Century Casinos, Inc. History

Address:

200-220 East Bennett Avenue
Cripple Creek, Colorado 80813
U.S.A.

Telephone: (719) 689-9100
Fax: (719) 689-9700

Website: www.cnty.com

Public Company
Incorporated: 1993
Employees: 500
Sales: $29.6 million (2001)
Stock Exchanges: NASDAQ
Ticker Symbol: CNTY
NAIC: 713210 Casinos (Except Casino Hotels); 713290 Other Gambling Industries; 721120 Casino Hotels

Company Perspectives:

At Century Casinos, Inc. we strive to grow our business in the U.S., as well as internationally, and look to continue our financial success by offering our guests excellent customer service and the latest exciting casino games; focusing on employee development and creating a positive work environment; adding value to the local communities through responsible operations, employment, and development of business associate relationships; and actively pursuing the development of new gaming opportunities and reinvesting in the success of our existing operations.

Key Dates:

1994:: Through a merger with Alpine Gaming, Century Casinos becomes a public company and acquires a casino in Cripple Creek, Colorado.
1996:: The acquisition of Womacks Casino expands the company's presence in Cripple Creek.
1999:: Casino Millennium opens in Prague, Czech Republic; Caledon Casino, Hotel & Spa opens near Capetown, South Africa.
2000:: Casino concession contracts renewed for operation on Silversea ultra-luxury cruise ships.
2002:: Casino concession opens with the inaugural voyage of The World of ResidenSea, a cruise vessel of luxury home residences.

Company History:

Century Casinos, Inc. operates casinos worldwide through direct ownership or management agreements. The company owns Womacks Casino and Hotel in Cripple Creek, Colorado, providing more than 675 gaming machines and game tables, casual and fine dining, and 21 hotel rooms. Century Casinos holds a 65 percent ownership in the Caledon Casino, Hotel & Spa east of Capetown, South Africa, providing over 250 gaming options. In addition to a 92-room hotel, amenities at the property include natural hot springs, tourist services, a retail center featuring local arts and crafts, conference and meeting space, and Outdoor Experience, a team-building activities program for corporate executives. Through a long-term management agreement, the company operates Casino Millennium, a 5,000-square-foot gaming area located in the five-star Marriott Hotel in Prague, Czech Republic. Century Casinos also operates gaming concessions on luxury cruise vessels for Silversea Cruises and The World at ResidenSea, providing equipment, staff, and management services for more than 200 gaming positions. The company offers consulting services for all stages of casino development, including market research, casino design, equipment selection, and operations management.

Early 1990s: Europeans Enter U.S. Gaming Market

Century Casinos formed in late 1992 when five men brought their experience in the European gaming industry to the United States. Erwin Haitzmann, chairman; James Forbes, CEO; Norbert Teufelberger, CFO; Michael Raunegger, senior vice-president of marketing; and Peter Hoetzinger, vice-chairman, were previously employed developing and managing casinos for state-owned Casinos Austria International. That company operated over 100 casinos in 17 countries on five continents, including several in Eastern Europe. Century Casinos' founders chose to start their own business in the United States to capitalize on the expansion of the gaming industry. They felt that gambling had become more acceptable as a form of entertainment in the United States and their experience had taught them how to open casinos in new places. Century Casinos chose to locate in Colorado to counter the stereotype of the Las Vegas casino manager wearing a polyester suit and cheap cologne. In 1990, Colorado passed a referendum to allow limited stakes gaming in three mountain towns. Flourishing gold mining towns during the late 19th and early 20th centuries, Central City, Blackhawk, and Cripple Creek catered to tourists by the late 20th century.

With $2 million in funds from private investors in Europe, Century Casinos Management, as the company was called originally, planned to develop a network of managed and owned casinos. Projects included an agreement to manage a gaming facility on the Soboba Indian Reservation near San Jacinto, California, and to develop riverboat casinos in Louisiana and Indiana. In September 1993, Century Casinos acquired out of foreclosure Terp's Casino in Central City, Colorado, 30 miles west of Denver, for $1.45 million. Plans involved remodeling and renaming the property under the brand Legends.

The company's first gaming operation set sail with the August 1993 inaugural voyage of the Albatross, a deluxe, yacht-like cruise ship operated by V. Ships of Monte Carlo. The luxurious Silver Cloud, operated by Silversea, a newly acquired subsidiary of V. Ships, initiated service from Civitavecchia near Rome in April 1994. Under three-year management agreements, Century Casinos supplied equipment for roulette, blackjack, and slot machines, provided personnel, and paid the expenses of the casinos; V. Ships received a portion of gaming revenues per day based on the number of adult passengers onboard.

In December 1993, Century Casinos entered into a merger agreement with Alpine Gaming, owner-operator of the Long Branch Saloon and Casino in Cripple Creek, Colorado, 45 miles west of Colorado Springs. The Long Branch opened in July 1992, offering patrons 125 slot and video gaming machines and four blackjack tables. The casino reported revenues of $2.3 million and a loss of $372,000 during its first year in operation. Alpine Gaming purchased the property in fall 1993 and became a public company that November. A merger with Alpine Gaming would allow Century Casinos to become a public company without the usual costs and procedures.

After approval from state regulators and Century Casinos' board of directors, the merger came to completion the following March. In a $10 million, non-cash transaction, Century Casinos obtained 76 percent ownership of the company and assumed all management positions. The transaction was recorded as an acquisition of Alpine Gaming with Century Casinos Management becoming a subsidiary. The following June, Alpine Gaming took the name Century Casinos, Inc. and the Long Branch was renamed Legends.

In the meantime, Century Casinos moved forward in its development of riverboat casinos in Louisiana and Indiana. In March 1994, Century Casinos obtained a gaming license from the Louisiana State Police to operate a riverboat casino near New Orleans, in St. Charles Parish. Under a management contract for St. Charles Gaming Company, Century Casinos would receive a percentage of gross revenue from gaming and a percentage of net profit. The 20,000-square-foot paddlewheel riverboat, named the Crown Casino, opened in August 1994 carrying 1,100 gaming machines.

Passage of a gaming referendum in Indiana prompted Century Casinos to purchase land on the Ohio River in Switzerland County and to apply for a gaming license there. Hospitality Franchise Systems (HFS) purchased an equity interest in Century Casinos for $2 million, forming a joint venture on the Switzerland County riverboat project, Pinnacle Gaming Development Corporation.

Shifting of resources followed as Century Casinos sold its Central City property in June 1994 for $1.9 million in order to pursue opportunities elsewhere. This proved to be a wise decision as casino development in nearby Blackhawk eventually overshadowed Central City and attracted more gamblers. The company purchased the Ranch House Casino in Wells, Nevada, for $850,000. The 18,000-square-foot facility provided 6,000 square feet of gaming space. Closed since 1992, Century Casinos had no immediate plans for the property.

Several casino projects came to fruition in 1995 as two casinos opened and a new management agreement was signed. Century Casinos began its casino concession on another Silversea cruise ship in January 1995 with the inaugural voyage of the Silver Wind from Mombassa, Kenya. The onboard gaming facility was named Legends at Sea to correspond with other Legends brand casinos owned or operated by the company. Also in January, the Legends Casino Soboba opened, beginning a five-year management agreement with the Soboba Band of Mission Indians. Century Casinos would receive 30 percent of net profit for management, development, and pre-opening costs. Century Casinos terminated the agreement in August, however, accepting a $3.1 million promissory note to be paid over three years.

The pursuit of international gaming opportunities resulted in a management and consulting agreement with Rhodes Casino, S.A., a consortium of businesses, including Playboy Enterprises. Signed in November, the $1.1 million contract involved oversight of the construction phase and the first three years of operation of a new casino on the Greek island of Rhodes.

In 1995, Century Casinos divested certain holdings. Crown Casino bought Century Casinos' remaining rights in a management agreement with St. Charles Gaming Company, a subsidiary of Crown Casino, for $4 million. In December, the company sold its 80 percent interest in Pinnacle Gaming to Switzerland County Development Corporation, a joint venture owned by Boomtown, Inc. and Hilton Gaming Corporation. For its activities promoting gaming in the area, Century Casinos received an initial payment of $80,000 and would be compensated upon approval of a gaming license, at groundbreaking, and when the casino began operations.

International Expansion During the Late 1990s

Finding the U.S. gaming market to be more difficult to navigate than anticipated, Century Casinos' management decided to pursue gaming opportunities internationally. To provide a financial foundation, Century Casinos expanded its share of the Cripple Creek gaming market with the July 1996 acquisition of Womacks Saloon and Gaming Parlor. The $13.5 million price included $3 million in assumed debt and $5.2 million in seller financing, with the balance paid in cash. The company preserved the Womacks name and folded the Legends casino into it. After interior remodeling to link the adjacent properties and the addition of new gaming devices, Womacks became the second largest casino in Cripple Creek, with nearly 600 gaming devices.

Marketing for the property included the Gold Club, a player tracking system that provided members with special offers on food and merchandise, as well as cash for gaming, based on previous game play. Century Casinos sought wide exposure through Western Pacific Airlines logojet program. The Womacks logo was painted on a jet serving 18 cities in the western United States from Colorado Springs. The company cosponsored Ramblin' Express buses with hourly departures from Colorado Springs to Cripple Creek.

The Womacks acquisition impacted Century Casinos' revenues significantly as the company increased its market share from 4.3 percent to 17.3 percent in Cripple Creek. In 1995, the company generated $4.2 million in net operating revenue from gaming, food and beverage sales, and hotel accommodations, less promotional allowances. In 1996, Century Casinos reported $11.5 million in net operating revenue with the addition of Womacks. In 1997, after one full year of ownership in Womacks, revenues reached $19.6 million with a net loss of $543,000. In its efforts to build a financial base for expansion, the company streamlined operations at Womacks for improved cost and operating efficiency.

With Womacks as a strategic stronghold and a reserve of funds from the company's previous projects, Century Casinos sought international gaming opportunities. The company negotiated an early settlement with the Soboba Indians in 1998, receiving a final payment of $500,000 on the $2.5 million debt. When Switzerland County Development obtained a gaming license in September 1998, Century Casinos received a payment of $431,000. With groundbreaking in 1999, Century Casinos received an additional $1 million. Switzerland County Development made a final lump sum payment of $1.4 million in January 2000 when the riverboat casino opened.

Through several different partnerships, Century Casinos pursued gaming development and management opportunities in South Africa, in British Columbia, Canada, and in Prague, Czech Republic. One of the risks in Century Casinos' search for gaming opportunities involved the government licensure processes, with gaming commissions closely scrutinizing the companies offering proposals to operate casinos. In searching for casino management opportunities, Century Casinos found that the small size of the company to be a hindrance. In May 1998, this factor contributed to the failure of a consortium to obtain a gaming license in the South African province of Gauteng. The company spent $500,000 in pursuing the deal. A subsequent joint venture continued to pursue gaming opportunities in Gauteng.

Century Casinos succeeded in winning a gaming license for Casino Millennium, in central Prague, in March 1999. Located adjacent to the five-star Marriott Hotel and connected to a complex of offices, retail shops, restaurants, and other entertainment, Casino Millennium was expected to become the premier entertainment facility in Prague. Century Casinos held a 49 percent ownership interest in the project, jointly owned with B.H Centrum, a subsidiary of Bau Holdings AG, a major European construction company. An exclusive 20-year service agreement provided Century Casinos with a fee based on gross revenues and a gaming equipment lease with pay based on a percentage of net profit. The casino opened in July 1999 with 15 gaming tables, 70 gaming machines, and a VIP gaming area.

In April 2000, a Century Casinos joint venture obtained a gaming license for operations in Caledon, South Africa, the only license for the Overberg region and one of five in the province of Western Cape. Construction began immediately on the property, located near popular tourist areas along the coast east of Cape Town. By September, the main structure was completed and celebrated according to local tradition with a "roof-wetting" ceremony. The Caledon Casino, Hotel & Spa opened in October, offering 14 game tables and 250 slot machines. With a 50 percent ownership in the property, Century Casinos signed a ten-year management agreement with its local partner, Fortes-King Hospitality.

By December, the company completed construction on conference and meeting facilities and refurbishment of a hotel on the property, providing 92 rooms, including six luxury suites. Construction continued on facilities at the property's natural hot mineral springs. At this time Century Casinos acquired an additional 15 percent ownership in the property. While initial attendance at the casino exceeded expectations, the December 2001 opening of another casino closer to Capetown proved to be strong competition for the Caledon casino. Future prospects for the property include a golf course, residential and timeshare units, and other facilities.

Century Casinos continued to implement its long-term strategy of improvement at Womacks Casino in Cripple Creek. Providing ample parking in proximity to the property became a competitive issue which the company addressed through the strategic lease or purchase of open lots. Efforts to attract gamblers were successful as Womacks won several local awards from the Mountain Jackpot in November 1999. Among other accolades, Womacks won first place in the Reader's Choice Awards for "Best Large Casino" and "Casino with the Best New Games." In 1999, the company reported an average win per day of $103 in contrast to the Cripple Creek average of $81 per day. That year, Womacks generated $22.7 million in net operating revenue, a 19.4 percent increase over 1998.

As part of the company's long-term strategic plan, Century Casinos began to develop a 500-seat events center adjacent to Womacks. Century Casinos and the City of Cripple Creek hoped to attract new clients through entertainment and special events and by offering the space for conventions and meetings. The city would operate and market the center. Century Casinos relocated its offices to the new facility, freeing space at Womack for hotel rooms, food and beverage operations, and additional gaming. Womacks Events Center celebrated is grand opening in September 2000 with the presentation of the Cripple Creek Film Festival. Featuring 33 independent films, this event was attended by producers, directors, and film celebrities.

Building on Previous Successes in the Early 2000s

After a hiatus in which an affiliate of Silversea Cruises handled shipboard casino concessions, Century Casinos returned to the sea with a new casino concession agreement with Silversea. The five-year agreement covered the Silver Cloud and the Silver Wind as well as two new six-star, luxury vessels for a total of 160 gaming positions. The inaugural voyage of the Silver Shadow took place in September 2000, and the original two ships sailed in October and November, respectively. The Silver Whisper began sailing in June 2001. Passenger traffic declined after the September 11, 2001 terrorist attacks on the World Trade Center and Pentagon, however, leading Silversea to suspend service on the Silver Wind in October 2001.

In August 2000, Century Casinos signed a casino concession agreement with The World of ResidenSea, the first luxury resort residences aboard an ocean-going vessel. The ship offered 110 residences, from 1,000 square feet to 3,200 square feet, as well as 88 guest suites, with purchase prices starting at $2 million. The five-year agreement involved provision of gaming equipment and casino management while the ship traveled around the world year round with an emphasis on warm climates. The World of ResidenSea launched from Oslo, Norway, in March 2002, carrying a 40-position game room operated by Century Casinos.

Century Casinos continued to pursue international opportunities. In November 2001, the company joined a consortium to seek a gaming license in the beach resort town of Punta del Este, Uruguay. The consortium included Inter-Continental Hotels & Resorts. The project involved a resort, a convention center, and a casino with over 1,000 gaming positions. Century Casinos sought to acquire a 50 percent ownership stake in Casino Millennium, pending government approval. The company purchased a 50 percent stake in Rhino Resort Limited in September 2001 as it continued to pursue a gaming license for Gauteng Province, near Johannesburg. Rhino Resort was granted a gaming license for the $40 million project, but in February 2002 another Gauteng gaming company, Tsogo Sun Holdings, appealed to the gaming authorities to revoke license. The courts overturned the licensure the following September.

Century Casinos' long-term development strategy for Cripple Creek progressed in 2001 and 2002. In early 2001, the company transformed the second floor of Womacks into ten luxury hotel rooms, completing construction in July for a total of 18 hotel rooms. The loss of gaming space was regained through a $2.5 million expansion project. Construction began in March 2002, adding 3,000 square feet to the casino for an overall increase in gaming space as the company added 60 new slot machines. Another 3,000 square feet provided space for back-of-the-house functions. Womacks benefited from a general increase in visitors to Cripple Creek as people chose shorter vacations closer to home in a soft economy. Future plans under consideration included the addition of 200 hotel rooms and 400 covered parking spaces.

In April 2002, Century Casinos purchased for $1.2 million the Palace Casino, an 8,500-square-foot property located across the street from Womacks. Century Casinos planned to maintain a gaming operation in the historic portion of the building, approximately 5,000 square feet, and to demolish the remaining part of the building to provide parking.

Principal Subsidiaries: Century Casinos Africa (Pty.) Ltd. (94.8%); Century Casinos Management, Inc.; Century Management u. Beteiligungs GmbH; WMCK-Venture Corporation.

Principal Competitors: Blackhawk Gaming, Inc.; Trans World Corporation.

Century Casinos, Inc. History

Company Perspectives:

Key Dates:

Company History:

Further Reading: