6-K

FORM 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of May 2011

Commission File Number      000-30224

CRYPTOLOGIC LIMITED

Marine House, 3rd Floor

Clanwilliam Place

Dublin 2, Ireland

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F R                                           Form 40-F £

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)  £

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)  £

DOCUMENTS FILED

See the Exhibit Index hereto for a list of the documents filed herewith and forming a part of this Form 6-K.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

          Date: May 12, 2011 CRYPTOLOGIC LIMITED   /s/ John Loughrey                                                                   John Loughrey Vice-President, General Counsel and Company Secretary

EXHIBIT INDEX

Exhibit	Description
99.1	Consolidated Financial Statements for the period ended March 31, 2011
99.2	Management's Discussion and Analysis for the period ended March 31, 2011
99.3	Certification of Chief Executive Officer
99.4	Certification of Chief Financial Officer

EX-99.1

EXHIBIT 99.1

CRYPTOLOGIC LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In thousands of U.S. dollars)

(Unaudited)

	As at March 31, 2011			As at December 31, 2010 (Note 23)
ASSETS
Deferred tax assets	$	870		$	864
Property, plant and equipment (note 5)		2,411			2,585
Intangible assets (note 6)		2,038			2,210
Total non-current assets		5,319			5,659
Cash and cash equivalents (note 7)		14,512			10,584
Security deposits (note 8)		811			515
User funds held on deposit		4,079			6,069
Trade and other receivables (note 9)		4,994			5,046
Current tax assets		737			730
Prepayments		8,488			8,942
Total current assets		33,621			31,886
Total assets	$	38,940		$	37,545
EQUITY
Share capital (note 10)	$	34,135		$	34,129
Share options (note 11)		5,596			5,564
Deficit		(23,465	)		(22,878	)
Total equity attributable to shareholders of the Company		16,266			16,815
Non-controlling interest (note 12)		1,179			1,226
Total equity		17,445			18,041
LIABILITIES
Deferred tax liabilities		63			16
Total non-current liabilities		63			16
Trade payables and accrued liabilities (note 13)		13,120			13,060
Income taxes payable		4,233			359
User funds held on deposit		4,079			6,069
Total current liabilities		21,432			19,488
Total liabilities		21,495			19,504
Total equity and liabilities	$	38,940		$	37,545

1

CRYPTOLOGIC LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands of U.S. dollars, except per share data)

(Unaudited)

	For the three months Ended March 31,
	2011			2010 (Note 23)
Total revenue (note 14)	$	6,016		$	7,641
Expenses:
Operating		4,688			8,578
General and administrative		1,396			2,178
Reorganization (note 15)		–			29
Depreciation (note 5)		228			223
Amortization of intangible assets (note 6)		181			517
		6,493			11,525
Results from operating activities		(477	)		(3,884	)
Finance income		39			403
Finance costs		(10	)		(15	)
Net finance income (note 16)		29			388
Loss before income taxes		(448	)		(3,496	)
Income tax expense		180			123
Loss for the period		(628	)		(3,619	)
Other comprehensive income		–			–
Other comprehensive income for the period net of income tax		–			–
Total comprehensive loss for the period	$	(628	)	$	(3,619	)
Total comprehensive loss attributable to:
Shareholders of the Company		(587	)		(3,378	)
Non-controlling interests		(41	)		(241	)
Total comprehensive loss for the period		(628	)		(3,619	)
Loss per common share (note 17)
Basic loss per share	$	(0.05	)	$	(0.26	)
Diluted loss per share	$	(0.05	)	$	(0.26	)

2

CRYPTOLOGIC LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands of U.S. dollars)

(Unaudited)

Attributable to Shareholders of the Company
	Share Capital		Contributed surplus		Share options			Retained earnings			Total			Non- Controlling interest			Total equity
Balance at January 1, 2010 (note 23)	$	33,848	$	68	$	5,646		$	(2,766	)	$	36,796		$	2,948		$	39,744
Total comprehensive income for the period
Profit or loss (note 23)		–		–		–			(20,112	)		(20,112	)		(1,509	)		(21,621	)
Transactions with owners recorded directly in equity
Shares exchanged		213		–		–			–			213			(213	)		–
Share-based payment transactions		–		–		(82	)		–			(82	)		–			(82	)
Balance at December 31, 2010 (note 23)	$	34,061	$	68	$	5,564		$	(22,878	)	$	16,815		$	1,226		$	18,041
Balance at January 1, 2011	$	34,061	$	68	$	5,564		$	(22,878	)	$	16,815		$	1,226		$	18,041
Total comprehensive income for the period
Profit or loss		–		–		–			(587	)		(587	)		(41	)		(628	)
Transactions with owners recorded directly in equity
Shares exchanged		6		–		–			–			6			(6	)		–
Share-based payment transactions		–		–		32			–			32			–			32
Balance at March 31, 2011	$	34,067	$	68	$	5,596		$	(23,465	)	$	16,266		$	1,179		$	17,445

3

CRYPTOLOGIC LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(Unaudited)

	For the three months ended March 31,
	2011			2010 (Note 23)
Cash flows from/(used in):
Operating activities:
Loss for the period	$	(628	)	$	(3,619	)
Adjustments for:
Depreciation		228			223
Amortization of intangible assets		181			517
Deferred tax		41			230
Share based payment transactions		32			303
		(146	)		(2,346	)
Change in operating assets and liabilities:
Change in trade and other receivables		52			1,187
Change in prepayments		454			(368	)
Change in trade payables and accrued liabilities		60			(1,121	)
Cash from/(used in) operating activities		420			(2,648	)
Change in income taxes payable		3,867			(1,346	)
Net cash from/(used in) operating activities		4,287			(3,994	)
Investing activities:
Acquisition of property, plant and equipment		(54	)		(43	)
Acquisition of intangible assets		(9	)		–
(Increase) in security deposits		(296	)		–
Net cash from (used in) investing activities		(359	)		(43	)
Financing activities:
Cash flows from financing activities		–			–
Net cash used in financing activities		–			–
Net increase/(decrease) in cash and cash equivalents		3,928			(4,037	)
Cash and cash equivalents, beginning of period		10,584			23,447
Cash and cash equivalents, end of period	$	14,512		$	19,410

4

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

1. Nature of operations

CryptoLogic Limited and its subsidiaries (the "Company") is a provider of commerce-enabling technology, permitting secure, reliable, high-speed and private financial transactions over the Internet.  The Company provides a comprehensive solution including software, network operations, administrative and marketing consulting services to licensed gaming operators (“Hosted Casino”).  The Company also licenses individual games, generally with branded content, to licensed gaming operators (“Branded Games”).  The Company earns substantially all of its revenue from the hosting and service arrangements for the operation of online casino and poker games on behalf of licensed casinos and licensing Branded Games to licensed operators.  Substantially all of the Company's revenue is earned in U.S. dollars, British pounds and euro from licensees located outside of the United States.  The Company's functional currency is the U.S. dollar and, consequently, it measures and reports its results in U.S. dollars.

2. Significant accounting policies

(a) Statement of Compliance and Conversion to International Financial Reporting Standards

The Canadian Accounting Standards Board (“AcSB”) confirmed in February 2008 that International Financial Reporting Standards (“IFRS”) would replace Canadian generally accepted accounting principles (“GAAP”) for publicly accountable enterprises for financial periods beginning on or after January 1, 2011.

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (“IAS 34”) using accounting policies consistent with IFRS as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

These are the Company’s first IFRS condensed consolidated interim financial statements for part of the period covered by the first IFRS consolidated annual financial statements to be presented in accordance with IFRS for the year ended December 31, 2011.  Previously the Company prepared its consolidated annual and interim financial statements in accordance with GAAP.

The accounting policies have been applied consistently by the Company and its wholly-owned subsidiaries.

(b) Basis of consolidation

(i) Business Combinations

Acquisitions prior to January 1, 2010

As part of its transition to IFRSs, the Company elected to restate only those business combinations that occurred on or after January 1, 2010.  In respect of acquisitions prior to January 1, 2010, goodwill represents the amount recognized under previous GAAP.

(ii) Acquisitions of non-controlling interests

Acquisitions of non-controlling interests are accounted for as transactions with shareholders in their capacity as equity holders.  Therefore no goodwill is recognized as a result of such transactions.

(iii) Subsidiaries

Subsidiaries are entities controlled by the Company.  The financial statements of subsidiaries are included in the condensed consolidated financial statements from the date that control commences

5

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

until the date that control ceases.  The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Company.

(iv) Special purpose entities

A special purpose entity (SPE) is consolidated if, based on an evaluation of the substance of its relationship with the Company and the SPE’s risks and rewards, the Company concludes that it controls the SPE.  SPEs are considered to be controlled by the Company where the SPE is established under terms that impose strict limitations on the decision-making powers of the SPE’s management and that result in the Company receiving the majority of the benefits related to the SPE’s operations and net assets, being exposed to the majority of risks incident to the SPE’s activities, and retaining the majority of the residual or ownership risks related to the SPEs or their assets.

The Company assessed its operations and relationships and concluded that there are no SPEs in respect of which the Company is the primary beneficiary.  Accordingly, no SPEs are consolidated.

(v) Transactions eliminated on consolidation

Intercompany balances and transactions, and any unrealized income and expenses arising from intercompany transactions, are eliminated in preparing the condensed consolidated financial statements.

Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Company’s interest in the investee.  Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

(c) Foreign currency

Transactions in foreign currencies are translated into U.S. dollars, the Company’s functional currency, at exchange rates at the dates of the transactions.  Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date.  The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the end of the reporting period.  Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.  Foreign currency differences arising on retranslation are recognized in the condensed consolidated statements of comprehensive loss.  Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

(d) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.  The cost of certain items of property, plant and equipment was determined by reference to a previous GAAP revaluation.  The Company elected to apply the optional exemption to use this previous revaluation as deemed cost at January 1, 2010, the date of transition (see note 5).  Cost includes expenditure that is directly attributable to the acquisition of the asset.

6

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized net within other income in profit or loss.

(ii) Subsequent costs

The cost of replacing a part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably.  The carrying amount of the replaced part is derecognized.  The costs of the day-to-day servicing of property, plant and equipment are recognized in profit or loss as incurred.

(iii) Depreciation

Depreciation is calculated over the depreciable amount, which is the cost of an asset less its residual value.  Depreciation is recognized in profit or loss over the estimated useful lives of each part of an item of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.

Leased assets are depreciated over the shorter of the lease term and their useful lives.

Depreciation is based on the estimated useful lives of the assets using the following methods and annual rates:

Asset	Basis	Rate
Computer equipment	Diminishing balance	40%
Office furniture and equipment	Diminishing balance	25%
Leasehold improvements	Straight-line	Term of lease

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(e) Intangible assets

(i) Goodwill

Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets.  In respect of acquisitions prior to January 1, 2008, goodwill is included on the basis of its deemed cost, which represents the amount recorded under previous GAAP.  Goodwill is measured at cost less accumulated impairment losses.

(ii) Computer software

Costs that are directly associated with identifiable and unique computer software products controlled by the Company and that will probably generate economic benefits exceeding costs beyond one year are recognized as intangible assets.  Subsequently, computer software is carried at cost less any accumulated amortization and accumulated impairment losses.

Expenditure which enhances or extends the performance of computer software programmes beyond their original specifications is recognized as a capital improvement and added to the

7

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

original cost of the computer software.  Costs associated with the maintenance of computer software programmes are recognized as an expense when incurred.

The cost related to the development of software is expensed as incurred unless such costs meet the criteria for capitalization under IFRS.  The Company capitalizes certain computer software development costs incurred for products designed for internal use.  Capitalized software development costs are included in intangible assets (see note 6).

Amortization commences when the computer software is available for use using the following methods and annual rates:

Intangible asset	Basis	Rate
Computer software and licenses	Straight-line	3 - 5 years
Capitalized software development	Straight-line	7 years

(iii) Intangible assets

Intangible assets consist of customer lists, brand names and domain names acquired and have finite useful lives.  Intangible assets are measured at cost less accumulated amortization and accumulated impairment losses.  The carrying value of intangible assets is reviewed if indications of impairment exist (see note 6).  Intangible assets are amortized on a straight-line basis over the useful lives of the respective assets as follows:

Customer lists	3 - 7 years
Brand names	12 years
Domain names	12 years

(f) Financial instruments

(i) Fair value measurement hierarchy

IFRS 7 requires certain disclosures which require the classification of financial assets and financial liabilities measured at fair value using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurement (see note 22).  The fair value hierarchy has the following levels:

(a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

(b) Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices) (Level 2); and

(c) Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

The level in the fair value hierarchy within which the financial asset or financial liability is categorized is determined on the basis of the lowest level input that is significant to the fair value measurement.  Financial assets and financial liabilities are classified in their entirety into only one of the three levels.

(ii) Non-derivative financial assets

The Company initially recognizes loans and receivables and deposits on the date that they are originated.  All other financial assets (including assets designated at fair value through profit or loss) are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in

8

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred.  Any interest in transferred financial assets that is created or retained by the Company is recognized as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

The Company has the following non-derivative financial assets: financial assets at fair value through profit or loss, loans and receivables and available-for sale financial assets.

Financial assets at fair value through profit or loss

A financial asset is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial recognition.  Financial assets are designated at fair value through profit or loss if the Company manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Company’s documented risk management or investment strategy.  Upon initial recognition, attributable transaction costs are recognized in profit or loss as incurred.  Financial assets at fair value through profit or loss are measured at fair value, and changes therein are recognized in profit or loss.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market.  Such assets are recognized initially at fair value plus any directly attributable transaction costs.  Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses.

Loans and receivables comprise trade and other receivables.

Cash and cash equivalents comprise cash, restricted cash, security deposits and short-term investments with original maturities of three months or less.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and that are not classified in any of the previous categories.

Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses (see note 21) and foreign currency differences on available-for-sale equity instruments (see note 21), are recognized in other comprehensive income and presented within equity in the fair value reserve.  When an investment is derecognized, the cumulative gain or loss in other comprehensive income is transferred to profit or loss.

(iii) Non-derivative financial liabilities

The Company initially recognizes all financial liabilities (including liabilities designated at fair value through profit or loss) on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire.  Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

9

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

The Company has the following non-derivative financial liabilities: trade payables and accrued liabilities.

Such financial liabilities are recognized initially at fair value plus any directly attributable transaction costs.  Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method.

(iv) Share capital

Common shares

Common shares are classified as equity.  Incremental costs directly attributable to the issue of common shares and share options are recognized as a deduction from equity, net of any tax effects.

(g) Impairment

(i) Financial assets (including receivables)

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired.  A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Company on terms that the Company would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, or the disappearance of an active market for a security.  In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.

The Company considers evidence of impairment for receivables at both a specific asset and collective level.  All individually significant receivables are assessed for specific impairment.  All individually significant receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified.  Receivables that are not individually significant are collectively assessed for impairment by grouping together receivables with similar risk characteristics.

In assessing collective impairment, the Company uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate.  Losses are recognized in profit or loss and reflected in an allowance account against receivables.  Interest on the impaired asset continues to be recognized through the unwinding of the discount.  When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

Impairment losses on available-for-sale investment securities are recognized by transferring the cumulative loss that has been recognized in other comprehensive income, and presented in the fair value reserve in equity, to profit or loss.  The cumulative loss that is removed from other

10

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

comprehensive income and recognized in profit or loss is the difference between the acquisition cost, net of any principal repayment and amortization, and the current fair value, less any impairment loss previously recognized in profit or loss.  Changes in impairment provisions attributable to time value are reflected as a component of interest income.

(ii) Non-financial assets

The carrying amounts of the Company’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment.  If any such indication exists, then the asset’s recoverable amount is estimated.  For goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell.  In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.  For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”, or “CGU”).  For the purposes of goodwill impairment testing, goodwill acquired in a business combination is allocated to the group of CGUs that is expected to benefit from the synergies of the combination.  This allocation is subject to an operating segment ceiling test and reflects the lowest level at which that goodwill is monitored for internal reporting purposes.

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount.  Impairment losses are recognized in profit or loss.  Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(h) Leased assets and lease payments

Leases in terms of which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases.  Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments.  Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Other leases are operating leases and the leased assets are not recognized in the Company’s statement of financial position.

Payments made under operating leases are recognized in profit or loss on a straight-line basis over the term of the lease.  Lease incentives received are recognized as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability.  The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

11

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

(i) Employee benefits

(i) Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts.  Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.  Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.  Contributions to a defined contribution plan that are due more than 12 months after the end of the period in which the employees render the service are discounted to their present value.

(ii) Termination benefits

Termination benefits are recognized as an expense when the Company is committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.  Termination benefits for voluntary redundancies are recognized as an expense if the Company has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.  If benefits are payable more than 12 months after the reporting period, then they are discounted to their present value.

(iii) Share-based payment transactions

The grant date fair value of share-based payment awards granted to employees is recognized as an expense in the statement of comprehensive loss, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards.  The amount recognized as an expense is adjusted to reflect the number of awards for which the related service are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that do meet the related service performance conditions at the vesting date.

Fair value is determined by the Black-Scholes valuation model.  The share options plan does not have any performance conditions other than continued service.

(j) Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.  Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.  The unwinding of the discount is recognized as finance cost.

(i) Provision for jackpots

Several of the Company's licensees participate in progressive jackpot games.  Each time a progressive jackpot game is played, a preset amount is added to a cumulative jackpot for that specific game.  Once a jackpot is won, the progressive jackpot game is reset with a predetermined amount.  The Company is liable for funding the jackpot wins as well as amounts required to reset the progressive jackpot game from the pool of funds collected and accrues the jackpot amount for

12

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

all games on a monthly basis.  The reset amount is accrued, up to the predetermined amount, as wagering occurs.  The accrual for the jackpot at the condensed consolidated statement of financial position dates is included in trade payables and accrued liabilities.

The Company regularly performs an analysis of the accumulation of jackpot funds and amounts required to address jackpot payouts.

At March 31, 2011, trade payables and accrued liabilities included $6,361 in jackpot provisions (December 31, 2010: $5,353).  This amount is sufficient to cover the full amount of any required payout.

(ii) Restructuring

A provision for restructuring is recognized when the Company has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly.  Future operating losses are not provided for.

(iii) Onerous contracts

A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract.  The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.  Before a provision is established, the Company recognizes any impairment loss on the assets associated with that contract.

(k) Revenue recognition

The Company earns its revenue primarily from:

· hosting and services arrangements related to the design and operation of casino and poker sites on the internet on behalf of licensed operators

· licensing individual games, generally with branded content, to licensed operators

· advertising revenue generated on websites operated by the company; and

· customizing its software for specific licensees and commerce-based transactions.

Revenues from Hosted Casino and Branded Games are recognized as the services are performed, on a daily basis, at the time of the gaming transactions, pursuant to the agreements with the licensees in which the Company participates in a pro rata share of the daily gaming profits, net of certain shared expenses (e.g., promotion costs).  In addition, the Company generally receives a standard monthly fee for the provision of hosting and related services from Hosted Casino licensees.

Advertising revenues, which are included in other revenue, are generated by display advertising on casino.co.uk and winneronline.com.  Revenue is earned and recognized as “impressions” are delivered, “click-throughs” occur or “affiliate revenue” is generated.  An “impression” is delivered when an advertisement appears in pages viewed by users.  A “click-through” occurs when a user clicks on an advertiser’s listing.  “Affiliate revenue” is generated when a player is referred from one of the company’s advertising portals to a separate online gaming site and the Company earns a percentage of the revenue generated from that player.

Revenue from the initial customization of the software graphics, sound and texts to the specifications of the licensees, or other services contemplated at the date the contract was executed is recognized on a straight-line basis over the term of the hosting and services agreements.  Revenue from customizations ordered subsequent to and not contemplated at the contract date are generally considered as a separate unit of accounting and recognized as the work is performed.

13

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

Interest income is recognized on an accrual basis.

(i) Royalties

The Company licenses various royalty rights, generally on an exclusive basis, from several owners of intellectual property rights.  These rights are used to produce games for use in Hosted Casino and also as Branded Games.  Generally the arrangements require material prepayments of minimum guaranteed amounts which have been recorded as prepaid expenses in the accompanying condensed consolidated balance sheets.  These prepaid amounts are amortized over the life of the arrangement as gross revenue is generated or on a straight-line basis if the underlying games are expected to have an effective royalty rate greater than the agreed amount.  The amortization of these amounts is recorded as a reduction in the revenue.

The Company regularly reviews its estimates of future revenues under its license arrangements and, during 2010, the review identified that it was appropriate to begin amortizing certain of these royalties on a straight-line basis, such that substantially all of these royalties are amortized on a straight-line basis.  For the three months ended March 31, 2011 amortization of $853 (2010: $297) was recorded as a reduction of revenue in the accompanying condensed consolidated statements of comprehensive loss.

For the three months ended March 31, 2011, the Company paid net royalties of $1,059 (2010: $1,025).  The company is committed to make further royalty payments of $2,066 (see note 19).

(l) Finance income and finance costs

Finance income comprises interest income on funds invested (including available-for-sale financial assets, gains on the disposal of available-for-sale financial assets and changes in the fair value of financial assets at fair value through profit or loss).  Interest income is recognized as it accrues in profit or loss, using the effective interest method.

Finance costs comprise interest and bank charges and changes in the fair value of financial assets at fair value through profit or loss

Foreign currency gains and losses are reported on a net basis.

(m) Income tax

Income tax expense comprises current and deferred tax.  Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future.  In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill.  Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

14

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized.  Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

(n) Earnings per share

Shares of the Company and of CryptoLogic Exchange Corporation (“CEC”) are participating securities and, accordingly, earnings per share is calculated using the two class method.  The two-class method determines earnings per share for the Company's common shares and CEC shares according to dividends declared and participation rights in undistributed earnings, which in the case of the Company are equal.

The Company uses the treasury stock method in computing diluted earnings per common share.  The treasury stock method is a method of recognizing the use of proceeds that could be obtained upon the exercise of options and warrants in computing diluted earnings per common share.  It assumes that any proceeds would be used to purchase the Company's common shares at the average market price.

(o) Segment reporting

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components.  All operating segments’ operating results are reviewed regularly by the Company’s CEO to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.  Unallocated items comprise mainly corporate assets (primarily the Company’s headquarters), head office expenses, and income tax assets and liabilities.

Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill.

(p) New standards and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations are not yet effective for the period ended March 31, 2011 and have not been applied in preparing these condensed consolidated financial statements.

· IFRS 1 First-time Adoption of International Financial Reporting Standards, amendments regarding Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters

· IFRS 7 Financial Instruments: Disclosures, amendments regarding Disclosures — Transfers of Financial Assets

· IFRS 9 Financial Instruments (to replace IAS 39)

· IAS 12 Income Taxes, amendments regarding Deferred Tax: Recovery of Underlying Assets

The Board of Directors expects that, when these standards or interpretations become effective in future periods, they will not have a material effect on the financial statements of the Company.

15

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

3. Critical accounting estimates and judgements

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses.  The areas requiring estimates and judgments that may potentially have a significant impact on the Company’s earnings and financial position include, but are not limited to, provision for jackpots, the estimate useful lives of property, plant and equipment and intangible assets, share based payments, income taxes, the reported amounts of revenue and expenses, the fair value of financial instruments, legal proceedings and contingent liabilities.

Although these estimates are based on management’s best knowledge of current events and actions, actual results ultimately may differ from those estimates.

(a) Provision for jackpots

Several of the Company's licensees participate in progressive jackpot games.  Each time a progressive jackpot game is played, a preset amount is added to a cumulative jackpot for that specific game.  Once a jackpot is won, the progressive jackpot game is reset with a predetermined amount.  The Company is liable for funding the jackpot wins as well as amounts required to reset the progressive jackpot game from the pool of funds collected and accrues the jackpot amount for all games on a monthly basis.  The reset amount is accrued, up to the predetermined amount, as wagering occurs.  The accrual for the jackpot at the condensed consolidated statement of financial position dates is included in trade payables and accrued liabilities.

The Company regularly performs an analysis of the accumulation of jackpot funds and amounts required to address jackpot payouts.

(b) Useful life of property, plant and equipment and intangible assets

Intangible assets and property, plant and equipment are amortized or depreciated over their useful lives.  Useful lives are based on management’s estimates of the period that the assets will generate revenue, which are periodically reviewed for continued appropriateness.

Changes to estimates can result in significant variations in the amounts charged to the condensed consolidated statement of comprehensive loss in specific periods.

(c) Share-based compensation

The Company has a share-based remuneration scheme for employees.  The fair value of share options is estimated by using the Black-Scholes model on the date of grant incorporating assumptions regarding risk free interest rate, dividend yield, volatility factor of the expected market price of the Company’s shares and the expected life of the options.

(d) Income taxes

The Company is subject to tax in multiple jurisdictions and judgment is required in determining the provision for income taxes.  The Company uses the asset and liability method of accounting for income taxes.  Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carryforwards.  Deferred income tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled.  The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment or substantive enactment date.

16

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

(e) Fair value of financial instruments

The Company determines the fair value of financial instruments that are not quoted using valuation techniques.  Those techniques are significantly affected by the assumptions used, including discount rates and estimates for future cash flows.  In that regard, the derived fair value estimates cannot always be substantiated by comparison with independent markets and, in many cases, may not be capable of being realized immediately (see note 21).

(f) Legal proceedings and contingent liabilities

The Company is involved in certain claims and litigation arising out of the ordinary course and conduct of business, including intellectual property matters.  Management assesses such claims and, if considered likely to result in material exposure and where it is probable that there will be an outflow of economic benefit, provisions for loss are made based on management's assessment of the likely outcome.  Management does not provide for claims that are considered unlikely to result in a significant loss, claims for which the outcome is not determinable or claims where the amount of the loss cannot be reasonably estimated.  Any settlement or awards under such claims are provided for when reasonably determinable.

4. Changes in accounting estimates

The Company licenses various royalty rights, generally on an exclusive basis, from several owners of intellectual property rights.  These rights are used to produce games for use in the hosted casino and also as branded games.  Generally the arrangements require material prepayments of minimum guaranteed amounts which have been recorded as prepaid expenses in the accompanying condensed consolidated balance sheets.  These prepaid amounts are amortized over the life of the arrangement as gross revenue is generated or on a straight-line basis if the underlying games are expected to have an effective royalty rate greater than the agreed amount.  The amortization of these amounts is recorded as a reduction in the revenue.

The Company regularly reviews its estimates of future revenues under its license arrangements and, during the second quarter of 2010, the review identified that it was appropriate to begin amortizing certain of these royalties on a straight-line basis, such that substantially all of these royalties are amortized on a straight-line basis.  In the three months ended March 31, 2011, amortization of $853 (2010: $297) was recorded as a reduction of revenue in the accompanying condensed consolidated statements of comprehensive loss.

In the three months ended March 31, 2011, the Company paid net royalties of $1,059 (2010: $1,025).  The company is committed to make further royalty payments of $2,066, of which $1,562 relates to the nine months ending December 31, 2011 (see note 19).

17

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

5. Property, plant & equipment

	Computer equipment			Office Furniture and equipment			Leasehold improvements			Total
Cost
Balance, January 1, 2010	$	5,373		$	1,013		$	2,564		$	8,950
Additions		349			161			312			822
Disposals		(12	)		(48	)		–			(60	)
Balance, December 31, 2010		5,710			1,126			2,876			9,712
Additions		31			13			10			54
Balance, March 31, 2011	$	5,741		$	1,139		$	2,886		$	9,766
Amortization
Balance, January 1, 2010	$	(4,500	)	$	(595	)	$	(1,029	)	$	(6,124	)
Charge for the year		(402	)		(188	)		(452	)		(1,042	)
Disposals		10			29			–			39
Balance, December 31, 2010		(4,892	)		(754	)		(1,481	)		(7,127	)
Charge for the period		(82	)		(29	)		(117	)		(228	)
Balance, March 31, 2011	$	(4,974	)	$	(783	)	$	(1,598	)	$	(7,355	)
Net book value
Balance, March 31, 2011	$	767		$	356		$	1,288		$	2,411
Balance, December 31, 2010	$	818		$	372		$	1,395		$	2,585
Balance, January 1, 2010	$	873		$	418		$	1,535		$	2,826

During the three months ended March 31, 2011, there were no changes in the estimated useful lives of property, plant and equipment.

During 2010, the Company disposed of office furniture and equipment and computer equipment associated with the consolidation of its operations into Malta.  The Company recorded a gain on disposal of these assets of $34, which is included in general and administrative expenses in the accompanying condensed consolidated statements of comprehensive loss.

18

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

6. Intangible assets

	Parbet			Casino.co.uk			Computer software & licenses (Note 23)			Capitalized software development (Note 23)			Total intangible assets
Cost
Balance, January 1, 2010	$	2,487		$	2,568		$	10,319		$	4,300		$	19,674
Additions		–			–			243			–			243
Impairments		(2,487	)		(2,481	)		–			(2,105	)		(7,073	)
SRED rebate		–			–			–			(295	)		(295	)
Balance, December 31, 2010		–			87			10,562			1,900			12,549
Additions		–			–			9			–			9
Balance, March 31, 2011		–			87			10,571			1,900			12,558
Amortization
Balance, January 1, 2010		(297	)		(800	)		(9,671	)		-			(10,768	)
Charge for the year		(148	)		(177	)		(482	)		(523	)		(1,330	)
Impairments		445			972			-			342			1,759
Balance, December 31, 2010		–			(5	)		(10,153	)		(181	)		(10,339	)
Charge for the period		–			(3	)		(100	)		(78	)		(181	)
Balance, March 31, 2011		–			(8	)		(10,253	)		(259	)		(10,520	)
Net book value
Balance, March 31, 2011	$	–		$	79		$	318		$	1,641		$	2,038
Balance, December 31, 2010	$	–		$	82		$	409		$	1,719		$	2,210
Balance, January 1, 2010	$	2,190		$	1,768		$	648		$	4,300		$	8,906

The impairment losses are included in the impairment of intangible assets in the accompanying condensed consolidated statements of comprehensive loss.

In January 2007, the Company acquired the poker brand and the customer list of Parbet.  The total cash consideration paid was $11,770, with $11,746 allocated to the brand and $1,332 allocated to the customer list.  The Company also recorded a future income tax liability of $1,308.  In 2008, due to decreasing poker revenues and reduced expectations of the Parbet.com brand, the Company determined that the carrying amounts of the intangible assets exceeded their fair value and recorded an impairment loss of approximately $7,214.

In the year ended December 31, 2010, as a result of reduced expectations of the Parbet brand, the Company reviewed the intangible assets for impairment.  The Company completed a valuation of the intangible assets, using probability weighted net cash flows expected from the Parbet brand and discounting these cash flows to present value at a discount rate that considers the degree of risk or uncertainty associated with the realization of the estimated net revenues.  Using this approach, the Company determined that the carrying amounts of the intangible assets exceeded their fair value and recorded an impairment loss of $1,950, or the entire carrying value of the intangible assets.

In August 2007, the Company acquired 100% of the assets and operations of Casino.co.uk, a gaming portal, for a purchase price of $6,098, including $182 related to the costs of acquisition.  In the year ended December 31, 2010, as a result of reduced expectations of the Casino.co.uk portal, the Company reviewed the intangible assets for impairment.  The Company completed a valuation of the intangible assets, using probability weighted net cash flows expected from the Casino.co.uk portal and discounting these cash flows to present value at a discount rate that considers the degree of risk or uncertainty associated with the realization of the estimated net revenues.  Using this approach, the Company determined that the carrying

19

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

amounts of the intangible assets exceeded their fair value and recorded an impairment loss of $1,626 (2009: $nil).  The brand name is being amortized over 12 years.

7. Cash and cash equivalents

For the purposes of the statement of cash flows, the cash and cash equivalents include the following:

	As at March 31, 2011		As at December 31, 2010
Cash at bank	$	8,212	$	3,284
Deposits		6,300		7,300
Total cash and cash equivalents	$	14,512	$	10,584

8. Security deposits

Security deposits are amounts held by the Company's banks as collateral provided to payment processors that process deposits and credit card transactions.  During the three months ended March 31, 2011, the Company increased its security deposits with one of its banks to provide additional cover for credit card and foreign exchange transactions.

9. Trade and other receivables

	As at March 31, 2011		As at December 31, 2010
Trade receivables	$	2,546	$	2,431
Refundable VAT and other taxes		874		1,249
Other receivables		1,574		1,366
Total trade and other receivables	$	4,994	$	5,046

The fair values of trade and other receivables due within one year approximate to their carrying amounts as presented above.

10. Share capital

Authorized

Unlimited Common Shares

Issued and outstanding

	Issued				Contributed		Total
	Common Shares		Amount		surplus
Balance, December 31, 2010		12,879	$	34,061	$	68	$	34,129
CEC shares exchanged (1)		5		6		–		6
Balance at March 31, 2011		12,884	$	34,067	$	68	$	34,135

(1) The Company acquired control over all of the issued and outstanding common shares of CryptoLogic Inc., an Ontario company, which through the Arrangement became an indirect wholly owned subsidiary of the Company.  As consideration for the acquisition, the Company issued either an equivalent amount of its Common Shares or, in the case of taxable Canadian residents, exchangeable shares of CEC, an indirect subsidiary of the Company.  The CEC shares can be exchanged by the holders for an equal number of CryptoLogic Limited Common Shares at any time.

20

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

As a result of the reorganization, a total of 12.6 million CryptoLogic Limited Common Shares and 1.3 million CEC shares were issued.  Since June 1, 2007, 398,437 CEC shares have been exchanged, with the remaining shares of CEC being reflected as non-controlling interest as at December 31, 2010.  On June 1, 2014, the Company will redeem all of the then outstanding CEC shares in return for CryptoLogic Limited Common Shares.

11. Share-based compensation

Under the share option plan, the Company may grant options to directors, officers and other key employees to purchase common shares.  All outstanding options of CryptoLogic Inc. as of the date of Arrangement were fully assumed by CryptoLogic Limited under the same terms and conditions as originally granted by CryptoLogic Inc.  Under the plan, a maximum of 3,900,000 common shares may be issued.  The exercise price of the options may not be less than the market value of the underlying common shares on the date of grant.  The Company generally grants share options with an exercise price at the closing price on the date of grant.  There were 911,462 common shares available to be issued under the share option plan as at March 31, 2011 (December 31, 2010: 1,256,712).  Options typically vest over a period of three or four years, as determined at the date of grant, and the term of the options may not exceed five years.

Historically, the Company has granted options with an exercise price at the closing price on the Toronto Stock Exchange on the date of grant.  Since the Company’s Common Shares are now more actively traded on NASDAQ the Company granted options with an exercise price at the closing price on NASDAQ on the date of grant.

Details of share option transactions are as follows:

	Three months ended March 31, 2011										Year ended December 31, 2010
	Number of options			Weighted average exercise price of options		Weighted average exercise price of options		Number of options			Weighted average exercise price of options		Weighted average exercise price of options
				Cdn$		US$					Cdn$		US$
Options outstanding, beginning of period		153,500		$	20.63				563,521		$	21.89
Options outstanding, beginning of period		70,000				$	1.61		–				$	–
Granted		–			–				5,000			3.08
Granted		310,000					1.45		70,000					1,61
Forfeited		(24,750	)		10.90				(415,021	)		8.62
Forfeited		(10,000	)				1.45		–					–
Options outstanding, end of period		128,750		$	20.12				153,500		$	20.63
Options outstanding, end of period		370,000				$	1.48		70,000				$	1.61
		498,750							223,500
Options exercisable, end of period		92,250		$	22.74	$	–		110,808		$	22.61	$	–

				March 31, 2011			March 31, 2011
	Options outstanding				Options exercisable
Range of exercise price	Number outstanding	Weighted average remaining life (years)		Weighted average exercise price	Number exercisable		Weighted average exercise price
Cdn$				Cdn$			Cdn$
$0.01 - $5.00	15,000	3.85	$	3.23	2,500	$	3.30
$5.01 - $20.00	69,750	1.84		18.75	45,750		18.70
$20.01 - $30.00	44,000	0.50		28.04	44,000		28.04
	128,750	1.62	$	20.12	92,250	$	22.74

21

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

						March 31, 2011				March 31, 2011
		Options outstanding						Options exercisable
Range of exercise price		Number outstanding		Weighted average remaining life (years)		Weighted average exercise price		Number exercisable		Weighted average exercise price
US$						US$				US$
$	0.01 - $5.00		370,000		4.70	$	1.48		–	$	–
			370,000		4.70	$	1.48		–	$	–

The Company expenses the cost of all share option grants, determined using the fair value method.  The estimated fair value of the options is recorded over the periods that the options vest.  The fair value of options granted was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2011	2010
Dividend yield	0.0%	0.0%
Risk-free interest rate	0.3%	0.3%
Expected volatility	76%	73%
Expected life of options in years	3	3

The weighted average fair value of options granted during the three months ended March 31, 2011 was $0.72 (2010: $nil).

Included in operating costs is the cost of share options in the amount of $32 (2010: $303).

12. Non-controlling interest

Pursuant to a business reorganization implemented by way of an Ontario, Canada Superior Court of Justice court approved plan of arrangement (the "Arrangement") and approved by the shareholders on May 24, 2007, CryptoLogic Limited acquired control over all of the issued and outstanding common shares of CryptoLogic Inc., an Ontario company, which through the Arrangement, became an indirect subsidiary of CryptoLogic Limited.  As part of the Arrangement, CryptoLogic Limited issued either an equivalent amount of its common shares or, in the case of taxable Canadian residents, exchangeable shares of CryptoLogic Exchange Corporation ("CEC"), an indirect subsidiary of CryptoLogic Limited.  The CEC shares are, as nearly as practicable, the economic equivalent of CryptoLogic Limited shares.  These CEC shares participate equally in voting and dividends with the shareholders of the Company.  No additional shares of CEC will be issued after June 1, 2007.

As part of its transition to IFRSs, the Group elected to restate only those business combinations that occurred on or after January 1, 2010; accordingly, the Arrangement has been accounted for using the continuity of interest method under previous GAAP, which recognizes CryptoLogic Limited as the successor entity to CryptoLogic Inc.

These condensed consolidated financial statements reflect the financial position, results of operations and cash flows as if the Company has always carried on the business formerly carried on by CryptoLogic Inc. and its subsidiaries, with all assets and liabilities recorded at the carrying values of CryptoLogic Inc.  The interest held by CEC shareholders has been presented as non-controlling interest in these condensed consolidated financial statements, as required under IFRS.  As a result of the Arrangement, a total of 12.6 million and 1.3 million shares of the Company and CEC were issued, respectively.

The shares issued by CEC are considered a non-controlling interest of the Company for accounting purposes and, consequently, a proportional amount of the Company's shareholders' equity was recorded separately as non-controlling interest on the condensed consolidated statement of financial position and a similar proportional share of the profit or loss associated with subsidiaries directly or indirectly owned by CEC is included in the condensed consolidated statement of comprehensive loss as non-controlling interest.

22

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

In addition, dividends paid to CEC shareholders reduce non-controlling interest on the condensed consolidated statement of financial position.  For accounting purposes, when CEC shares are exchanged, the proportional share of the non-controlling interest recorded on the condensed consolidated statement of financial position is reduced and share capital increased based on the pro-rata number of shares exchanged to the total number of CEC shares outstanding.  Since June 1, 2007, a total of 398,437 CEC shares have been exchanged for the Company's shares.

13. Trade payables and accrued liabilities

	As at March 31, 2011		As at December 31, 2010
Trade payables	$	1,191	$	1,796
Provision for jackpots		6,631		5,353
Accrued liabilities		5,298		5,911
Total trade payables and accrued liabilities	$	13,120	$	13,060

The average credit period on purchases is one month.  The Company has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.

The fair values of trade payables and accrued liabilities due within one year approximate to their carrying amounts as presented above.

14. Segment reporting

The Company provides a comprehensive solution including software, network operations, administrative and marketing consulting services to licensed gaming operators that allows licensees to provide online casino and poker games as well as licensees of Branded Games and considers these to be one operating and reporting segment.

The Company reviews performance by reference to group-wide reporting measures and the revenues derived from the following products:

· Hosted Casino

· Branded Games

· Poker

· Other

The Company licenses various royalty rights, generally on an exclusive basis, from several owners of intellectual property rights.  These rights are used to produce games for use in Hosted Casino and also as Branded Games.  Generally the arrangements require material prepayments of minimum guaranteed amounts which have been recorded as prepaid expenses in the accompanying condensed consolidated balance sheets.  These prepaid amounts are amortized over the life of the arrangement as gross revenue is generated or on a straight-line basis if the underlying games are expected to have an effective royalty rate greater than the agreed amount.  The amortization of these amounts is recorded as a reduction in revenue.

The Company does not allocate operating expenses, general and administrative expenses, profit measures, assets and liabilities to individual product groupings.  Accordingly the disclosures below are provided on a group wide basis:

23

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

Revenue by product:

For the three months ended March 31,	2011			2010
Hosted Casino	$	5,219		$	5,754
Branded Games		1,489			1,254
Poker		253			589
Other		103			723
Revenue before amortization		7,064			8,320
Amortization of royalties		(853	)		(297	)
Amortization of games		(195	)		(382	)
Revenue	$	6,016		$	7,641

Revenue from the top seven licensees constituted 77% (2010: 79%) of revenue before amortization.

Geographical analysis of revenue before amortization is made according to the jurisdiction of the gaming license of the licensee.  This does not reflect the region of the end users of the Company’s licensees.

Geographical analysis of revenue before amortization:

For the three months ended March 31,	2011		2010
Malta	$	5,493	$	6,686
Gibraltar		1,153		1,206
Alderney		363		242
Curaçao		38		49
Rest of the World		17		137
	$	7,064	$	8,320

Geographical analysis of capital assets:

Net book value as at	March 31, 2011		December 31, 2010
Malta	$	627	$	656
Ireland		1,477		1,610
United Kingdom		80		87
Canada		227		232
	$	2,411	$	2,585

15. Reorganization

The Company announced a plan for reorganization of its business in 2009 after completing a comprehensive review.  As a result of that review, the Company decided to reduce costs by outsourcing non-core activities, including integrating its poker network with one of the world’s leading gaming technology and services companies, transitioning certain functions to lower cost jurisdictions and eliminating certain redundant functions.  In June 2010, the Company commenced an additional reorganization plan consolidating its Cyprus and the majority of its UK activities at a new location in Malta together with headcount reductions across all locations.

The following is a summary of the reorganization accrual:

Included in trade payables and accrued liabilities at December 31, 2010	$	54
Total reorganization charges incurred in the three months ended March 31, 2011		–
Total reorganization payments for the three months ended March 31, 2011		(54	)
Included in trade payables and accrued liabilities at March 31, 2011	$	–

24

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

During the three months ended March 31, 2011, the Company made total reorganization payments of $54, consisting of employee severance.

16. Finance income and costs

For the three months ended March 31,	2011			2010
Interest income	$	8		$	42
Net foreign exchange transaction gains		31			361
Finance income		39			403
Interest expense		(10	)		(15	)
Finance costs		(10	)		(15	)
Net finance income	$	29		$	388

17. Loss per Common Share

Loss per share is calculated using the two-class method, whereby Common Shares of the Company and the fully participating exchangeable common shares of CEC are used to determine the weighted average number of shares outstanding for both basic and diluted loss per share.

The loss attributable to the Common Shares in calculating the basic and diluted loss per share is as follows:

	For the three months ended March 31,
	2011			2010
Loss attributable to Common Shares	$	(587	)	$	(3,378	)
Loss attributable to CEC shares		(41	)		(241	)
Loss before non-controlling interest	$	(628	)	$	(3,619	)

The denominator used in calculating basic and diluted loss per Common Share is calculated as follows:

	For the three months ended March 31,
All share amounts below are in thousands of shares	2011		2010
Weighted average number of Common Shares outstanding – basic		12,884		12,801
Add weighted average impact of CEC shares		936		1,019
Total weighted average number Common Shares outstanding – basic		13,820		13,820
Total weighted average number of Common Shares outstanding –diluted		13,820		13,820

Basic and diluted loss per Common Share is as follows:

	For the three months ended March 31,
	2011			2010
Net loss per Common Share
Basic	$	(0.05	)	$	(0.26	)
Diluted	$	(0.05	)	$	(0.26	)

For the three month period ended March 31, 2011 and March 31, 2010, basic and diluted net loss per share has been computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period.  Potentially dilutive securities for the three months ended March 31, 2011 and March 31, 2010 have been excluded, as they would be anti-dilutive due to the recorded loss.

25

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

18. Capital risk management

The Company defines capital as its shareholders’ equity and has a policy to maintain a strong capital base so as to maintain investor and market confidence and to sustain future development of the business.  The Company is listed on three major exchanges, the Toronto Stock Exchange, NASDAQ and the London Stock Exchange.  The Company monitors both the demographic spread of shareholders, as well as the return on equity.

At March 31, 2011, the Company had $16,266 (December 31, 2010: $16,815) shareholders’ equity.

The Company offers share options to key employees and directors.  At March 31, 2011, employees and directors held options to purchase 498,750 Common Shares of the Company.

The Company has not declared a dividend in the quarter.  The Company does not expect to declare any dividends for the foreseeable future.

There were no changes in the Company’s policy for managing capital during the three months ended March 31, 2011.  Neither the Company, nor any of its subsidiaries, is subject to externally imposed capital requirements.

19. Commitments

The Company has operating lease agreements for premises expiring at various periods up to May 2020.  The future minimum annual rentals on the operating leases are as follows:

Nine months ended December 31, 2011	$	905
2012		1,212
2013		899
2014		577
2015		393
Thereafter		579
Total	$	4,565

The Company has guaranteed minimum payments and purchase commitments for certain intellectual property rights up to 2012 as follows:

Nine months ended December 31, 2011	$	1,562
2012		504
Total	$	2,066

20. Related party transactions

In the normal course of operations, the Company previously engaged the services of a law firm in which a former member of the Board of Directors is a partner.  Fees paid to this firm for the three months ended March 31, 2011 were $nil (2010: $14).

21. Financial instruments

The fair values of the Company's financial assets and liabilities approximate their carrying amounts at the reporting date.

The nominal value less any estimated credit adjustments for financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values.  The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate available to the Company for similar financial instruments.

26

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

Financial assets at fair value through profit or loss

A financial asset is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial recognition.  Financial assets are designated at fair value through profit or loss if the Company manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Company’s documented risk management or investment strategy.  Upon initial recognition attributable transaction costs are recognized in profit or loss as incurred.  Financial assets at fair value through profit or loss are measured at fair value, and changes therein are recognized in profit or loss.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market.  Such assets are recognized initially at fair value plus any directly attributable transaction costs.  Subsequent to initial recognition loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses.

Loans and receivables comprise trade and other receivables.

Cash and cash equivalents comprise cash, restricted cash, security deposits and short-term investments with original maturities of three months or less.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and that are not classified in any of the previous categories.

Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on available-for-sale equity instrument, are recognized in other comprehensive income and presented within equity in the fair value reserve.  When an investment is derecognized, the cumulative gain or loss in other comprehensive income is transferred to profit or loss.

Trade payables and accrued liabilities

Such financial liabilities are recognized initially at fair value plus any directly attributable transaction costs.  Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method.

22.           Financial risk management

(a) Overview

The Company is exposed to interest rate risk, credit risk, liquidity risk, and currency risk arising from the financial instruments held.

The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.

Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities.

(b) Interest rate risk

Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates.  The Company is exposed to interest rate risk principally on its cash and cash equivalents which generally have maturity dates of less than 90 days.  The Company has no interest

27

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

bearing debt.  The Company's management monitors the interest rate fluctuations on a continuous basis and acts accordingly.

At the reporting date the interest rate profile of interest-bearing financial instruments was:

	As at March 31, 2011		As at December 31, 2010
Variable rate instruments:
Financial assets	$	19,402	$	17,168

The weighted average effective interest rate on its cash and cash equivalents as at March 31, 2011 was 0.06% (2010: 0.78%).

Sensitivity analysis

An increase of 100 basis points in interest rates at March 31, 2011 would have decreased the loss and total comprehensive loss by $33 (2010: $54).  This analysis assumes that all other variables, in particular foreign currency rates, remain constant.  For an equivalent decrease there would be an equal and opposite impact on the loss and total comprehensive loss.

(c) Credit Risk

Credit risk arises when a failure by counter parties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the balance sheet date.  The Company has no significant concentration of credit risk.  The Company has policies in place to ensure that sales of services are made to customers with an appropriate credit history and monitors on a continuous basis the ageing profile of its receivables.  Cash balances are held with high credit quality financial institutions and the Company has policies to limit the amount of credit exposure to any financial institution.

The Company does not have any material accounts receivable balances greater than 90 days outstanding.  As a result, the Company believes that its accounts receivable represent a low credit risk and has never recorded a material expense associated with a credit risk exposure.

The company holds investments, according to Company Investment policy, only in banks carrying an S&P rating of BBB+/A-3+ and higher or government guaranteed banks with a similar rating.

(d) Liquidity risk

Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match.  An unmatched position potentially can increase the risk of losses.  The Company has procedures with the object of minimizing such losses such as maintaining sufficient cash and other highly liquid current assets.

28

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

The following tables detail the Company’s remaining contractual maturity for its financial liabilities.  The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.  The table includes both interest and principal cash flows.

	Carrying amount		Contractual cash flows		Payable less than 3 months		Payable 3-12 months		Payable 1-2 years		Payable 2-5 years		Payable more than 5 years
As at March 31, 2011
Trade payables and accrued liabilities	$	13,120	$	13,120	$	13,120	$	–	$	–	$	–	$	–
As at December 31, 2010
Trade payables and accrued liabilities	$	13,060	$	13,060	$	13,060	$	–	$	–	$	–	$	–

(e) Currency risk

Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates.  Currency risk arises when future commercial transactions and recognized assets and liabilities are denominated in a currency that is not the functional currency of the Company.  The Company is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the British pound, euro and Canadian dollar.  The Company's management monitors the exchange rate fluctuations on a continuous basis and acts accordingly.

At March 31, 2011, the Company’s gross balance sheet exposure to foreign currency risk was substantially as follows:

	USD			EUR			GBP			Others			Total
Cash and cash equivalents, security deposits and user funds	$	11,084		$	2,598		$	1,144		$	4,576		$	19,402
Trade and other receivables	$	1,398		$	2,018		$	1,229		$	349		$	4,994
Accounts payable and accrued liabilities	$	(3,347	)	$	(2,128	)	$	(7,160	)	$	(485	)	$	(13,120	)
Income taxes receivable and payable	$	–		$	325		$	(21	)	$	(3,800	)	$	(3,496	)
User funds	$	(2,007	)	$	(1,740	)	$	(332	)	$	–		$	(4,079	)
Net balance sheet exposure	$	7,128		$	1,073		$	(5,140	)	$	640		$	3,701

The Company’s revenue and expense exposure for revenue and expenses denominated in foreign currencies was substantially as follows:

	USD		EUR		GBP		CAD		Others		Total
Revenue
Three months ended
March 31, 2011	$	611	$	2,734	$	2,653	$	–	$	18	$	6,016
Three months ended
March 31, 2010	$	2,988	$	2,142	$	2,511	$	–	$	–	$	7,641
Expenses
Three months ended
March 31, 2011	$	365	$	3,056	$	1,664	$	1,344	$	64	$	6,493
Three months ended
March 31, 2010	$	76	$	3,401	$	3,549	$	4,406	$	93	$	11,525

29

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

Sensitivity analysis

Gross balance sheet exposure:

A 10% strengthening of the U.S. dollar against the currencies in the above table (gross balance sheet exposure) at March 31, 2011 would have decreased the loss by approximately $342 (at December 31, 2010: $481).  This analysis assumes that all other variables remain constant and represents the Company’s gross balance sheet exposure at March 31, 2011.  A 10% weakening of the U.S. dollar against the same would have had an equal but opposite effect.

Net revenue exposure:

A 10% strengthening on average of the U.S. dollar against the currencies in the above table for the three months ended March 31, 2011 would have decreased revenue, and correspondingly increased losses, by approximately $541 (2010: $465).  This analysis assumes that all other variables, in particular interest rates, remained constant during the quarter, and represents the exposure of the Company’s revenues denominated in foreign currencies to the relative strength of its functional currency.  A 10% weakening of the U.S. dollar against the same would have had an equal but opposite effect.

Expense exposure:

A 10% strengthening of the U.S. dollar against the currencies in the above table for the three months ended March 31, 2011 would have decreased expense, and correspondingly decreased losses, by approximately $613 (2010: $1,145).  This analysis assumes that all other variables, in particular interest rates, remained constant during the quarter, and represents the exposure of the Company’s expenses denominated in foreign currencies to the relative strength of its functional currency.  A 10% weakening of the U.S. dollar against the same would have had an equal but opposite effect.

Foreign exchange:

In the three months ended March 31, 2011, the Company recognized a total foreign exchange gain of $34 (2010: $361), which is recorded in net finance costs in the accompanying condensed consolidated statements of comprehensive loss.

23.           Explanation of transition to International Financial Reporting Standards

As stated in note 2, these are the Company’s first condensed consolidated financial statements prepared in accordance with IFRS.

The accounting policies set out in note 2 have been applied in preparing the condensed consolidated interim financial statements of the three months ended March 31, 2011, the comparative information presented in these financial statements for the three months ended March 31, 2010, the financial statements for the year ended December 31, 2010 and in the preparation of an opening IFRS statement of financial position at January 1, 2010 (the Company’s date of transition).

In preparing the opening IFRS statement of financial position, the Company has adjusted amounts reported previously in financial statements prepared in accordance with Canadian GAAP (previous GAAP).  An explanation of how the transition from previous GAAP to IFRS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes that accompany the tables.

30

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

The guidance for the first time adoption of IFRS is set out in IFRS 1 First-time adoption of International Financial Reporting Standards.  IFRS 1 provides for certain mandatory exceptions and optional exemptions for first time adopters of IFRS.  The Company elected to take the following IFRS 1 optional exemptions:

· To apply the requirements of IFRS 3 Business Combinations, prospectively for the Company’s date of transition.

· To apply the requirements of IFRS 2 Share-based payments, only to equity instruments granted after November 7, 2002 which had not vested at the date of transition.

31

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In thousands of U.S. dollars)

(Unaudited)

	Notes		Previous GAAP			Effect of transition to IFRS January 1, 2010			IFRS
ASSETS
Deferred tax assets			$	1,549		$	–		$	1,549
User funds held on deposit		E		7,929			(7,929	)		–
Property, plant and equipment		D		7,774			(4,948	)		2,826
Intangible assets		D, B		4,342			4,564			8,906
Total non-current assets				21,594			(8,313	)		13,821
Cash and cash equivalents				23,447			–			23,447
Security deposits				250			–			250
User funds held on deposit		E		–			7,929			7,929
Trade and other receivables				7,972			–			7,972
Current tax assets				681			–			681
Prepayments				9,426			–			9,426
Total current assets				41,776			7,929			49,705
Total assets			$	63,370		$	(384	)	$	62,986
EQUITY
Share capital			$	33,916		$	–		$	33,916
Share options		A		7,633			(1,987	)		5,646
Deficit				(4,753	)		1,987			(2,766	)
Total equity attributable to shareholders of the Company				36,796			–			36,796
Non-controlling interest		C		2,948			–			2,948
Total equity				39,744			–			39,744
LIABILITIES
Deferred tax liabilities		B		384			(384	)		–
User funds held on deposit		E		7,929			(7,929	)		–
Total non-current liabilities				8,313			(8,313	)		–
Trade payables and accrued liabilities				13,156			–			13,156
Income taxes payable				2,157			–			2,157
User funds held on deposit		E		–			7,929			7,929
Total current liabilities				15,313			7,929			23,242
Total liabilities				23,626			(384	)		23,242
Total equity and liabilities			$	63,370		$	(384	)	$	62,986

32

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In thousands of U.S. dollars)

(Unaudited)

	Notes		Previous GAAP			Effect of transition to IFRS March 31, 2010			IFRS
ASSETS
Deferred tax assets			$	1,305		$	–		$	1,305
User funds held on deposit		E		7,777			(7,777	)		–
Property, plant and equipment		D		7,236			(4,597	)		2,639
Intangible assets		D, B		4,182			4,227			8,409
Total non-current assets				20,500			(8,147	)		12,353
Cash and cash equivalents				19,410			–			19,410
Security deposits				250			–			250
User funds held on deposit		E		–			7,777			7,777
Trade and other receivables				6,785			–			6,785
Current tax assets				666			–			666
Prepayments				9,795			–			9,795
Total current assets				36,906			7,777			44,683
Total assets			$	57,406		$	(370	)	$	57,036
EQUITY
Share capital			$	33,977		$	–		$	33,977
Share options		A		7,805			(1,856	)		5,949
Deficit				(8,000	)		1,856			(6,144	)
Total equity attributable to shareholders of the Company				33,782			–			33,782
Non-controlling interest		C		2,646			–			2,646
Total equity				36,428			–			36,428
LIABILITIES
Deferred tax liabilities		B		370			(370	)		–
User funds held on deposit		E		7,777			(7,777	)		–
Total non-current liabilities				8,147			(8,147	)		–
Trade payables and accrued liabilities				12,035			–			12,035
Income taxes payable				796			–			796
User funds held on deposit		E		–			7,777			7,777
Total current liabilities				12,831			7,777			20,608
Total liabilities				20,978			(370	)		20,608
Total equity and liabilities			$	57,406		$	(370	)	$	57,036

33

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In thousands of U.S. dollars)

(Unaudited)

	Notes		Previous GAAP			Effect of transition to IFRS December 31, 2010			IFRS
ASSETS
Deferred tax assets			$	864		$	–		$	864
User funds held on deposit		E		6,069			(6,069	)		–
Property, plant and equipment		D		4,713			(2,128	)		2,585
Intangible assets		D, B		95			2,115			2,210
Total non-current assets				11,741			(6,082	)		5,659
Cash and cash equivalents				10,584			–			10,584
Security deposits				515			–			515
User funds held on deposit		E		–			6,069			6,069
Trade and other receivables				5,046			–			5,046
Current tax assets				730			–			730
Prepayments				8,942			–			8,942
Total current assets				25,817			6,069			31,886
Total assets			$	37,558		$	(13	)	$	37,545
EQUITY
Share capital			$	34,129		$	–		$	34,129
Share options		A		7,826			(2,262	)		5,564
Deficit				(25,140	)		2,262			(22,878	)
Total equity attributable to shareholders of the Company				16,815			–			16,815
Non-controlling interest		C		1,226			–			1,226
Total equity				18,041			–			18,041
LIABILITIES
Deferred tax liabilities		B		29			(13	)		16
User funds held on deposit		E		6,069			(6,069	)		–
Total non-current liabilities				6,098			(6,082	)		16
Trade payables and accrued liabilities				13,060			–			13,060
Income taxes payable				359			–			359
User funds held on deposit		E		–			6,069			6,069
Total current liabilities				13,419			6,069			19,488
Total liabilities				19,517			(13	)		19,504
Total equity and liabilities			$	37,558		$	(13	)	$	37,545

34

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands of U.S. dollars, except per share data)

(Unaudited)

			Previous GAAP			Effect of transition to IFRS			IFRS
	Notes		Three months ended March 31, 2010
Total revenue			$	7,641		$	–		$	7,641
Expenses:
Operating		A, F		8,086			492			8,578
General and administrative				2,178			–			2,178
Reorganization				29			–			29
Finance costs		F		15			(15	)		–
Depreciation		D		580			(357	)		223
Amortization of intangible assets		D		160			357			517
				11,048			477			11,525
Results from operating activities				(3,407	)		(477	)		(3,884	)
Finance income		F		42			361			403
Finance costs		F		–			(15	)		(15	)
Net finance costs				42			346			388
Loss before income taxes				(3,365	)		(131	)		(3,496	)
Income tax expense				123			–			123
Loss for the period				(3,488	)		(131	)		(3,619	)
Other comprehensive income				–			–			–
Other comprehensive income for the period net of income tax				–			–			–
Total comprehensive loss for the period			$	(3,488	)	$	(131	)	$	(3,619	)
Total comprehensive loss attributable to:
Shareholders of the Company				(3,247	)		(131	)		(3,378	)
Non-controlling interests				(241	)		–			(241	)
Total comprehensive loss for the period			$	(3,488	)	$	(131	)	$	(3,619	)

35

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands of U.S. dollars, except per share data)

(Unaudited)

			Previous GAAP			Effect of transition to IFRS			IFRS
	Notes		Year ended December 31, 2010
Total revenue			$	25,988		$	–		$	25,988
Expenses:
Operating		A, F		30,230			(100	)		30,130
General and administrative				7,561			–			7,561
Reorganization				1,935			–			1,935
Impairment of property, plant and equipment				1,763						1,763
Impairment of intangible assets				3,566						3,566
Finance costs		F		65			(65	)		–
Depreciation		D		2,047			(1,004	)		1,043
Amortization of intangible assets		D		325			1,004			1,329
				47,492			(165	)		47,327
Results from operating activities				(21,504	)		165			(21,339	)
Finance income		F		80			175			255
Finance costs		F		–			(65	)		(65	)
Net finance costs				80			110			190
Other income				185			–			185
Loss before income taxes				(21,239	)		275			(20,964	)
Income tax expense				657			–			657
Loss for the period				(21,896	)		275			(21,621	)
Other comprehensive income				–			–			–
Other comprehensive income for the period net of income tax				–			–			–
Total comprehensive loss for the period			$	(21,896	)	$	275		$	(21,621	)
Total comprehensive loss attributable to:
Shareholders of the Company				(20,387	)		275			(20,112	)
Non-controlling interests				(1,509	)		–			(1,509	)
Total comprehensive loss for the period			$	(21,896	)	$	275		$	(21,621	)

36

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(Unaudited)

			Previous GAAP			Effect of transition to IFRS			IFRS
	Notes		Three months ended March 31, 2010
Cash flows from/(used in):
Operating activities:
Loss for the period		A	$	(3,488	)	$	(131	)	$	(3,619	)
Adjustments for:
Depreciation		D		580			(357	)		223
Amortization of intangible assets		D		160			357			517
Deferred tax				230			–			230
Share-based payment transactions		A		172			131			303
				(2,346	)		–			(2,346	)
Change in operating assets and liabilities:
Change in trade and other receivables				1,187			–			1,187
Change in prepayments				(368	)		–			(368	)
Change in trade payables and accrued liabilities				(1,121	)		–			(1,121	)
Cash used in operating activities				(2,648	)		–			(2,648	)
Income taxes receivable/payable				(1,346	)		–			(1,346	)
Net cash used in operating activities				(3,994	)		–			(3,994	)
Investing activities:
Acquisition of property, plant and equipment				(43	)		–			(43	)
Net cash used in investing activities				(43	)		–			(43	)
Financing activities:
Cash flows from financing activities				–			–			–
Net cash used in financing activities				–			–			–
Net decrease in cash and cash equivalents				(4,037	)		–			(4,037	)
Cash and cash equivalents, beginning of period				23,447			–			23,447
Cash and cash equivalents, end of period			$	19,410		$	–		$	19,410

37

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(Unaudited)

			Previous GAAP			Effect of transition to IFRS			IFRS
	Notes		Year ended December 31, 2010
Cash flows from/(used in):
Operating activities:
Loss for the period		A	$	(21,896	)	$	275		$	(21,621	)
Adjustments for:
Depreciation		D		2,047			(1,004	)		1,043
Amortization of intangible assets		D		325			1,004			1,329
Impairment of capital assets				1,763			–			1,763
Gain on long-term investments				(185	)		–			(185	)
Impairment of intangible assets				3,566			–			3,566
Deferred tax				684			–			684
Share-based payment transactions		A		193			(275	)		(82	)
				(13,503	)		–			(13,503	)
Change in operating assets and liabilities:
Change in trade and other receivables				2,926			–			2,926
Change in prepayments				484			–			484
Change in trade payables and accrued liabilities				(96	)		–			(96	)
Cash used in operating activities				(10,189	)		–			(10,189	)
Income taxes receivable/payable				(1,550	)		–			(1,550	)
Net cash used in operating activities				(11,739	)		–			(11,739	)
Investing activities:
Acquisition of property, plant and equipment				(1,065	)		–			(1,065	)
Cash received from long-term investments				185			–			185
Disposal of capital assets				21			–			21
(Increase) in security deposits				(265	)		–			(265	)
Net cash used in investing activities				(1,124	)		–			(1,124	)
Financing activities:
Cash flows from financing activities				–			–			–
Net cash used in financing activities				–			–			–
Net decrease in cash and cash equivalents				(12,863	)		–			(12,863	)
Cash and cash equivalents, beginning of period				23,447			–			23,447
Cash and cash equivalents, end of period			$	10,584		$	–		$	10,584

38

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

A. Share-based payments

The Company has a share option plan for directors, officers and other key employees.  Under Canadian GAAP, share option grants were accounted for as capital transactions at the time of the grant and were reflected as share options in the total equity attributable to the shareholders of the Company.  The fair value of the options was measured at grant date using the Black-Scholes pricing model, and was recognized over the period that the employee earns the options.  The fair value was recognized as an expense in the condensed consolidated statements of comprehensive loss with a corresponding increase in equity.  The amount recognized as expense was adjusted to reflect the number of share options expected to vest.  The Company did not estimate forfeitures in determining the expense to be recognized over the service period and forfeitures were accounted for as they occur.

Under IFRS, share options for directors, officers and other key employees are measured initially, based on the fair value of the options, using an option-pricing model.  Each vesting instalment over the vesting period of the options is accounted for as a separate arrangement and the Company estimates the number of options for which the requisite service is expected to be rendered.

B. Deferred tax

In January 2007, the Company acquired the poker brand and the customer list of Parbet and the assets and operations of Casino.co.uk, a gaming portal.  Included in the allocation of the purchase price, the Company recorded future income tax liabilities.

Under IFRS, a deferred tax liability is not recognized if it arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit.

C. Non-controlling interest

Under Canadian GAAP, the Company classified non-controlling interest (minority interest) as a separate component between liabilities and equity in the condensed consolidated balance sheets.

Under IFRS, non-controlling interest is classified as a component of equity separately disclosed from the parent shareholders’ equity.

In addition, the Company has elected to avail of the exemption under IFRS 1, not to retrospectively restate any business combinations under IFRS 3 Revised.

D. Property, plant and equipment

Under Canadian GAAP, the Company classified computer software licenses and capitalized software development costs as property, plant and equipment.

Under IFRS, computer software licenses and capitalized software development costs are classified as intangible assets.

E. User funds held on deposit

Under Canadian GAAP, the Company classified user funds held on deposit as a separate component of non-current assets.  Under IFRS, user funds held on deposit are reclassified as current assets.

F. Finance costs

Under Canadian GAAP the company classified foreign exchange gains and losses as a component of operating expense in the condensed consolidated statements of comprehensive loss.  Under IFRS foreign exchange gains and losses other than those arising on financial instruments measured at fair value through the profit and loss are recorded as a component of net finance income/costs.  Finance costs are shown on

39

CRYPTOLOGIC LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(In thousands of U.S. dollars, except per share disclosure and where indicated otherwise)

Three months ended March 31, 2011

the face of the condensed consolidated statements of comprehensive loss as an expense after results of operating activities.

24. Differences between the International Financial Reporting Standards and United States generally accepted accounting principles

There are no significant measurement differences between IRFS and U.S. GAAP affecting the condensed consolidated financial statements.

40

EX-99.2

EXHIBIT 99.2

CRYPTOLOGIC LIMITED

MANAGEMENT’S DISCUSSION AND ANALYSIS

INTRODUCTION

The following report contains management’s discussion and analysis (“MD&A”) of CryptoLogic Limited’s consolidated results of operations and financial condition for the three months ended March 31, 2011 and should be read in conjunction with the unaudited consolidated interim financial statements and accompanying notes for the three months ended March 31, 2011 and the audited consolidated financial statements and accompanying notes and MD&A for the year ended December 31, 2010, which are available on SEDAR at www.sedar.com or EDGAR at www.sec.gov.  All currency amounts are in U.S. dollars, unless otherwise indicated.  This MD&A is dated May 10, 2011.

CryptoLogic Limited and our subsidiaries are referred to collectively as “CryptoLogic”, “the Company”, “we”, “us”, and “our” throughout this MD&A, unless otherwise specified.

Certain of the statements contained in this MD&A may contain forward-looking statements and forward-looking information within the meaning of applicable law, including the Securities Act (Ontario).  Statements regarding the Company’s objectives, goals, strategies, beliefs, intentions, plans, estimates and outlook, future operations, future financial position, future revenues and projected costs are forward-looking statements or contain forward-looking information.  Words such as “anticipates”, “believes”, “budgets”, “could”, “estimates”, “expects”, “forecasts”, “intends”, “may”, “might”, “plans”, “projects”, “schedule”, “should”, “will”, “would” and similar expressions are used to identify forward-looking statements or information.

Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties.  Should one or more of these risks materialize, or should assumptions underlying the forward-looking statements or information prove incorrect, actual results may vary significantly from what management currently foresees.  Accordingly, investors should exercise caution when considering any forward-looking statements or information herein and undue reliance should not be placed on such statements or information.  Certain material factors or assumptions are applied in making forward-looking statements, including, but not limited to, factors and assumptions regarding government regulation, Internet viability and system infrastructure and reliability, market demand, internet security, reliance on internet service providers, competition, dependence on top licensees, chargebacks, risks inherent in doing business internationally, foreign exchange fluctuations, litigation, the Company’s ability to protect its proprietary technology, reliance on key employees, management’s ability to develop and manage growth, ability to integrate acquired businesses, stock volatility and liquidity. Investors are cautioned that the foregoing list of important factors that may affect future results is not exhaustive.  When relying on forward-looking statements or information to make decisions with respect to the Company, investors should carefully consider the foregoing factors and other uncertainties and potential events.  The Company undertakes no obligation to update or revise any forward-looking statement or information, except as required by applicable law.

Additional information regarding the Company, including the Company’s annual information form and/or Form 20-F for the year ended December 31, 2010 are available at www.sedar.com or www.sec.gov.  Some figures and percentages may not total exactly due to rounding.

1

BUSINESS OVERVIEW

CryptoLogic is a publicly traded online gaming software developer and supplier servicing the Internet gaming market.  CryptoLogic, through its wholly-owned subsidiaries, provides software licensing, e-cash management and customer support services for our Internet gaming software to an internationally-recognized client base (“licensees” or “customers”) around the world, who operate under government authority where their Internet businesses are licensed.

OVERVIEW OF RESULTS – FIRST QUARTER 2011

As of January 1, 2011, the Company adopted International Reporting Standards (“IFRS”) and the following disclosures and associated condensed consolidated financial statements are presented in accordance with International Accounting Standard 34, Interim Financial Reporting.  The comparative periods for the year ended December 31, 2010 have been restated in accordance with IFRS.  Comparative periods prior to January 1, 2010 (the Company’s date of transition) are presented in accordance with Canadian GAAP.  The following table presents selected financial data for each of the eight most recent financial quarters of the Company on a consolidated basis:

	IFRS			IFRS			IFRS			IFRS			IFRS			Canadian GAAP			Canadian GAAP			Canadian GAAP
	2011 Q1			2010 Q4			Q3			Q2			Q1			2009 Q4			Q3			Q2
(In thousands of US dollars, except per share data)
Hosted Casino	$	5,219		$	4,905		$	5,552		$	5,765		$	5,754		$	9,323		$	7,558		$	8,317
Branded Games		1,489			1,363			1,353			1,525			1,254			1,184			780			534
Poker		253			239			357			440			589			543			501			516
Other		103			147			59			207			723			(546	)		1,214			1,368
Revenue before amortization		7,064			6,654			7,321			7,937			8,320			10,504			10,053			10,735
Amortization of royalties		(853	)		(898	)		(945	)		(940	)		(297	)		(286	)		(102	)		(220	)
Amortization of games		(195	)		(243	)		(281	)		(258	)		(382	)		(288	)		(360	)		(375	)
Revenue	$	6,016		$	5,513		$	6,095		$	6,739		$	7,641		$	9,930		$	9,591		$	10,140
Expenses
Operating		4,688			4,851			7,265			9,436			8,578			12,535			9,304			9,600
General and administrative		1,396			1,091			1,655			2,637			2,178			2,477			2,380			2,200
Reorganization		–			27			209			1,670			29			6,184			240			155
Impairment of capital assets		–			(295	)		–			2,058			–			2,689			–			–
Impairment of long-term investments		–			–			–			–			–			2,337			–			3,961
Impairment of goodwill
and intangible assets		–			–			–			3,566			–			6,545			–			–
Depreciation and amortization		409			415			478			739			740			1,111			1,241			1,199
		6,493			6,089			9,607			20,106			11,525			33,878			13,165			17,115
Results from operating activities		(477	)		(576	)		(3,512	)		(13,367	)		(3,884	)		(23,948	)		(3,574	)		(6,975	)
Net finance income/(costs)		29			(204	)		(92	)		98			388			21			161			(199	)
Other income		–			185			–			–			–			–			–			–
Loss before income taxes		(448	)		(595	)		(3,604	)		(13,269	)		(3,496	)		(23,927	)		(3,413	)		(7,174	)
Income tax expense/(credit)		180			277			115			142			123			3,431			15			(861	)
Loss and total comprehensive loss
for the period	$	(628	)	$	(872	)	$	(3,719	)	$	(13,411	)	$	(3,619	)	$	(27,358	)	$	(3,428	)	$	(6,313	)
Total comprehensive loss attributable to:
Shareholders of the Company		(587	)		(815	)		(3,439	)		(12,480	)		(3,378	)		(24,819	)		(3,204	)		(6,191	)
Non-controlling interests		(41	)		(57	)		(280	)		(931	)		(241	)		(2,539	)		(224	)		(122	)
Total comprehensive loss
for the period	$	(628	)	$	(872	)	$	(3,719	)	$	(13,411	)	$	(3,619	)	$	(27,358	)	$	(3,428	)	$	(6,313	)
Loss per share
Basic	$	(0.05	)	$	(0.06	)	$	(0.27	)	$	(0.97	)	$	(0.26	)	$	(1.98	)	$	(0.25	)	$	(0.46	)
Diluted	$	(0.05	)	$	(0.06	)	$	(0.27	)	$	(0.97	)	$	(0.26	)	$	(1.98	)	$	(0.25	)	$	(0.46	)
Weighted average number of shares (000’s)
Basic		13,820			13,820			13,820			13,820			13,820			13,820			13,820			13,820
Diluted		13,820			13,820			13,820			13,820			13,820			13,820			13,820			13,820

2

RESULTS OF OPERATIONS - FIRST QUARTER 2011

Revenue

Revenue decreased 21.3% to $6.0 million for the three months ended March 31, 2011 when compared with the same period in the prior year (Q1 2010: $7.6 million).

Hosted Casino

Hosted Casino revenue decreased 9.3% to $5.2 million for the three months ended March 31, 2011 when compared with the same period in the prior year (Q1 2010: $5.8 million).  Hosted Casino revenue represented 86.8% of total revenue in Q1 2011 (Q1 2010: 75.3%).

The decrease in revenue is due primarily to a reduction in the contribution from a major licensee of $0.5 million.  The relative strength of the U.S. dollar did not have a material impact on Hosted Casino revenue for Q1 2011 when compared with the same period in the prior year.

Fees and licensing revenue from both our Hosted Casino and Branded Games businesses are calculated as a percentage of a licensee’s level of activity in its online casino site.  This is affected by the number of active players on the licensee’s site and their related gaming activity.  In addition, these results are influenced by a number of factors such as the entertainment value of the games developed by CryptoLogic, the frequency and success of new game offerings and the effectiveness of the licensee’s marketing programs.  Hosted Casino and Branded Games revenue are also impacted by the relative strength of the U.S. dollar to both the euro and the British pound as our licensees provide online casinos in these currencies for which we earn a percentage that is translated into U.S. dollars, our functional currency.

Branded Games

Branded Games revenue increased 18.7% to $1.5 million for the three months ended March 31, 2011 when compared with the same period in the prior year (Q1 2010: $1.3 million).  Branded Games revenue represented 24.8% of total revenue in Q1 2011 (Q1 2010: 16.4%).  During the quarter, the Company’s revenue producing games increased from 170 to 179 games.  The increase in Branded Games revenue is primarily due to the increased number of revenue producing games through an increased number of licensees and games per licensee, partially offset by a lower contribution from a major licensee.  The relative strength of the U.S. dollar did not have a material impact on Branded Games revenue when compared with the same period in the prior year.

Poker

Poker revenue decreased 57.0% to $0.3 million in the three months ended March 31, 2011 when compared with the same period in the prior year (Q1 2010: $0.6 million).  Poker revenue represented 4.2% of total revenue in Q1 2011 (Q1 2010: 7.7%).  The decrease in Poker revenue is primarily due to a reduction in contribution from a major licensee.  The relative strength of the U.S. dollar did not have a material impact on Poker revenue when compared with the same period in the prior year.

The Company offers a “virtual” poker room for its licensees using software and technology provided on GTECH Corporation’s International Poker Network.  Fees from online poker are based on a percentage of the licensee’s “rake” per hand in regular or ring games (the “rake” is typically 5% of the pot, up to a maximum amount per hand), or fixed entry fees for entry into poker tournaments.  Players prefer poker rooms with strong “liquidity”, which are rooms that offer a high availability of games at the desired stake levels, in the currency of choice, and on a 24/7 basis.

Other Revenue

Other revenue includes fees for software customization, advertising and marketing services generated from our portal business and fees associated with our e-cash business.  Other revenue decreased 85.8% to $0.1 million for the three months ended March 31, 2011 when compared with the same period in the prior year (Q1 2010: $0.7 million).  Other revenue represented 1.7% of total revenue in Q1 2011 (Q1 2010: 9.5%).  The decrease in Other revenue is due to a one-time termination fee from a licensee in Q1 2010.  The relative strength of the U.S. dollar did not have a material impact on Other revenue when compared with the same period in the prior year.

3

Amortization of Royalties

The Company licenses various royalty rights, generally on an exclusive basis, from several owners of intellectual property rights.  These rights are used to produce games for use in Hosted Casino and also as Branded Games.  Generally, the arrangements require material prepayments of minimum guaranteed amounts which have been recorded as prepaid expenses in the accompanying consolidated balance sheets.  These prepaid amounts are amortized over the life of the arrangement as gross revenue is generated or on a straight-line basis if the underlying games are expected to have an effective royalty rate greater than the agreed amount.  The amortization of these amounts is recorded as a reduction in revenue.

Amortization of royalties increased 187.2% to $0.9 million for the three months ended March 31, 2011 when compared with the same period in the prior year (Q1 2010: $0.3 million).  Amortization of royalties represented (14.2)% of total revenue in Q1 2011 (Q1 2010: (3.9)%).  The increase in royalty amortization was as a result of the Company’s regular review of estimates of future revenue under its license arrangements which identified in Q2 2010 that it was appropriate to begin amortizing certain of these royalties on a straight-line basis, such that substantially all of these royalty payments are amortized on a straight-line basis.

Player Restrictions

No revenue is derived from U.S.-based players.

Expenses

Operating Expense

CryptoLogic’s operating expense comprises development and support expense, which includes all personnel costs, equity compensation costs for employee stock options; licensee support; marketing, e-cash systems and support costs; customer service expense and expenses related to regulatory compliance.

Operating expense decreased 45.3% to $4.7 million for the three months ended March 31, 2011 when compared with the same period in the prior year (Q1 2010: $8.6 million).  Operating expense represented 77.9% of revenue in Q1 2011 (Q1 2010: 112.3%).  The decrease in operating expense was primarily due to the Company’s reorganization plans resulting in reduced headcount related costs, consulting costs and IT infrastructure costs.  The relative strength of the U.S. dollar negatively impacted operating expense by $0.1 million when compared with the same period in the prior year.

General and Administrative Expense

General and administrative (G&A) expense includes overhead and administrative expense, travel expense and professional fees relating to our business development, infrastructure and public company listings.

G&A expense decreased 35.9% to $1.4 million for the three months ended March 31, 2011 when compared with the same period in the prior year (Q1 2010: $2.2 million).  G&A expense represented 23.2% of total revenue in Q1 2011 (Q1 2010: 28.5%).  The decrease in G&A expense was primarily due to the Company’s reorganization plans resulting in reduced rent and occupancy costs, decreased professional fees associated with our annual audit, compliance with Sarbanes Oxley and legal costs.  The relative strength of the U.S. dollar did not have a material impact on G&A expense when compared with the same period in the prior year.

Depreciation and Amortization

Depreciation and amortization expense is based on the estimated useful life and includes the depreciation and amortization of our investments in computer equipment, office furniture and equipment, leasehold improvements, goodwill, computer software and licenses, capitalized software development, customer lists, brand names and domain names.

Depreciation and amortization decreased 44.7% to $0.4 million for the three months ended March 31, 2011 when compared with the same period in the prior year (Q1 2010: $0.7 million).  Depreciation and amortization represented 6.8% of total revenue in Q1 2011 (Q1 2010: 9.7%).  The decrease in depreciation and amortization was primarily due to less amortization on infrastructure assets as they become fully depreciated and reduced amortization on assets

4

impaired.  The relative strength of the U.S. dollar did not have a material impact on depreciation and amortization when compared with the same period in the prior year.

Income Taxes

Income tax expense increased 46.3% to $0.2 million for the three months ended March 31, 2011 when compared with the same period in the prior year (Q1 2010: $0.1 million).  The Company is subject to tax in many jurisdictions.  This results in a tax charge on transfer pricing of costs between group companies even in periods of overall losses.  The Company is actively working to reduce the number of its subsidiaries, which should reduce the overall tax burden.  The consolidated loss comprises of losses in some jurisdictions and income in others, which results in an income tax expense despite consolidated losses.

Non-Controlling Interest

Pursuant to a business reorganization implemented by way of an Ontario Superior Court of Justice court approved plan of arrangement (the “Arrangement”) and approved by the shareholders on May 24, 2007, CryptoLogic Limited acquired control over all of the issued and outstanding common shares of CryptoLogic Inc., an Ontario company, which through the Arrangement became an indirect subsidiary of CryptoLogic Limited.  As part of the Arrangement, the Company issued either an equivalent amount of CryptoLogic Limited Common Shares or, in the case of taxable Canadian residents, exchangeable shares (“Exchangeable Shares”) of CryptoLogic Exchange Corporation (“CEC”), an indirect subsidiary of the Company.  The CEC shares are, as nearly as practicable, the economic equivalent of CryptoLogic Limited Common Shares.  These CEC shares participate equally in voting and dividends with the shareholders of the Company.  No additional shares of CEC have been or will be issued.  For more information, see the Management Information Circular dated April 23, 2007 available on www.sedar.com.

For accounting purposes, the Arrangement has been accounted for using the continuity of interest method, which recognizes the Company as the successor entity to CryptoLogic Inc.  Accordingly, financial information presented in the MD&A reflects the financial position, results of operations and cash flows as if the Company has always carried on the business formerly carried on by CryptoLogic Inc., with all assets and liabilities recorded at the carrying values of CryptoLogic Inc.  The interest held by CEC shareholders has been presented as a non-controlling interest in the consolidated financial statements, as required under IFRS.

At the time of the reorganization, a total of 12.6 million and 1.3 million shares of CryptoLogic Limited and CEC were outstanding, respectively.  Since then, a total of 398,437 shares of CEC have been exchanged, with the remaining 934,131 shares of CEC being reflected as minority interest as at March 31, 2011.  Minority interest will continue until all CEC shares have been exchanged into CryptoLogic Limited shares or until June 1, 2014 when we will redeem all of the then outstanding CEC shares in return for CryptoLogic Limited shares.

Total Comprehensive Loss

Total comprehensive loss decreased 82.6% to $0.6 million or $(0.05) per diluted share for the three months ended March 31, 2011 when compared with the same period in the prior year (Q1 2010: $3.6 million or $(0.26) per diluted share).  The decrease in the loss was as a result of increased Branded Games revenue, decreased operating expense and G&A expense.  Partially offsetting these movements were decreases in Hosted Casino, Poker and Other revenue and increased amortization of royalties.

LIQUIDITY AND CAPITAL RESOURCES

The consolidated financial statements were prepared on a going concern basis.  The going concern basis assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

The Company has incurred significant operating losses of $21.3 million, $37.8 million and $38.1 million and negative cash flows from operations of $11.7 million, $17.8 million and $18.6 million for the three years ended December 31, 2010, 2009 and 2008, respectively, which resulted in a decrease in cash and cash equivalents to $10.6 million, $23.4 million and $36.3 million as of December 31, 2010, 2009 and 2008, respectively.  A continuation of

5

such operating losses, negative cash flows from operations and decreases in cash and cash equivalents may cast doubt upon the Company's ability to continue as a going concern.

During 2010, management determined that a material reduction in expenses was necessary in order to preserve cash and give the Company sufficient time to focus on increasing revenues.  Accordingly, the Company made a significant restructuring effort, commencing midway through Q3 2010, and resulting in a reduction in operating and general and administrative expense to $6.1 million in Q1 2011 from $12.1 million in Q2 2010, the last full quarter before this restructuring.  Management believes that the results of this restructuring have substantially mitigated doubts regarding the Company’s ability to continue as a going concern.

Management has considered expectations for future revenues and reduced operating and general and administrative expense and, on that basis, believes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business and, accordingly, it is appropriate to prepare the consolidated financial statements on a going concern basis.

Furthermore, having regard to expectations for future revenues, reduced operating and general and administrative expense, the completion of the Company’s reorganization plan and lower levels of future purchase commitments, management expects cash needs to be funded through existing cash resources and operating cash flow.

Net Cash Position

CryptoLogic remained debt-free in Q1 2011.  Cash and cash equivalents at March 31, 2011 were $14.5 million (December 31, 2010: $10.6 million).  The increase in net cash of $3.9 million is primarily due to an increase in income taxes receivable and payable of $3.9 million, a $1.0 million increase in jackpot provision and decreased prepayments of $0.5 million, partially offset by a decrease in trade payable and accrued liabilities of $0.9 million and an increase in security deposits of $0.3 million.

Net Cash Flow From/(Used in) Operating Activities

Cash flow from operating activities was $4.3 million for the three months ended March 31, 2011 (Q1 2010: $(4.0) million).  The cash flow from operating activities is mainly due to the increase in income taxes receivable and payable of $3.9 million and the decrease in prepayments of $0.5 million.

Investing Activities

Cash flow used in investing activities was $0.4 million for the three months ended March 31, 2011 (Q1 2010: $nil).  Cash flow used in investing activities was mainly due to an increase in security deposits of $0.3 million.

Financing Activities

Cash flow used in financing activities was $nil for the three months ended March 31, 2011 (Q1 2010: $nil).

Working Capital

Working capital at March 31, 2011 was $12.2 million (December 31, 2010: $12.4 million).

User Funds Held on Deposit

User funds held on deposit at March 31, 2011 was $4.1 million (December 31, 2010: $6.1 million).  The decrease was mainly due to the loss of a minor poker licensee which generated an immaterial amount of revenue.

Capitalization

Since inception, CryptoLogic has had neither debt nor unutilized credit facilities.  At March 31, 2011, CryptoLogic had 12,884,920 Common Shares outstanding (December 31, 2010: 12,879,920) and 498,750 stock options outstanding (December 31, 2010: 223,500).  The 12,884,920 outstanding Common Shares excludes 934,131 (December 31, 2010: 939,131) exchangeable shares (“Exchangeable Shares”) in CryptoLogic Exchange Corporation (“CEC”) which are entitled to be exchanged on a one-for-one basis for Common Shares of the Company.  Including the Exchangeable Shares of CEC, the outstanding Common Shares of the Company would be 13,819,051 (December 31, 2010: 13,819,051).  As of May 10, 2011 there were 12,913,720 Common Shares of CryptoLogic outstanding and 905,331 Exchangeable Shares in CEC outstanding.

6

As part of the 2007 reorganization, Canadian residents received Exchangeable Shares of CEC, an indirect subsidiary of CryptoLogic.  The Exchangeable Shares are, as nearly as practicable, the economic equivalent of Common Shares of CryptoLogic.  For accounting purposes, the acquisition is accounted for using the continuity of interest method, which recognizes CryptoLogic as the successor entity to CryptoLogic Inc.  The Exchangeable Shares can be exchanged for an equivalent amount of Common Shares of the Company at any time and are accounted for as a minority interest.  On June 1, 2014, the Company will redeem all of the then outstanding Exchangeable Shares for an amount per share equal to the redemption price.  The redemption price will be satisfied through the issuance and delivery of one Common Share of CryptoLogic for each Exchangeable Share.  CryptoLogic has issued a special voting share to a third party trustee, the purpose of which is to provide holders of Exchangeable Shares with the right to vote on matters to be voted on by CryptoLogic shareholders.  All outstanding options of CryptoLogic Inc. as of the date of the Arrangement were fully assumed by CryptoLogic under the same terms and conditions as originally granted by CryptoLogic Inc.  The Exchangeable Shares provide those shareholders with the same voting and dividend rights as the Common Shares of CryptoLogic.  No additional Exchangeable Shares will be issued and all exercises of stock options will give rise to the issue of additional Common Shares of CryptoLogic.

Cash Commitments and Contractual Obligations

Total cash commitments at March 31, 2011 were $6.6 million (December 31, 2010: $7.5 million).

The Company has operating lease agreements for premises expiring at various periods up to May 2020.  The future minimum annual rentals on the operating leases are as follows:

Nine months ended December 31, 2011	$	905
2012		1,212
2013		899
2014		577
2015		393
Thereafter		579
Total	$	4,565

The Company has guaranteed minimum payments and purchase commitments for certain intellectual property rights up to 2012 as follows:

Nine months ended December 31, 2011	$	1,562
2012		504
Total	$	2,066

RESEARCH AND DEVELOPMENT

CryptoLogic makes significant investments in research and development to remain competitive with technology advancements and product evolution in the global online gaming market.  Research and development personnel comprised 17% of our workforce at March 31, 2011 (December 31, 2010: 18%).

CRITICAL ACCOUNTING ESTIMATES

CryptoLogic’s accounting policies are specified in the notes to our financial statements, in particular note 2.  The accounting estimates discussed below are considered particularly important, as they require judgments by management.  Management has instituted policies that are intended to ensure these judgments are well controlled and consistently applied from period to period.

The Company licenses various royalty rights, generally on an exclusive basis, from several owners of intellectual property rights.  These rights are used to produce games for use in Hosted Casino and also as Branded Games.  Generally the arrangements require material prepayments of minimum guaranteed amounts which have been recorded as prepaid expenses in the accompanying consolidated balance sheets.  These prepaid amounts are amortized over the life of the arrangement as gross revenue is generated or on a straight-line basis if the underlying

7

games are expected to have an effective royalty rate greater than the agreed amount.  The amortization of these amounts is recorded as a reduction in revenue.

The Company regularly reviews its estimates of future revenues under its license arrangements and, during Q2 2010, the review identified that it was appropriate to begin amortizing certain of these royalties on a straight-line basis, such that substantially all of these royalties are amortized on a straight-line basis.  For the three months ended March 31, 2011, amortization of $0.9 million (Q1 2010: $0.3 million) was recorded as a reduction of revenue.

Several of the Company's licensees participate in progressive jackpot games.  Each time a progressive jackpot game is played, a preset amount is added to a cumulative jackpot for that specific game.  Once a jackpot is won, the progressive jackpot game is reset with a predetermined amount.  The Company is liable for funding the jackpot wins as well as amounts required to reset the progressive jackpot game from the pool of funds collected and accrues the jackpot amount for all games on a monthly basis.  The reset amount is accrued, up to the predetermined amount, as wagering occurs.  The accrual for the jackpot at the consolidated balance sheet dates is included in trade payables and accrued liabilities.

At March 31, 2011, trade payables and accrued liabilities include $6.4 million in jackpot provisions (December 31, 2010: $5.4 million).  This amount is sufficient to cover the full amount of any required payout.

The Company may receive from time to time claims and enter into litigation arising out of the ordinary course and conduct of business including intellectual property matters.  Management assesses such claims, and if considered likely to result in material exposure and where the amount of the claim is quantifiable, provisions for loss are made based on management’s assessment of the likely outcome.  Management does not make provisions for claims that are considered unlikely to result in a significant loss, claims for which the outcome is not determinable or claims where the amount of the loss cannot be reasonably estimated.  Any settlements or awards under such claims are provided for when reasonably determinable.  Adjustments will be made to the accrual for such amounts as new information is obtained or the claim settled.

The Company regularly reviews its long-term assets, comprising capital assets, intangible assets and long-term investments for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.  Determination of recoverability generally requires the Company to estimate the fair value of the long-term asset, which requires the Company to make assumptions and judgments on several items including, but not limited to, the future cash flows that will be generated by these assets and the appropriate discount rate to apply to those cash flows.  Measurement of any impairment loss for long-lived assets is based on the amount by which the carrying value exceeds the fair value of the asset.

Accounting for both current and future tax requires the Company to make assumptions, judgments and estimates about current tax laws, which require certain interpretations of tax laws in several jurisdictions around the world as well as possible outcomes of current and future audits conducted by the respective tax authorities.  The Company has established reserves for income taxes to address potential exposures involving tax positions that could be challenged by tax authorities.  Although the Company believes our assumptions, judgments and estimates are reasonable, changes in tax laws or our interpretation of tax laws and the resolution of the current and any future tax audits could significantly impact the amounts provided for income taxes in its consolidated financial statements.

The Company’s assumptions, judgments and estimates relative to the value of a deferred tax asset take into account predictions of the amount and category of future taxable income, such as income from operations or capital gains income.  Actual operating results and the underlying amount and category of income in future years could render our current assumptions, judgments and estimates of recoverable net deferred taxes inaccurate.  Any of the assumptions, judgments and estimates mentioned above could cause the Company’s actual income tax obligations to differ from its estimates, thus materially impacting its financial position and results of operations.

The Company has a stock option plan where the amount of compensation expensed is determined using an option-pricing model.  In addition, the Company provided a long-term incentive program where the amount of the compensation expensed is determined based on estimated performance criteria and the Company’s stock price.  Calculations for these plans with the necessary assumptions inherently mean judgments are required by management.

8

CHANGE IN ACCOUNTING POLICIES

Recently Issued and Adopted Accounting Pronouncements

International Financial Reporting Standards (“IFRS”)

In February 2008, the Accounting Standards Board (“AcSB”) confirmed that the use of IFRS would be required in 2011 for publicly accountable enterprises in Canada.

The adoption of IFRS has required the restatement of amounts reported by the Company for its previous year end, and of the opening balance sheet as at January 1, 2011.

The IFRS conversion project consisted of three phases which have been completed by the Company.

Phase One: Scoping and Diagnostics, which involved project planning and staffing and identification of differences between current Canadian GAAP and IFRS.

Phase Two: Analysis and Development, involved detailed diagnostics and evaluation of the financial impacts of various options and alternative methodologies provided for under IFRS; identification and design of operational and financial business processes; initial staff and audit committee training; analysis of IFRS 1 optional exemptions and mandatory exceptions to the general requirement for full retrospective application upon transition to IFRS; summarization of 2011 IFRS disclosure requirements; and development of required solutions to address identified issues.

Phase Three: Implementation and Review involved the execution of changes to information systems and business processes; completion of formal authorization processes to approve recommended accounting policy changes; and further training programs across the Company’s finance and other affected areas, as necessary, culminating in the collection of financial information necessary to compile IFRS-compliant financial statements and reconciliations; embedding of IFRS in business processes; and audit committee approval of IFRS-compliant financial statements.

Impact on Internal Controls over Financial Reporting and Disclosure Controls and Procedures

The Company has completed an assessment of its internal controls over financial reporting and its disclosure controls and procedures.  There were no matters identified that materially affect, or are reasonably likely to materially affect the Company’s internal controls over financial reporting.

Changes in Accounting Policies

The guidance for the first time adoption of IFRS is set out in IFRS 1 First-time adoption of International Financial Reporting Standards.  IFRS 1 provides for certain mandatory exceptions and optional exemptions for first time adopters of IFRS.  The Company elected to take the following IFRS 1 optional exemptions:

• To apply the requirements of IFRS 3 Business Combinations, prospectively for the Company’s date of transition.

• To apply the requirements of IFRS 2 Share-based payments, only to equity instruments granted after November 7, 2002 which had not vested at the date of transition.

The following unaudited condensed consolidated financial statements show the impacts of the differences between IFRS and Canadian GAAP as at the date of transition (January 1, 2010) and as at and for the three months ended March 31, 2010 and for the year ended December 31, 2010.

9

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In thousands of U.S. dollars)

(Unaudited)

	Notes		Previous GAAP			Effect of transition to IFRS January 1, 2010			IFRS
ASSETS
Deferred tax assets			$	1,549		$	–		$	1,549
User funds held on deposit		E		7,929			(7,929	)		–
Property, plant and equipment		D		7,774			(4,948	)		2,826
Intangible assets		D, B		4,342			4,564			8,906
Total non-current assets				21,594			(8,313	)		13,821
Cash and cash equivalents				23,447			–			23,447
Security deposits				250			–			250
User funds held on deposit		E		–			7,929			7,929
Trade and other receivables				7,972			–			7,972
Current tax assets				681			–			681
Prepayments				9,426			–			9,426
Total current assets				41,776			7,929			49,705
Total assets			$	63,370		$	(384	)	$	62,986
EQUITY
Share capital			$	33,916		$	–		$	33,916
Share options		A		7,633			(1,987	)		5,646
Deficit				(4,753	)		1,987			(2,766	)
Total equity attributable to shareholders of the Company				36,796			–			36,796
Non-controlling interest		C		2,948			–			2,948
Total equity				39,744			–			39,744
LIABILITIES
Deferred tax liabilities		B		384			(384	)		–
User funds held on deposit		E		7,929			(7,929	)		–
Total non-current liabilities				8,313			(8,313	)		–
Trade payables and accrued liabilities				13,156			–			13,156
Income taxes payable				2,157			–			2,157
User funds held on deposit		E		–			7,929			7,929
Total current liabilities				15,313			7,929			23,242
Total liabilities				23,626			(384	)		23,242
Total equity and liabilities			$	63,370		$	(384	)	$	62,986

10

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In thousands of U.S. dollars)

(Unaudited)

	Notes		Previous GAAP			Effect of transition to IFRS March 31, 2010			IFRS
ASSETS
Deferred tax assets			$	1,305		$	–		$	1,305
User funds held on deposit		E		7,777			(7,777	)		–
Property, plant and equipment		D		7,236			(4,597	)		2,639
Intangible assets		D, B		4,182			4,227			8,409
Total non-current assets				20,500			(8,147	)		12,353
Cash and cash equivalents				19,410			–			19,410
Security deposits				250			–			250
User funds held on deposit		E		–			7,777			7,777
Trade and other receivables				6,785			–			6,785
Current tax assets				666			–			666
Prepayments				9,795			–			9,795
Total current assets				36,906			7,777			44,683
Total assets			$	57,406		$	(370	)	$	57,036
EQUITY
Share capital			$	33,977		$	–		$	33,977
Share options		A		7,805			(1,856	)		5,949
Deficit				(8,000	)		1,856			(6,144	)
Total equity attributable to shareholders of the Company				33,782			–			33,782
Non-controlling interest		C		2,646			–			2,646
Total equity				36,428			–			36,428
LIABILITIES
Deferred tax liabilities		B		370			(370	)		–
User funds held on deposit		E		7,777			(7,777	)		–
Total non-current liabilities				8,147			(8,147	)		–
Trade payables and accrued liabilities				12,035			–			12,035
Income taxes payable				796			–			796
User funds held on deposit		E		–			7,777			7,777
Total current liabilities				12,831			7,777			20,608
Total liabilities				20,978			(370	)		20,608
Total equity and liabilities			$	57,406		$	(370	)	$	57,036

11

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In thousands of U.S. dollars)

(Unaudited)

	Notes		Previous GAAP			Effect of transition to IFRS December 31, 2010			IFRS
ASSETS
Deferred tax assets			$	864		$	–		$	864
User funds held on deposit		E		6,069			(6,069	)		–
Property, plant and equipment		D		4,713			(2,128	)		2,585
Intangible assets		D, B		95			2,115			2,210
Total non-current assets				11,741			(6,082	)		5,659
Cash and cash equivalents				10,584			–			10,584
Security deposits				515			–			515
User funds held on deposit		E		–			6,069			6,069
Trade and other receivables				5,046			–			5,046
Current tax assets				730			–			730
Prepayments				8,942			–			8,942
Total current assets				25,817			6,069			31,886
Total assets			$	37,558		$	(13	)	$	37,545
EQUITY
Share capital			$	34,129		$	–		$	34,129
Share options		A		7,826			(2,262	)		5,564
Deficit				(25,140	)		2,262			(22,878	)
Total equity attributable to shareholders of the Company				16,815			–			16,815
Non-controlling interest		C		1,226			–			1,226
Total equity				18,041			–			18,041
LIABILITIES
Deferred tax liabilities		B		29			(13	)		16
User funds held on deposit		E		6,069			(6,069	)		–
Total non-current liabilities				6,098			(6,082	)		16
Trade payables and accrued liabilities				13,060			–			13,060
Income taxes payable				359			–			359
User funds held on deposit		E		–			6,069			6,069
Total current liabilities				13,419			6,069			19,488
Total liabilities				19,517			(13	)		19,504
Total equity and liabilities			$	37,558		$	(13	)	$	37,545

12

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands of U.S. dollars, except per share data)

(Unaudited)

			Previous GAAP			Effect of transition to IFRS			IFRS
	Notes		Three months ended March 31, 2010
Total revenue			$	7,641		$	–		$	7,641
Expenses:
Operating		A, F		8,086			492			8,578
General and administrative				2,178			–			2,178
Reorganization				29			–			29
Finance costs		F		15			(15	)		–
Depreciation		D		580			(357	)		223
Amortization of intangible assets		D		160			357			517
				11,048			477			11,525
Results from operating activities				(3,407	)		(477	)		(3,884	)
Finance income		F		42			361			403
Finance costs		F		–			(15	)		(15	)
Net finance costs				42			346			388
Loss before income taxes				(3,365	)		(131	)		(3,496	)
Income tax expense				123			–			123
Loss for the period				(3,488	)		(131	)		(3,619	)
Other comprehensive income				–			–			–
Other comprehensive income for the period net of income tax				–			–			–
Total comprehensive loss for the period			$	(3,488	)	$	(131	)	$	(3,619	)
Total comprehensive loss attributable to:
Shareholders of the Company				(3,247	)		(131	)		(3,378	)
Non-controlling interests				(241	)		–			(241	)
Total comprehensive loss for the period			$	(3,488	)	$	(131	)	$	(3,619	)

13

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands of U.S. dollars, except per share data)

(Unaudited)

			Previous GAAP			Effect of transition to IFRS			IFRS
	Notes		Year ended December 31, 2010
Total revenue			$	25,988		$	–		$	25,988
Expenses:
Operating		A, F		30,230			(100	)		30,130
General and administrative				7,561			–			7,561
Reorganization				1,935			–			1,935
Impairment of property, plant and equipment				1,763						1,763
Impairment of intangible assets				3,566						3,566
Finance costs		F		65			(65	)		–
Depreciation		D		2,047			(1,004	)		1,043
Amortization of intangible assets		D		325			1,004			1,329
				47,492			(165	)		47,327
Results from operating activities				(21,504	)		165			(21,339	)
Finance income		F		80			175			255
Finance costs		F		–			(65	)		(65	)
Net finance costs				80			110			190
Other income				185			–			185
Loss before income taxes				(21,239	)		275			(20,964	)
Income tax expense				657			–			657
Loss for the period				(21,896	)		275			(21,621	)
Other comprehensive income				–			–			–
Other comprehensive income for the period net of income tax				–			–			–
Total comprehensive loss for the period			$	(21,896	)	$	275		$	(21,621	)
Total comprehensive loss attributable to:
Shareholders of the Company				(20,387	)		275			(20,112	)
Non-controlling interests				(1,509	)		–			(1,509	)
Total comprehensive loss for the period			$	(21,896	)	$	275		$	(21,621	)

14

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(Unaudited)

			Previous GAAP			Effect of transition to IFRS			IFRS
	Notes		Three months ended March 31, 2010
Cash flows from/(used in):
Operating activities:
Loss for the period		A	$	(3,488	)	$	(131	)	$	(3,619	)
Adjustments for:
Depreciation		D		580			(357	)		223
Amortization of intangible assets		D		160			357			517
Deferred tax				230			–			230
Share-based payment transactions		A		172			131			303
				(2,346	)		–			(2,346	)
Change in operating assets and liabilities:
Change in trade and other receivables				1,187			–			1,187
Change in prepayments				(368	)		–			(368	)
Change in trade payables and accrued liabilities				(1,121	)		–			(1,121	)
Cash used in operating activities				(2,648	)		–			(2,648	)
Income taxes receivable/payable				(1,346	)		–			(1,346	)
Net cash used in operating activities				(3,994	)		–			(3,994	)
Investing activities:
Acquisition of property, plant and equipment				(43	)		–			(43	)
Net cash used in investing activities				(43	)		–			(43	)
Financing activities:
Cash flows from financing activities				–			–			–
Net cash used in financing activities				–			–			–
Net decrease in cash and cash equivalents				(4,037	)		–			(4,037	)
Cash and cash equivalents, beginning of period				23,447			–			23,447
Cash and cash equivalents, end of period			$	19,410		$	–		$	19,410

15

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(Unaudited)

			Previous GAAP			Effect of transition to IFRS			IFRS
	Notes		Year ended December 31, 2010
Cash flows from/(used in):
Operating activities:
Loss for the period		A	$	(21,896	)	$	275		$	(21,621	)
Adjustments for:
Depreciation		D		2,047			(1,004	)		1,043
Amortization of intangible assets		D		325			1,004			1,329
Impairment of capital assets				1,763			–			1,763
Gain on long-term investments				(185	)		–			(185	)
Impairment of intangible assets				3,566			–			3,566
Deferred tax				684			–			684
Share-based payment transactions		A		193			(275	)		(82	)
				(13,503	)		–			(13,503	)
Change in operating assets and liabilities:
Change in trade and other receivables				2,926			–			2,926
Change in prepayments				484			–			484
Change in trade payables and accrued liabilities				(96	)		–			(96	)
Cash used in operating activities				(10,189	)		–			(10,189	)
Income taxes receivable/payable				(1,550	)		–			(1,550	)
Net cash used in operating activities				(11,739	)		–			(11,739	)
Investing activities:
Acquisition of property, plant and equipment				(1,065	)		–			(1,065	)
Cash received from long-term investments				185			–			185
Disposal of capital assets				21			–			21
(Increase) in security deposits				(265	)		–			(265	)
Net cash used in investing activities				(1,124	)		–			(1,124	)
Financing activities:
Cash flows from financing activities				–			–			–
Net cash used in financing activities				–			–			–
Net decrease in cash and cash equivalents				(12,863	)		–			(12,863	)
Cash and cash equivalents, beginning of period				23,447			–			23,447
Cash and cash equivalents, end of period			$	10,584		$	–		$	10,584

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A. Share-based payments

The Company has a share option plan for directors, officers and other key employees.  Under Canadian GAAP, share option grants were accounted for as capital transactions at the time of the grant and were reflected as share options in the total equity attributable to the shareholders of the Company.  The fair value of the options was measured at grant date using the Black-Scholes pricing model, and was recognized over the period that the employee earns the options.  The fair value was recognized as an expense in the condensed consolidated statements of comprehensive loss with a corresponding increase in equity.  The amount recognized as expense was adjusted to reflect the number of share options expected to vest.  The Company did not estimate forfeitures in determining the expense to be recognized over the service period and forfeitures were accounted for as they occur.

Under IFRS, share options for directors, officers and other key employees are measured initially, based on the fair value of the options, using an option-pricing model.  Each vesting instalment over the vesting period of the options is accounted for as a separate arrangement and the Company estimates the number of options for which the requisite service is expected to be rendered.

B. Deferred tax

In January 2007, the Company acquired the poker brand and the customer list of Parbet and the assets and operations of Casino.co.uk, a gaming portal.  Included in the allocation of the purchase price, the Company recorded future income tax liabilities.

Under IFRS, a deferred tax liability is not recognized if it arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit.

C. Non-controlling interest

Under Canadian GAAP, the Company classified non-controlling interest (minority interest) as a separate component between liabilities and equity in the condensed consolidated balance sheets.

Under IFRS, non-controlling interest is classified as a component of equity separately disclosed from the parent shareholders’ equity.

In addition, the Company has elected to avail of the exemption under IFRS 1, not to retrospectively restate any business combinations under IFRS 3 Revised.

D. Property, plant and equipment

Under Canadian GAAP, the Company classified computer software licenses and capitalized software development costs as property, plant and equipment.

Under IFRS, computer software licenses and capitalized software development costs are classified as intangible assets.

E. User funds held on deposit

Under Canadian GAAP, the Company classified user funds held on deposit as a separate component of non-current assets.  Under IFRS, user funds held on deposit are reclassified as current assets.

F. Finance costs

Under Canadian GAAP the company classified foreign exchange gains and losses as a component of operating expense in the condensed consolidated statements of comprehensive loss.  Under IFRS foreign exchange gains and losses other than those arising on financial instruments measured at fair value through the profit and loss are recorded as a component of net finance income/costs.  Finance costs are shown on the face of the condensed consolidated statements of comprehensive loss as an expense after results of operating activities.

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FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

The Company classifies all cash, cash equivalents, short-term investments and user funds on deposit as held-for-trading assets, which are measured at fair value and the changes in fair value are recognized in comprehensive income.  Transaction costs related to financial assets and financial liabilities that are designated as held-for-trading are expensed as incurred.

Trade and other receivables are classified as loans and receivables and are recorded at amortized cost.  The Company has determined that the carrying value represents fair value as at March 31, 2011 and December 31, 2010.

All trade payables, accrued liabilities and liabilities for user funds held on deposit are recorded at amortized cost.  The Company has determined that the carrying value represents fair value as at March 31, 2011 and December 31, 2010.

Long-term investments are classified as available-for-sale assets which are measured at fair value.  Temporary changes in fair value of long-term investments are recognized in comprehensive income.  Changes in fair value of long-term investments deemed to be other than temporary are recorded in the consolidated statements of comprehensive loss.  Transaction costs related to available-for-sale assets are included in the carrying value of the asset.

The Company has exposure to credit risk and market risk from its use of financial instruments.

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its obligations.  The carrying amount of the Company’s financial assets represents its maximum credit exposure.

The Company manages its credit risk associated with accounts receivable by maintaining reserves for potential credit losses.  Historically the Company has not experienced any significant credit losses associated with its Hosted Casino, Branded Games and Poker businesses and does not have any material trade receivable balances greater than 90 days outstanding.  As a result, the Company believes that its trade receivables represent a low credit risk and has never recorded a material expense associated with a credit risk exposure.

The Company manages its credit risk associated with cash and cash equivalents by holding investments, according to Company investment policy, only in banks carrying an S&P rating of BBB+/A-3+ and higher or government guaranteed banks with a similar rating.

Market risk is the risk that changes in the market prices such as fluctuations in foreign exchange rates and interest rates, will affect the Company’s net income or the value of its financial instruments.

The Company operates internationally giving rise to exposure to changes in foreign exchange rates.  The currency risk is derived from revenues denominated in currencies other than the U.S. dollar, its functional currency, primarily the British pound and the euro, and expenses associated with its multinational operations (primarily the Canadian dollar, the British pound and the euro) as well as the respective receivable and payable balances.  The Company believes that it is, to a degree, naturally hedged.  The Company is also exposed to currency risk on cash and cash equivalents and other current assets denominated in foreign currencies.  As at March 31, 2011, approximately 52% of the Company’s financial assets were denominated in its functional currency (December 31, 2010: 66%).

The Company is exposed to interest rate risk principally on its cash deposits and short-term money market investments of generally less than 90 days.  The Company is exposed to both an overall decrease in interest rates as well as the interest rates associated with the currency or location it invests in.

RELATED PARTY TRANSACTIONS

In the normal course of operations, the Company engages the services of a law firm in which a former member of the Board of Directors is a partner.  Fees paid to this firm for the three months ended March 31, 2011 were $nil (Q1 2010: $0.1 million) and are included in general and administrative expenses in the accompanying consolidated statements of loss and comprehensive loss.  At March 31, 2011, there was $nil outstanding (December 31, 2010: $nil)

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DISCLOSURE CONTROLS AND PROCEDURES

An evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” as of the end of the period covered by this Management’s Discussion and Analysis was made under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of March 31, 2011, our disclosure controls and procedures, as defined by National Instrument 52-109 - Certification of Disclosures in Issuers’ Annual and Interim Filings are effective to ensure that information required to be disclosed in reports that we file or submit under Canadian securities legislation is summarized and reported within the time periods specified therein.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.  Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and the Chief Financial Officer and effected by the Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards, and reconciled to United States GAAP.  It includes those policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets of the Company, provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, that receipts and expenditures are made only in accordance with authorization of management and the Board of Directors, and that prevention or timely detection of the unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the annual or interim financial statements of the Company, is assured.

Management assessed the effectiveness of internal control over financial reporting as at March 31, 2011.  Management based its assessment on criteria established in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and concludes that, as of March 31, 2011, internal control over financial reporting is effective.

Changes in Internal Controls

There have been no changes in our “internal control over financial reporting” that occurred during the three months ended March 31, 2011 that have materially affected or are reasonable likely to materially affect our internal control over financial reporting.

RISKS AND UNCERTAINTIES

Other than as set out below, the primary risks and uncertainties that affect and may affect us and our business, financial condition and results of operations are substantially unchanged from the Company’s MD&A for the year ended December 31, 2010 as contained in our 2010 Audited Financial Statements filed on SEDAR at www.sedar.com or available on EDGAR at www.sec.gov.

We may be involved in litigation arising in the ordinary course of business.  The outcome of such matters cannot be predicted with certainty, and could have a material adverse effect on our business, revenues, operating results and financial condition.

We are involved in litigation arising in the ordinary course of business.  The outcome of such matters cannot be predicted with certainty, and could have a material adverse effect on our business, revenues, operating results and financial condition.

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Moreover, from time to time, third parties have asserted and may continue to assert patent, trademark, copyright and other intellectual property rights to technologies or business methods that we consider important.  There can be no assurance that the assertion of such claims will not result in litigation or that we would prevail in any such litigation or be able to obtain a license for the use of any infringed intellectual property from a third party or, if such a license is required, that it would be available on terms acceptable to us.

In December 2010, a significant supplier of games delivered to the Company a notice of arbitration relating to the agreement between the two companies.  In February 2011, the Company delivered to the supplier a notice of termination of the agreement, to take effect from March 2011.  Notwithstanding this termination, in April 2011, a non-binding memorandum of understanding setting out a commercially acceptable solution was signed between the parties with the aim of concluding a binding agreement.  In the absence of achieving such a binding agreement, arbitration hearings are likely to proceed later in 2011.

In February 2011, a brand licensor delivered to the Company a notice purporting to terminate the brand license agreement between the two companies, claiming that the Company had breached such agreement.  In May 2011, the brand licensor reaffirmed its position that the brand license agreement is terminated.  The Company believes there is no breach that warrants termination of the agreement and, accordingly, considers the agreement to remain in force.  In the absence of a commercially acceptable resolution of this matter, the Company intends to pursue litigation in order to protect its rights.

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EX-99.3

EXHIBIT 99.3

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, David Gavagan, Chief Executive Officer, CryptoLogic Limited, certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of CryptoLogic Limited (the “issuer”) for the interim period ended March 31, 2011.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings..

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

a. designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

i. material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

ii. information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

b. designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission.

5.2 N/A

5.3 N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2011 and ended on March 31, 2011 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 12, 2011

/s/ David Gavagan

David Gavagan

Chief Executive Officer

EX-99.4

EXHIBIT 99.4

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Huw Spiers, Chief Financial Officer, CryptoLogic Limited, certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of CryptoLogic Limited (the “issuer”) for the interim period ended March 31, 2011.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings..

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

a. designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

i. material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

ii. information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

b. designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission.

5.2 N/A

5.3 N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2011 and ended on March 31, 2011 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 12, 2011

/s/ Huw Spiers

Huw Spiers

Chief Financial Officer