Plaintiffs Seek to Revive Las Vegas Casino Price-Fixing Lawsuit

Imagine paying inflated hotel room rates in Las Vegas due to alleged price-fixing by major casinos. Now, plaintiffs in a high-stakes antitrust lawsuit are pushing to resurrect their case against these casinos. With billions of dollars at play, could this lawsuit reshape how algorithmic pricing affects your travel costs? Dive into the details of this legal battle and what it could mean for the future of Las Vegas tourism.

Plaintiffs Push to Revive Las Vegas Price-Fixing Lawsuit Alleging Casino Room Rate Manipulation

Last week, plaintiffs in a historic lawsuit alleging price-fixing among several Las Vegas casinos filed a request with the US Court of Appeals for the Ninth Circuit to revive the case. The lawsuit claims that a group of major casinos violated federal antitrust laws by using a third-party software provider to set room prices, effectively colluding to inflate rates for hotel guests.

This move comes four months after a judge in the Nevada District dismissed the case, siding with the casinos. The judge had argued that the plaintiffs failed to demonstrate an explicit agreement among the businesses to manipulate room pricing. However, the plaintiffs argue that the court’s decision sets a dangerous precedent by allowing algorithmic price-fixing to evade antitrust scrutiny.

The Core of the Allegations

The crux of the plaintiffs’ argument centers on the assertion that major Las Vegas casinos have been outsourcing their room pricing decisions to a single third-party software provider, thus breaking down the competitive pricing mechanisms of a typical market. The brief filed with the Ninth Circuit states:

“This case involves a modern version of an old story: one in which, rather than set prices independently, competitors delegate their pricing to a single third-party actor and break the competitive machinery of a normal market.”

The lawsuit names several prominent defendants, including Caesars Entertainment, Wynn Resorts, Treasure Island, and Blackstone, as well as Cendyn Group, the software provider in question, and its Rainmaker subsidiary. The plaintiffs argue that these companies have been using shared algorithmic pricing technology to artificially drive up room rates. They highlight data showing that the defendants’ room prices have risen significantly faster than a benchmark property on the Las Vegas Strip since at least 2015.

According to the complaint, this practice was part of a deliberate strategy to maximize profitability over occupancy rates, thereby breaking free from traditional market forces that would otherwise ensure competitive pricing.

Casinos’ Defense and Dismissal of the Case

The casinos have vehemently denied any wrongdoing. In their legal filings, they argue that there is no concrete evidence of a conspiracy to fix prices. In a joint statement, they said:

“[T]he complaint fails at the outset because it is missing every essential ingredient necessary to plead an antitrust conspiracy under Ninth Circuit law. The complaint fails to identify any individual ‘who’ entered into the purported conspiracy. The complaint not only fails to allege ‘when’ the purported conspiracy began, but it also concedes that plaintiffs have no idea when it began.”

In the earlier dismissal, the district court concluded that there was insufficient proof of a “tacit agreement” among the casinos, thus rejecting the plaintiffs’ claims. However, the recent appeal seeks to overturn that decision, arguing that the court ignored established antitrust case law and drew conclusions against the plaintiffs.

The Larger Debate on Algorithmic Pricing

This lawsuit brings to light the growing controversy over the use of shared algorithmic pricing technology in the hospitality industry. The use of third-party software to optimize room rates has become a standard practice for many casinos and hotels, allowing them to adjust prices based on real-time demand and competitor rates. However, when multiple operators rely on the same software, it raises questions about potential price-fixing and collusion.

This isn’t the first legal challenge of its kind. A similar lawsuit was recently filed in New Jersey against major Atlantic City casinos over the use of algorithmic pricing. As digital tools become more sophisticated, the line between lawful competitive strategies and antitrust violations becomes increasingly blurred, posing new challenges for regulators and the industry alike.

Why This Case Matters

The outcome of this appeal could have far-reaching implications for the casino and hospitality industry, not only in Las Vegas but across the United States. If the Ninth Circuit rules in favor of the plaintiffs, it could set a precedent for how algorithmic pricing is regulated under antitrust laws. This would potentially open the door for further lawsuits and regulatory scrutiny, pushing operators to reconsider their reliance on shared pricing technology.

On the other hand, if the court sides with the casinos, it could legitimize the use of algorithm-driven pricing strategies and limit the scope of antitrust law in regulating these practices. This ruling could thereby influence how other industries use similar technologies to optimize pricing without falling afoul of the law.

The Las Vegas price-fixing lawsuit has become a focal point in the ongoing debate over algorithmic pricing and its implications for market competition. By seeking to resurrect the case, the plaintiffs are challenging the idea that shared pricing software can be used without triggering antitrust concerns. The Ninth Circuit’s decision will be pivotal in determining the future landscape of hotel pricing strategies and the extent to which antitrust laws can be applied in the digital age. As the case unfolds, it may redefine the rules of competition within the casino and hospitality industry.