CENTURY CASINOS INC /CO/

Previous wording

We view each region in which we operate as a separate operating segment and each casino or other operation within those markets as a reporting unit. We aggregate all operating segments into three reportable segments based on the geographical locations in which our casinos operate: United States, Canada and Poland. We have additional business activities including certain other corporate and management operations that we report as Corporate and Other.

Current wording

We aggregate all operating segments into three reportable segments based on the geographical locations in which our casinos operate: United States, Canada and Poland. We have additional business activities including certain other corporate and management operations that we report as Corporate and Other. In the United States, we view our operating segments as East, Midwest and West. The reporting units, except for Century Downs Racetrack and Casino and Casinos Poland, are owned, operated and managed through wholly-owned subsidiaries. Our ownership and operation of Century Downs Racetrack and Casino and Casinos Poland are discussed below.

Previous wording

(1)The real estate assets, except The Riverview hotel in Cape Girardeau and The Farmstead hotel in Caruthersville, are owned by VICI PropCo.

Current wording

(1)The real estate assets, except The Riverview hotel in Cape Girardeau and The Farmstead hotel in Caruthersville, are owned by VICI PropCo and leased to us under the Master Lease.

Previous wording

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 is the only horse racetrack in the Calgary area and is located less than one-mile north of the city limits of Calgary and 4.5 miles from the Calgary International Airport.

Current wording

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 is the only horse racetrack in the Calgary area and is located less than one mile north of the city limits of Calgary and seven miles from the Calgary International Airport.

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 September 30, 2024, CPL had casino licenses for six casinos and operated five casinos throughout Poland. 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 new casino licenses for these locations but was notified in October 2024 that it was not awarded the licenses at either location. The following table summarizes information about CPL’s casinos as of September 30, 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 March 31, 2025, CPL had casino licenses for seven casinos and operated six casinos throughout Poland. The following table summarizes information about CPL’s casinos as of March 31, 2025.

Previous 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 are waiting on regulatory approval to reopen the full gaming floor at the Katowice casino.

Current 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 are waiting on regulatory approval to reopen the full gaming floor at the Katowice casino.

Previous 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. We relocated the casino to a new location and opened the casino on October 24, 2024 with 70 slots and 13 tables.

Current 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. We relocated the casino to a new location and opened the casino in October 2024.

Previous 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.

Current wording

Through our wholly-owned subsidiary Century Nevada Acquisition, Inc., we have a 50% equity interest in Smooth Bourbon, LLC (“Smooth Bourbon”) which we consolidate as a subsidiary for which we have a controlling financial interest. The remaining 50% of Smooth Bourbon is owned by Marnell Gaming, LLC (“Marnell”) and is reported as a non-controlling financial interest.

Previous wording

Current macroeconomic conditions remain very dynamic, including impacts from rising inflation and interest rates, volatile changes in foreign currency exchange rates, political unrest and armed conflicts, and other factors. Any worsening in economic conditions in the regions we operate or globally, or the perception that conditions may worsen, could reduce consumer discretionary spending or increase our costs and erode our net income and cash flows.

Current wording

Current macroeconomic conditions remain very dynamic, including volatile changes in stock markets, foreign currency exchange rates, political unrest and armed conflicts, inflation, US domestic and other international economic policies, such as tariffs, and other factors. Both customer visits and customer spending at our casinos are key drivers of our revenue and profitability, and reductions in either could have a material adverse effect on our business, financial condition and results of operations. The actual or perceived impact of macroeconomic conditions on consumer spending could lead to fewer customer visits and decreased discretionary spending by our customers. We are seeing weaker trends from retail and low-end customers, which we believe is due to macroeconomic conditions impacting consumer spending in our markets. Any worsening in economic conditions in the regions in which we operate or globally, or the perception that conditions may worsen, could reduce consumer discretionary spending or increase our costs and erode our net earnings and cash flows.

Previous wording

We opened our new land-based casino with a 38 room hotel in Caruthersville, Missouri on November 1, 2024. The new land-based casino is adjacent to and connected with the temporary casino pavilion building. The project cost approximately $51.9 million and was funded with financing provided by VICI PropCo in conjunction with the Master Lease. VICI PropCo owns the real estate improvements associated with the Caruthersville project. As of September 30, 2024, we had received $51.9 million from VICI PropCo and have spent approximately $40.9 million of those funds on this project. We previously amended our Master Lease in December 2022 to provide for an increase in initial annualized rent of approximately $4.2 million related to 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. The pavilion building that was the temporary casino location will return to being used as event space.

Current wording

On November 1, 2024, we opened our new land-based casino with a 38 room hotel in Caruthersville, Missouri. The new land-based casino is adjacent to and connected with the temporary casino pavilion building. The project cost approximately $51.9 million and was funded with financing provided by VICI PropCo in conjunction with the Master Lease. VICI PropCo owns the real estate improvements associated with the Caruthersville project. We previously amended our Master Lease in December 2022 to provide for an increase in initial annualized rent of approximately $4.2 million upon completion of the Caruthersville project. See Part I, Item 1. Note 5, “Long-Term Financing Obligation” for a discussion of the Master Lease as amended to date.

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.

Current wording

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

Previous wording

Sports Betting (Colorado)– We mutually agreed to cancel two of our sports betting agreements in Colorado. Circa obtained its own master license in Colorado, and the Circa agreement was terminated in May 2024. As part of the Circa termination agreement, we received a payment of $1.1 million that included sports betting revenue owed from January 2024 to May 2024 and a breakage fee of $0.7 million. Tipico exited the U.S. market, and the Tipico agreement was terminated in July 2024. As part of the Tipico termination agreement, the Company received a payment of $1.6 million that includes sports betting revenue owed from November 2023 to June 2024 and a breakage fee of $1.0 million. The breakage fees were recorded as other revenue on our condensed consolidated statements of loss resulting in $1.0 million and $1.7 million in other revenue for the three and nine months ended September 30, 2024, respectively. Prior to the termination of the agreements, revenue from these agreements was $0.5 million per quarter in our United States segment.

Current wording

Sports Betting (Colorado)– During 2024, we mutually agreed to cancel two of our sports betting agreements in Colorado. Prior to the termination of the agreements, revenue from these agreements was $1.8 million per year in our United States segment.

Previous wording

Weather – Inclement weather in the United States impacted revenue for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 for our Colorado and West Virginia properties.

Current wording

Weather – Increased inclement weather impacted revenue for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 for all of our North American properties.

Previous wording

Net operating revenue decreased by ($5.5) million, or (3.4%), and increased by $31.7 million, or 7.8%, for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023. Following is a breakout of net operating revenue by segment for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023:

Current wording

Net operating revenue decreased by ($5.6) million, or (4.1%), for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Following is a breakout of net operating revenue by segment for the three months ended March 31, 2025 compared to the three months ended March 31, 2024:

Previous wording

Operating costs and expenses decreased by ($8.9) million, or (6.1%), and increased by $41.6 million, or 11.7%, for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023. Following is a breakout of operating costs and expenses by segment for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023:

Current wording

Operating costs and expenses decreased by ($4.4) million, or (3.5%), for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Following is a breakout of operating costs and expenses by segment for the three months ended March 31, 2025 compared to the three months ended March 31, 2024:

Previous wording

United States decreased by ($1.6) million, or (8.2%), and by ($10.9) million, or (21.0%).

Current wording

United States decreased by ($1.6) million, or (1.8%).

Previous wording

Corporate and Other decreased by ($5.8) million, or (67.0%), and by ($6.1) million, or (35.4%).

Current wording

Corporate and Other decreased by ($0.7) million, or (17.7%).

Previous wording

Earnings from operations increased by $3.5 million, or 23.9%, and decreased by ($11.0) million, or (21.4%), for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023. Following is a breakout of earnings from operations by segment for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023:

Current wording

Earnings from operations decreased by ($1.1) million, or (13.8%), for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Following is a breakout of earnings from operations by segment for the three months ended March 31, 2025 compared to the three months ended March 31, 2024:

Previous wording

Corporate and Other increased by $5.8 million, or 67.0%, and by $4.9 million, or 30.7%.

Current wording

Corporate and Other increased by $0.7 million, or 17.4%.

Previous wording

Net loss decreased by ($6.1) million, or (42.7%), and increased by $45.9 million, or 264.1%, for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 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 income tax expense during the second quarter of 2024. 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 $7.1 million, or 52.2%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. 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. Interest expense primarily from the Master Lease negatively impacts net loss attributable to Century Casinos, Inc. shareholders. Increased income tax expense negatively impacted net loss attributable to Century Casinos, Inc. shareholders for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. For the three months ended March 31, 2024, we recognized an income tax benefit on losses incurred in the United States. There was income tax expense for the three months ended March 31, 2025 as a valuation allowance was recognized in the second quarter of 2024 for the United States deferred tax assets. For a discussion of these items, see “Non-Operating Income (Expense)” and “Taxes” below in this Item 2.

Previous wording

Adjusted EBITDAR is used outside of our financial statements as a valuation metric. We define Adjusted EBITDAR as net (loss) earnings attributable to Century Casinos, Inc. shareholders before interest expense (income), net, including interest expense related to the Master Lease as discussed below, income taxes (benefit), depreciation, amortization, non-controlling interests net earnings (losses) and transactions, pre-opening expenses, acquisition costs, non-cash stock-based compensation charges, asset impairment costs, loss (gain) on disposition of fixed assets, discontinued operations, (gain) loss on foreign currency transactions, cost recovery income and other, gain on business combination and certain other one-time transactions. 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) attributable to Century Casinos, Inc. shareholders and Adjusted EBITDAR reported for each reportable 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.

Current wording

Adjusted EBITDAR is used outside of our financial statements as a valuation metric. We define Adjusted EBITDAR as net (loss) earnings attributable to Century Casinos, Inc. shareholders before interest expense (income), net, including interest expense related to the Master Lease as discussed below, income taxes (benefit), depreciation, amortization, non-controlling interests net earnings (losses) and transactions, pre-opening expenses, termination expenses related to closing a casino, acquisition costs, non-cash stock-based compensation charges, asset impairment costs, loss (gain) on disposition of fixed assets, discontinued operations, (gain) loss on foreign currency transactions, cost recovery income and other, gain on business combination and certain other one-time transactions. 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) attributable to Century Casinos, Inc. shareholders and Adjusted EBITDAR reported for each reportable 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 generally accepted accounting principles (“US GAAP”).

Previous wording

The reconciliation of Adjusted EBITDAR to net earnings (loss) attributable to Century Casinos, Inc. shareholders is presented below.

Current wording

The reconciliation of Adjusted EBITDAR to net loss attributable to Century Casinos, Inc. shareholders is presented below.

Previous wording

We opened the new land-based casino and hotel in Caruthersville on November 1, 2024. The casino has 599 slot machines and nine live table games, a 50% increase in gaming positions compared with the temporary location. The number of hotel rooms doubled to 74.

Current wording

We opened the new land-based casino and hotel in Caruthersville on November 1, 2024. The casino has 579 slot machines and nine live table games, which is almost a 50% increase in gaming positions compared with the prior temporary location. The number of hotel rooms doubled to 74.

Previous wording

We opened The Riverview in Cape Girardeau in April 2024. The Riverview is a 69 room, six-story building with 68,000 square feet that is adjacent to and connected with Century Casino Cape Girardeau. The Walker’s Bluff Casino in Illinois, which opened in August 2023, has increased competition for our Missouri casinos, primarily our Cape Girardeau casino. However, we believe that our marketing efforts have been effective in offsetting this competition to date.

Current wording

We opened The Riverview in Cape Girardeau in April 2024. The Riverview is a 69 room, six-story building with 68,000 square feet that is adjacent to and connected with Century Casino Cape Girardeau.

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 agreement also provides 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 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.

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 agreement also provides 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. Sports betting in Missouri was approved by voters in November 2024, and we plan to partner with sports betting operators to conduct sports betting at our Missouri casinos when it begins in late 2025. As stated above, two of our sports betting agreements in Colorado were terminated in May 2024 and July 2024. Revenue from these agreements was $0.5 million for the three months ended March 31, 2024 in our United States segment.

Previous 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 $1.0 million due to a breakage fee from the termination of our sports betting agreement with Tipico. Revenue from the sports betting agreement was approximately $0.2 million per quarter. The increased revenue was partially offset by decreased gaming revenue at all locations. 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.

Current wording

Midwest – In Missouri, net operating revenue increased by approximately $2.8 million primarily due to increased gaming revenue at our new casino in Caruthersville and increased hotel and food and beverage revenue at both properties due to the new hotels that were opened in 2024. The increases in Missouri were offset by decreased net operating revenue of approximately $2.2 million in Colorado. Decreased net operating revenue in Colorado was primarily due to the termination of two sports betting agreements in 2024, as detailed above, decreased gaming revenue due to the elimination of table games at both properties, and inclement weather in February 2025. Operating expenses in the Midwest operating segment increased due to increased payroll, marketing and operating costs, primarily at the Missouri locations due to opening our new hotels and the new Caruthersville casino in 2024.

Previous wording

In February 2023, the Alberta Gaming, Liquor and Cannabis Commission (“AGLC”), Alberta’s gaming regulatory agency, approved a temporary increase from 15% of slot machine net sales retained by casinos to 17% effective from April 1, 2023 through March 31, 2025. The increase in the slot machine net sales retention percentage has had a positive impact on net operating revenue and results of operations at our Canadian properties. Effective August 1, 2023, the AGLC extended the operating hours for slot machines by 30 minutes on weekdays and 90 minutes on weekends.

Current wording

In February 2023, the AGLC, Alberta’s gaming regulatory agency, approved a temporary increase from 15% of slot machine net sales retained by casinos to 17% effective from April 1, 2023 through March 31, 2025. In December 2024, the temporary increase was extended through March 31, 2026. The increase in the slot machine net sales retention percentage has had a positive impact on net operating revenue and results of operations at our Canadian properties.

Previous wording

A competitor is requesting to relocate their casino from west Edmonton to south Edmonton, approximately 11 miles from our Century Mile property. Additional approvals are needed before the project begins and we anticipate construction could take approximately one year if the project is approved. An increase in competitors to the Edmonton market and near our Century Mile property could lead to a decrease in visitors at our casinos and have a negative impact on our results of operations in Canada.

Current wording

A competitor is requesting to relocate their casino from a city about 50 miles southeast of Edmonton to south Edmonton, approximately 11 miles from our Century Mile property. Additional approvals are needed before the project begins and we anticipate construction could take approximately one year if the project is approved. An increase in competitors to the Edmonton market and near our Century Mile property could lead to a decrease in visitors at our casinos and have a negative impact on our results of operations in Canada.

Previous wording

Results in US dollars were impacted by a (1.7%) and (1.1%) decrease in the average exchange rate between the US dollar and Canadian dollar for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, respectively.

Current wording

Results in US dollars were impacted by a (6.5%) decrease in the average exchange rate between the US dollar and Canadian dollar for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

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. Although we apply for a new license prior to the expiration of a current license, there is no guarantee that a new license will be awarded prior to the expiration of the current license or at all. 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 reopened the casino at a new location on October 24, 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 new casino licenses for these locations but was notified in October 2024 that it was not awarded the licenses at either location.

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 in 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. The license for the Hilton Hotel in Warsaw expires in June 2025. CPL has applied for a license in Warsaw but there can be no assurance that such license will be received.

Previous wording

Results in US dollars were impacted by a 5.7% and 6.4% increase in the average exchange rate between the US dollar and Polish zloty for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, respectively.

Current wording

Results in US dollars were impacted by a (0.3%) decrease in the average exchange rate between the US dollar and Polish zloty for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Previous wording

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

Current wording

Net operating revenue decreased primarily due to licensing-related closures at our LIM Center casino in Warsaw and the Krakow casino and slower gaming activity in the Warsaw market, offset by increased revenue at the casino in Wroclaw that opened in October 2024. Operating costs and expenses decreased due to decreased payroll and gaming-related expenses primarily related to the casino closures.

Previous wording

A reconciliation of net earnings (loss) attributable to Century Casinos, Inc. shareholders to Adjusted EBITDAR can be found in the “Non-US GAAP Measures Definitions and Calculations – Adjusted EBITDAR” discussion above.

Current wording

A reconciliation of net (loss) earnings attributable to Century Casinos, Inc. shareholders to Adjusted EBITDAR can be found in the “Non-US GAAP Measures Definitions and Calculations – Adjusted EBITDAR” discussion above.

Previous wording

Net operating revenue decreased because our last 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 our material acquisition activity was completed in 2023, as well as decreased payroll expense and decreased stock compensation expense offset by increased professional services expenses. Earnings from equity investment relates to income from our 50% membership interests in Smooth Bourbon prior to its consolidation in the United States reportable segment on April 3, 2023.

Current wording

Total operating costs and expenses, including general and administrative expenses, decreased due primarily to lower stock compensation expense and insurance costs.

Previous wording

Interest income is primarily related to interest earned on our cash reserves and, for the nine months ended September 30, 2023, interest from the Acquisition Escrow. We earned approximately $0.2 million and $1.0 million in interest income in Canada from the funds from the Canada Real Estate Sale for the three and nine months ended September 30, 2024, respectively. 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.

Previous 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.

Current wording

Interest expense is directly related to interest owed on the borrowings under our Goldman Credit Agreement, the UniCredit Term Loan, CPL’s credit facility, our financing obligation under the Master Lease with VICI PropCo, deferred financing costs and our finance lease agreements.

Previous 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 nine months ended September 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 nine months ended September 30, 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. There was no cost recovery income received by CDR for the three months ended March 31, 2025 and 2024. The decrease in gain on foreign currency transaction, cost recovery income and other is due to changes in foreign currency gains.

Previous wording

Income tax expense is recorded relative to the jurisdictions that recognize book earnings. During the nine months ended September 30, 2024, we recognized income tax expense of $25.3 million on pre-tax loss of ($32.1) million, representing an effective income tax rate of (78.7%) compared to an income tax benefit of ($1.3) million on pre-tax loss of ($11.4) million, representing an effective income tax rate of 11.8% 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 three months ended March 31, 2025, we recognized income tax expense of $0.5 million on pre-tax loss of ($18.4) million, representing an effective income tax rate of (2.6%) compared to 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% for the same period in 2024. 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 7, “Income Taxes,” to our condensed consolidated financial statements included in Part I, Item 1 of this report.

Previous wording

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, other debt or equity financing activities or funding arrangements with third-party partners, such as VICI PropCo.

Current wording

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, other debt or equity financing activities or funding arrangements with third-party partners, such as VICI PropCo in connection with our casino project in Caruthersville.

Previous wording

(1)Cash, cash equivalents and restricted cash as of September 30, 2024 includes $11.0 million of cash previously funded by VICI PropCo that has not yet been spent on our Caruthersville project.

Current wording

(1)Cash, cash equivalents and restricted cash as of March 31, 2025 and 2024 included $1.9 million and $19.9 million, respectively, of cash previously funded by VICI PropCo that had not been spent on our Caruthersville project as of such date.

Previous wording

Cash flows from operations decreased during the nine months ended September 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.

Current wording

Trends in our operating cash flows tend to follow trends in earnings from operations excluding non-cash charges, offset by cash rent, income tax payments and interest payments on our long-term debt. 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.