Casinos Could Face Challenges As Junk Fees Change Takes Effect

A view of the Las Vegas Strip taken from Treasure Island on Thursday Nov. 16, 2023. (Jeff Scheid/The Nevada Independent)

Article by : Erik Gibbs Dec 19, 2024

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The Federal Trade Commission (FTC) has introduced a new regulation targeting hidden fees, commonly known as “junk fees,” which are often tacked onto bills for services like hotel stays and live-event tickets. This rule directly impacts the gaming industry, particularly casino resorts that charge resort fees, requiring greater transparency in pricing.

Under the new rule, casinos and other lodging operators must prominently display the total cost of stays, including all mandatory fees. While resort fees are not banned outright, businesses must clearly outline their purpose, amount, and how they factor into the final price before customers agree to pay. These requirements are designed to prevent “bait-and-switch” pricing tactics, where advertised rates appear lower than the actual total cost.

FTC Chair Lina Khan stated the rule aims to save consumers time and money by eliminating deceptive practices. According to the FTC, Americans spend an estimated 53 million hours annually sifting through unclear pricing information. The commission believes these changes will simplify comparisons and reduce frustration when booking lodging or event tickets.

Resort fees have become standard at many high-end casino resorts, especially in destinations like Las Vegas. These fees often cover amenities such as Wi-Fi, gym access, and shuttle services. 

Critics argue that these fees are misleading and force consumers to pay more than they initially anticipate. For example, MGM Resorts increased its resort fees twice this year, with charges ranging from $45 to $55 per night at its Las Vegas properties.

The gaming industry has pushed back against the label of “junk fees.” Organizations like the American Gaming Association (AGA) have emphasized the value of resort fees, stating they represent the cost of additional amenities and services. Bill Miller, AGA president and CEO, defended the fees earlier this year, asserting that they communicate the value of a customer’s experience beyond just the room rate.

The new rule reflects a larger campaign by President Joe Biden’s administration to address junk fees across multiple industries, including hospitality, entertainment, and travel. Federal officials began investigating these fees in 2022, gathering over 12,000 public comments to draft the proposal. 

After further feedback, the finalized rule was announced and will take effect 120 days after its publication in the Federal Register, potentially as soon as April 2024.

While the administration sees this rule as a win for transparency, questions remain about its overall effectiveness. The fees themselves remain intact, and industry groups argue they are already disclosed sufficiently. However, clearer pricing may help consumers make more informed decisions, potentially reshaping how casino resorts market their offerings.

As casinos adapt to these new requirements, the industry will likely monitor how transparency influences customer behavior and whether it impacts revenue generated from resort fees.