Feds Support Tourists in Atlantic City Hotel Price Gouging Lawsuit

In the United States, two federal agencies are backing a lawsuit filed by a group of tourists accusing prominent Atlantic City casino operators of collusion in the setting of their local hotel room rates.

The class-action complaint filed in May contends casino operators, including MGM Resorts International and Caesars Entertainment Incorporated, are utilizing electronic algorithms to determine the price of their Atlantic City rooms.

The 109-page action asserts such a practice represents collusion and violates American anti-trust laws as charges increased across the board from 2018 despite falls in overall occupancy rates. 

Detailed Defendants 

MGM Resorts International is responsible for the 2,767-room Borgata Hotel Casino & Spa facility, while Caesars Entertainment Incorporated runs the equally-spacious Caesars Atlantic City, Tropicana Atlantic City, and Harrah’s Resort Atlantic City properties. 

Hard Rock International Incorporated, which operates the 2,000-room Hard Rock Hotel and Casino Atlantic City casino destination, is also named as a defendant alongside Florida-based technology firm Cendyn Group LLC. 

The complaint alleges an anti-trust conspiracy exists in the New Jersey seaside resort as the casino operators are colluding via the utilization of a pricing platform from Cendyn Group LLC in order to set room rates that are higher than would be available in a competitive market. 

This action was lodged after an analogous complaint was filed in Nevada last year, similarly naming Caesars Entertainment Incorporated and MGM Resorts International as defendants. 

Substantial Succour

The Federal Trade Commission and the Antitrust Division of the United States Department of Justice are now supporting the Atlantic City complaint, according to the Wall Street Journal newspaper. The two agencies submitted statements of interest in the case on Thursday.

The pair purportedly contends that the use of an algorithm in the setting of hotel room rates could violate anti-trust rules even if offenders never directly communicate. 

The two agencies reportedly used their filings to assert parties may violate anti-trust laws simply by utilizing an algorithm to establish the starting price for a room. The duo went on to detail this potential exists even if the final charged rate ends up being higher or lower. 

Earlier Efforts

The newspaper reported that the United States Department of Justice and the Federal Trade Commission have recently thrown their weight behind similar cases concerning the real estate industry. 

The pair purportedly lodged statements of interest in a 2023 lawsuit brought against landlords and software firm RealPage Incorporated. Earlier this month, they argued against the dismissal of a comparable grievance involving pricing-software provider Yardi Systems Limited.

Lawyers working for the government reportedly argue that parties can be found guilty of violating United States anti-trust laws even without proof of direct communication between competitors. Such legal experts argue this involves the use of ‘tacit’ deals, such as the utilization of a common price-setting entity.