Atlantic City Casino-Hotel Operators Sued for Violating US Antitrust Law

Caesars Entertainment Inc, MGM Resorts International, Hard Rock International Inc, and other operators of casino hotels in Atlantic City have been accused of allegedly increasing their room rental prices in an artificial manner. 

The operators are now part of a proposed class action filed against them by two New Jersey residents who claim the operators have violated Section 1 of the Sherman Act.

The Lawsuit Counts 109 Pages

The 109-page lawsuit was officially filed last Tuesday in the US District Court for the District of New Jersey. It mentioned Hard Rock International Inc as a defendant, along with hospitality technology company Cendyn Group LLC with headquarters in Florida. 

The latter is the one that sold the shared pricing algorithm platform that constitutes the main culprit of the alleged casino-hotel operators’ conspiracy. 

According to Heather Altman and Eliza Wiatroski, the defendants together with their hotels that include Bally’s Atlantic City, Harrah’s Atlantic City, and Borgata made use of Cendyn’s shared pricing algorithm platform to charge room rates that were higher than they would have been under normal conditions in the current competitive market in the region.

“Substantial” 25% Increases in Room Rates 

The New Jersey residents who filed the case claim that, according to data from the state’s gaming regulators, there have been “substantial increases” in the room rates in Atlantic City hotels and decreases in the rates of occupancy during the period targeted by the new class action which covers the past four years. 

According to regulators’ findings, casino hotels in Atlantic City had boosted their room rates by 25% in 2022 compared to the room rates charged in 2019, in spite of actually renting 5% fewer rooms, as alleged by the customers filing the lawsuit.

For the quarter ending December 31, 2022, the occupancy rates for the casino hotels in Atlantic City reached 65.8%, signaling a 0.6% drop compared to the previous year’s numbers. For the twelve months ending December 31, 2022, however, the same hotel occupancy rate reached 73.4%, marking an increase of 5.8% compared to the previous year.

The current lawsuit filed against the operators claims that there were no proven market factors like higher demand for accommodation or rising costs that would justify the type of price increase that took place from 2018 onwards. 

Even more, the same consumers claimed there were no justifiable means of explaining the “corresponding revenue that casino-hotel defendants each have obtained during the class period.”

The same complaint alleges that the defendant hotels had been misrepresenting guests using “omissions, half-truths, and misrepresentations” when establishing their new room rates. 

The lawsuit claims that the potential class could be represented by “tens if not hundreds of thousands” of affected consumers. The plaintiffs are asking for compensation in an amount that has not been made public as well as triple damages under federal antitrust laws.

This represents the most recent price-fixing lawsuit against an alleged antitrust conspiracy against casino hotel operators via shared pricing platforms. 

At the start of the year, MGM, Caesars, and a number of other defendants asked a federal judge in Nevada to dismiss the same type of class action against them in Las Vegas. 
In January, Atlantic City’s casinos announced they were ready to return to the pre-pandemic numbers and hit the refresh button through a series of important projects.