The Company records deferred tax assets and liabilities based on the difference between the financial statement and income tax basis of assets and liabilities using the enacted statutory tax rate in effect for the year these differences are expected to be taxable or reversed. Deferred income tax expenses or credits are based on the changes in the asset or liability from period to period. The recorded deferred tax assets are reviewed for impairment on a quarterly basis by reviewing the Company’s internal estimates for future taxable income.

As of March 31, 2012, the Company has established a valuation allowance for its U.S. deferred tax assets of $5.1 million, a $0.9 million valuation allowance on its Calgary property and a $1.4 million valuation allowance on the Century Casinos Europe subsidiary deferred tax assets due to the uncertainty of future taxable income. The Company assesses the continuing need for a valuation allowance that results from uncertainty regarding its ability to realize the benefits of the Company’s deferred tax assets. The ultimate realization of deferred income tax assets depends on generation of future taxable income during the periods in which those temporary differences become deductible. If the Company concludes that its prospects for the realization of its deferred tax assets are more likely than not, the Company will then reduce its valuation allowance as appropriate and credit income tax expense after considering the following factors:

· The level of historical taxable income and projections for future taxable income over periods in which the deferred tax assets would be deductible;

· Accumulation of net income before tax utilizing a look-back period of three years, and

· Tax planning strategies.

The income tax provisions are based on estimated full-year earnings for financial reporting purposes adjusted for permanent differences. The Company’s provision for income taxes from operations consists of the following:


Amounts in thousands	As of March 31,
	2012	2011
U.S. Federal - Current	($19)	$25
U.S. Federal - Deferred	0	0
Provision for U.S. federal income taxes	(19)	25

Foreign - Current	$239	$54
Foreign - Deferred	72	144
Provision for foreign income taxes	311	198
Total provision for income taxes	$292	$223

The Company’s income tax expense by jurisdiction is summarized in the table below:

	For the three months			For the three months
Amounts in thousands	ended March 31, 2012			ended March 31, 2011
	Pre-tax income	Income tax	Effective	Pre-tax income (loss)	Income tax	Effective
	Pre-tax income	Income tax	tax rate	Pre-tax income (loss)	Income tax	tax rate
Canada	$955	$302	31.6%	$455	$192	42.2%
United States	5	(19)	(380.0%)	(498)	25	(5.0%)
Mauritius	103	9	8.7%	484	5	1.0%
Austria	246	-	-	118	1	0.8%
Poland	116	-	-	28	-	-
Total	$1,425	$292	20.5%	$587	$223	380.%