Creek property increased during the first quarter of 2024 compared to the first quarter of 2023 due to the increase in the Cripple Creek market size from our competitor’s casino and hotel expansion as well as events in the city. Operating expenses in the Midwest operating segment increased due to increased payroll, marketing and operating costs, primarily at the Cape Girardeau location due to the opening of The Riverview.

Previous wording

West –As a new operating segment, all increases are due to the acquisition of the Nugget on April 3, 2023. Inclement weather over holiday weekends negatively impacted revenue during the first quarter of 2024. Beginning in the second quarter of 2024 we have implemented cost saving measures at the Nugget. These measures include marketing improvements, staffing changes and a change to our housekeeping program in the hotels.

Current wording

West –As a new operating segment, all increases are due to the acquisition of the Nugget on April 3, 2023. Inclement weather over holiday weekends negatively impacted revenue at the Nugget during the first quarter of 2024 and we had three fewer entertainment shows and decreased hotel group bookings in the second quarter of 2024 compared to the second quarter of 2023, which decreased gaming, hotel and other revenue for the second quarter of 2024 compared to the second quarter of 2023. Beginning mid-April 2024, we began implementing cost saving measures at the Nugget. These measures include marketing improvements, staffing changes and a change to our housekeeping program in the hotels. We estimate these cost savings will be approximately $1.0 million per quarter. Subsequent to the end of the second quarter of 2024, we announced a leadership change at the Nugget.

Previous wording

In March 2023, we received an earn out payment of CAD 0.8 million ($0.6 million based on the exchange rate on March 31, 2023) from the sale of the Calgary casino operations in 2020 that is recorded to gain on sale of casino operations in our condensed consolidated statement of loss for the three months ended March 31, 2023.

Current wording

We received an earn out payment 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 June 30, 2023) for the three and six months ended June 30, 2023, respectively, from the sale of the Calgary casino operations in 2020 that is recorded to gain on sale of casino operations in our condensed consolidated statements of loss for the three and six months ended June 30, 2023.

Previous wording

In September 2023, we completed the Canada Real Estate Sale. Interest expense increased $2.9 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 due to the addition of the Canadian properties to the Master Lease.

Current wording

In September 2023, we completed the Canada Real Estate Sale. Interest expense increased $2.9 million and $5.8 million for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, respectively, due to the addition of the Canadian properties to the Master Lease.

Previous wording

Results in US dollars were impacted by a 0.3% increase in the average exchange rate between the US dollar and Canadian dollar for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Current wording

Results in US dollars were impacted by a (1.8%) and (0.7%) decrease in the average exchange rate between the US dollar and Canadian dollar for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, respectively.

Previous wording

Gaming and food and beverage revenue increased at all of our Canada locations. The increase in gaming revenue was due primarily to the additional 2% slot machine net sales retained starting April 1, 2023. Operating costs and expenses increased due to increased payroll, cost of goods sold and utility costs.

Current wording

Gaming and food and beverage revenue increased at all of our Canada locations. The increase in gaming revenue was partially due to the additional 2% slot machine net sales retained starting April 1, 2023. Operating costs and expenses increased due to increased payroll, cost of goods sold and utility costs.

Previous wording

In Poland, casino gaming licenses are granted for a term of six years. These licenses are not renewable. Before a gaming license expires for a particular city, there is a public notification of the available license and any gaming company can apply for a new license for that city. We closed our Wroclaw casino in November 2023 due to the expiration of the gaming license. We were awarded a license for the Wroclaw casino in December 2023 and anticipate reopening the casino in a new location in the third quarter of 2024. We closed the casinos in Bielsko-Biala and Katowice in October 2023 due to the expiration of the gaming licenses. New licenses were awarded in February 2024 for each, and the casinos were reopened in February 2024 and March 2024, respectively. The next license expiration for a CPL casino occurs in May 2024 in Krakow. CPL has applied for a casino license in Krakow ahead of that license’s expiration, but the license has not yet been awarded. There can be no assurance that such license will be received.

Current wording

In Poland, casino gaming licenses are granted for a term of six years. These licenses are not renewable. Before a gaming license expires for a particular city, there is a public notification of the available license and any gaming company can apply for a new license for that city. We closed our Wroclaw casino in November 2023 due to the expiration of the gaming license. We were awarded a license for the Wroclaw casino in December 2023 and anticipate reopening the casino in a new location in October 2024. We closed the casinos in Bielsko-Biala and Katowice in October 2023 due to the expiration of the gaming licenses. New licenses were awarded in February 2024 for each, and the casinos were reopened in February 2024 and March 2024, respectively. We closed the Krakow casino in May 2024 and the LIM Center casino in Warsaw in July 2024 due to the expiration of the gaming licenses. CPL applied for casino licenses in Krakow and for the LIM Center casino in Warsaw ahead of each such licenses’ expiration, but the licenses have not yet been awarded. There can be no assurance that these licenses will be received.

Previous wording

Results in US dollars were impacted by a 9.1% increase in the average exchange rate between the US dollar and Polish zloty for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Current wording

Results in US dollars were impacted by a 4.3% and 6.8% increase in the average exchange rate between the US dollar and Polish zloty for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, respectively.

Previous wording

Net operating revenue decreased primarily due to licensing-related closures at our Bielsko-Biala, Krakow and Wroclaw locations during the first quarter of 2024. Operating costs and expenses decreased due to decreased gaming-related expenses.

Current wording

Net operating revenue decreased primarily due to licensing-related closures at our Bielsko-Biala, Katowice, Krakow and Wroclaw locations during the first six months of 2024. Operating costs and expenses decreased due to decreased payroll, marketing and gaming-related expenses.

Previous wording

Net operating revenue decreased because the remaining ship-based casino contract ended in April 2023. Total operating costs and expenses, including general and administrative expenses, increased due to increased professional services expenses. Earnings from equity investment relates to income from our 50% membership interest in Smooth Bourbon prior to its consolidation in the United States reportable segment on April 3, 2023.

Current wording

Net operating revenue decreased because our remaining ship-based casino contract ended in April 2023. Total operating costs and expenses, including general and administrative expenses, decreased due to decreased acquisition costs as both acquisitions were completed in 2023 and decreased stock compensation expense offset by increased professional services expenses. Earnings from equity investment relates to income from our 50% membership interest in Smooth Bourbon prior to its consolidation in the United States reportable segment on April 3, 2023.

Previous wording

Interest income is primarily related to interest earned on our cash reserves and, for the three months ended March 31, 2023, interest from the Acquisition Escrow. We earned approximately $0.6 million in interest income in Canada from the funds from the Canada Real Estate Sale for the three months ended March 31, 2024. The Acquisition Escrow was used to fund the Nugget Acquisition on April 3, 2023.

Current wording

Interest income is primarily related to interest earned on our cash reserves and, for the six months ended June 30, 2023, interest from the Acquisition Escrow. We earned approximately $0.3 million and $0.8 million in interest income in Canada from the funds from the Canada Real Estate Sale for the three and six months ended June 30, 2024, respectively. The Acquisition Escrow was used to fund the Nugget Acquisition on April 3, 2023.

Previous wording

Interest expense is directly related to interest owed on our borrowings under our Goldman Credit Agreement, our financing obligation with VICI PropCo, our CPL and CRM borrowings, our capital lease agreements and, prior to the Canada Real Estate Sale, interest expense related to the CDR land lease. Increases in interest expense were primarily due to increased interest related to the addition of Rocky Gap and the Century Canadian Portfolio to the financing obligation under the Master Lease with VICI.

Current wording

Interest expense is directly related to interest owed on our borrowings under our Goldman Credit Agreement, our financing obligation under the Master Lease with VICI PropCo, our CPL and CRM borrowings, our capital lease agreements and, prior to the Canada Real Estate Sale, interest expense related to the CDR land lease. Increases in interest expense were primarily due to increased interest related to the addition of Rocky Gap and the Century Canadian Portfolio to the financing obligation under the Master Lease and increased interest rates under the Goldman Credit Agreement.

Previous wording

CDR receives cost recovery income related to infrastructure built during the development of the Century Downs REC project. The distribution to CDR’s non-controlling shareholders through non-controlling interest is part of an agreement between CRM and CDR. There was no cost recovery income received by CDR for the three months ended March 31, 2024. Cost recovery income of $3.5 million was received by CDR for the three months ended March 31, 2023.

Current wording

Cost recovery income is related to infrastructure built during the development of CDR. The infrastructure was built by the non-controlling shareholders prior to our acquisition of our controlling ownership interest in CDR. Cost recovery income of $1.1 million was received by CDR for the three and six months ended June 30, 2024 related to infrastructure built during the development of the Century Downs REC project. The distribution to CDR’s non-controlling shareholders is part of an agreement between CRM and CDR. Cost recovery income of $3.5 million was received by CDR for the six months ended June 30, 2023.

Previous wording

Income tax expense is recorded relative to the jurisdictions that recognize book earnings. During the three months ended March 31, 2024, we recognized an income tax benefit of $4.0 million on pre-tax loss of ($15.7) million, representing an effective income tax rate of 25.4% compared to an income tax expense of $1.6 million on pre-tax income of $4.7 million, representing an effective income tax rate of 34.9% for the same period in 2023. For further discussion of our effective income tax rates and an analysis of our effective income tax rate compared to the US federal statutory income tax rate, see Note 8, “Income Taxes,” to our condensed consolidated financial statements included in Part I, Item 1 of this report.

Current wording

Income tax expense is recorded relative to the jurisdictions that recognize book earnings. During the six months ended June 30, 2024, we recognized an income tax expense of $25.6 million on pre-tax loss of ($25.1) million, representing an effective income tax rate of (102.2%) compared to an income tax expense of $1.7 million on pre-tax income of $5.1 million, representing an effective income tax rate of 33.6% for the same period in 2023. For further discussion of our effective income tax rates and an analysis of our effective income tax rate compared to the US federal statutory income tax rate, see Note 8, “Income Taxes,” to our condensed consolidated financial statements included in Part I, Item 1 of this report.

Previous wording

(1)Cash, cash equivalents and restricted cash as of March 31, 2024 includes $19.9 million of cash previously funded by VICI PropCo but has not yet been spent on our Caruthersville project, and as of March 31, 2023 included $100.2 million related to the Acquisition Escrow.

Current wording

(1)Cash, cash equivalents and restricted cash as of June 30, 2024 includes $14.0 million of cash previously funded by VICI PropCo that has not yet been spent on our Caruthersville project.

Previous wording

(2)Working capital is defined as current assets minus current liabilities and included the $100.2 million related to the Acquisition Escrow as of March 31, 2023.

Current wording

(2)Working capital is defined as current assets minus current liabilities.

Previous wording

Our cash flows from operations have historically been positive and sufficient to fund ordinary operations. Cash flows from operations decreased during the three months ended March 31, 2024, primarily due to $12.2 million in income tax payments related to the Canada Real Estate Sale and increased interest expense. 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.

Current wording

Cash flows from operations decreased during the six months ended June 30, 2024, primarily due to $12.2 million in income tax payments related to the Canada Real Estate Sale and increased interest expense. 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.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2024 consisted of $1.2 million for casino licenses in Poland, $0.4 million for various hotel renovations and $0.1 million in restaurant renovations to the Mountaineer property in West Virginia, $0.8 million in slot machine purchases in Maryland, $6.1 million for our hotel project in Cape Girardeau, $6.7 million for our casino project in Caruthersville, $0.2 million for slot machine purchases at our Missouri properties, $0.6 million for slot machine purchases and $0.1 million in various renovations in Nevada, $0.2 million for slot machine purchases, $0.1 million in gaming-related purchases and $0.2 million in hotel renovations at our Colorado properties, $0.4 million related to racing related updates at Century Downs in Canada and $2.5 million in other fixed asset additions at our properties, offset by less than $0.1 million in proceeds from the disposal of assets.

Current wording

Net cash used in investing activities for the six months ended June 30, 2024 consisted of $1.8 million for casino licenses in Poland, $0.1 million for various hotel renovations to the Mountaineer property in West Virginia, $1.0 million in slot machine purchases, $0.1 million for beach access, and $0.1 million in golf equipment for the Rocky Gap property in Maryland, $7.0 million for our hotel project in Cape Girardeau, $15.5 million for our casino project in Caruthersville, $0.7 million for slot machine purchases at our Missouri properties, $1.0 million for slot machine purchases, $0.3 million for a high limit room, $0.1 million for sportsbook improvements and $0.5 million in various renovations in Nevada, $0.3 million for slot machine purchases, $0.3 million in gaming-related purchases and $0.3 million in hotel renovations at our Colorado properties, $0.6 million related to racing related updates at Century Downs, $0.2 million in restaurant renovations at St. Albert and $0.1 million related to racing related updates at Century Mile in Canada, $0.3 million in renovations on the new Wroclaw casino location in Poland and $5.9 million in other fixed asset additions at our properties, offset by $0.1 million in proceeds from the disposal of assets.