Judge Rules in Favor of Casinos in Price-Fixing Lawsuit

Article by : Erik Gibbs Oct 30, 2023

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In Nevada, a federal judge recently dismissed a proposed class action lawsuit that accused MGM Resorts, Caesars Entertainment, Treasure Island and Wynn Resorts in Las Vegas of conspiring to overcharge for room rates. This is now being questioned as it stands in violation of US antitrust law.

While the lawsuit was dismissed, the plaintiffs have the option to refile an amended lawsuit within the next 30 days. Chief US District Judge Miranda Du issued the ruling, highlighting the “ambiguity” and “numerous deficiencies” in the consumer lawsuit, which was initially filed in January.

The cited deficiencies include the failure to plausibly allege that the defendants colluded, demonstrate that all defendants used the same data-sharing software and show that the hotel operators were “required” to accept the software’s recommended prices.

The dismissed lawsuit made allegations that the four major resort operators along the Las Vegas Strip engaged in collusion.

They were accused of using Rainmaker, a revenue management platform that the lawsuit contended was used by 90% of the Strip’s hotels, to artificially increase room prices.

The lawsuit aimed to achieve class-action status, representing all guests who stayed at the defendants’ properties since 2019.

Attorneys from the Seattle-based law firm Hagens Berman argued that Rainmaker utilized confidential real-time pricing and room supply data from competitors to manipulate the usual supply and demand dynamics, potentially violating the Sherman Antitrust Act.

The developer of Rainmaker, Cendyn, based in Boca Raton, Florida, and its subsidiary, Rainmaker Group Unlimited, located in Georgia, were also named as defendants in the lawsuit.

In a competitive market, hotel operators typically set room prices independently to maximize occupancy.

However, the lawsuit that was dismissed alleged that information sharing and algorithms used through Rainmaker disrupted the usual competitive pricing dynamics and resulted in higher room rates.

The suit contended that Rainmaker’s proprietary software, Guestrev, examined data related to hotel guests and room availability and then artificially restricted the supply. This manipulation was said to lead to pricing recommendations that favored the resorts.

Judge Du allowed the possibility for the plaintiffs to submit an amended lawsuit within 30 days but did not make a ruling on the merits of the antitrust claims raised in the dismissed lawsuit.