Atlantic City Hotel Room Price Lawsuit Receives Federal Support

A lawsuit against leading gaming and hospitality operators in Atlantic City, New Jersey, reportedly received support from a couple of federal regulators. The legal action claims casino-hotel operators engaged in anticompetitive actions regarding hotel room rates which have been increasing since 2018. The lawsuit was initially filed by a couple of tourists in May 2023.

Now, as announced by the Wall Street Journal, the legal action received support from the Justice Department’s Antitrust Division and the Federal Trade Commission. The two federal regulators were involved in the case after filing a statement of interest on Thursday this week. The duo claimed that the use of a specific algorithm for hotel room rates may suggest collusion.

According to the two agencies, the casino-hotel operators may violate antitrust laws even if they have never communicated but have used the same algorithm. This claim directly addresses a legal argument presented by the defendants, which include leading gaming and hospitality companies Caesars Entertainment, Hard Rock International and MGM Resorts, among others.

The Justice Department’s Antitrust Division and the Federal Trade Commission argued that the casino-hotel operators may have violated the laws in the US after using the same algorithm for forming the price. This is the case considering that they have used the same method to form prices even if in the end they charged slightly different room rates.

The Lawsuit Claims Room Occupancy Declines

In January, the US District Court Judge Karen Williams allowed the three lawsuits against the six casino-hotel operators in Atlantic City to be consolidated. This consolidation decision followed a request from the plaintiffs. The lawsuit alleges that a total of six gaming and hospitality operators used a company called Cendyn Group that “sells and promotes a pricing algorithm platform.”

The plaintiffs accused the operators of conspiration that started back in 2018 and is currently ongoing, adding that it resulted in an increase in the hotel room rates in the seaside casino resort city. In the lawsuit, the plaintiffs argued that the actions of the operators were in breach of the Clayton Antitrust Act and the Sherman Antitrust Act.

The plaintiffs supported their statements, revealing data from the New Jersey Division of Gaming Enforcement, the state’s gambling regulator. Per that data, room occupancy across Atlantic City has been decreasing from 87% in 2017 to 73% in 2022. Moreover, the plaintiffs claim that the six operators have a significant presence in the city, controlling between 72% and 80% of the share of hotel rooms.