Court Greenlights Consolidation of Lawsuits against AC Casinos

Lawsuits filed against a number of major hotel-casino operators in Atlantic City were given a green light to be consolidated earlier this week. The lawsuits alleged gambling operators engaged in anticompetitive actions, resulting in a cumulative increase in hotel room rates since 2018. As announced by Play NJ, US District Court Judge Karen Williams recently allowed three class action lawsuits against a total of six casinos in Atlantic City to be consolidated. The decision comes upon a request from the plaintiff.

Named as defendants in the consolidated lawsuit are Hard Rock International, MGM Resorts International, as well as Caesars Entertainment. The legal claim is also against Cendyn Group, a company that “sells and promotes a pricing algorithm platform.” Per the lawsuit, the defendants all used a program supplied by Cendyn Group that enabled them to “share, coordinate, and set supra-competitive prices for guest rooms.”

The alleged conspiration has been ongoing since 2018 through the present date, resulting in an increase in hotel room rates across Atlantic City. According to the plaintiffs, the six casinos in the city breached the Sherman Antitrust Act and the Clayton Antitrust Act.

Price Increases Impact Room Occupancy, Claims Lawsuit

Supporting their statements, plaintiffs included data provided by the gambling regulator in New Jersey, the Division of Gaming Enforcement (DGE). Per that data, room occupancy for Atlantic City’s hotel casinos has been decreasing since 2017. Back then, hotel occupancy hit 87% and after that, in 2018, dipped to 81%. This downward trend continued with 79% hotel room occupancy recorded in 2019 as well as 62% and 68% in 2020 and 2021 respectively. Then, according to DGE’s data, hotel room occupancy in 2022 was 73%, a result that was far below the rates recorded in 2017 and 2018.

The legal claim alleges that the defendants in the lawsuit control between 72% to 80% of the share of hotel rooms for the market in the city. This majority share enabled them to establish higher rates, claims the lawsuit.

Currently, MGM Resorts operates the Borgata Hotel and Casino in Atlantic City. On the other hand, Caesars is in charge of three properties in the city: Tropicana Atlantic City, Caesars Atlantic City and Harrah’s Resort Atlantic City. Although the company sold its Bally’s Atlantic City property, it was also listed in the lawsuit.