New FTC Rule Bans Junk Fees, But Won’t Stop Rising Casino Costs

^{The FTC in Washington DC may or may not be taking a closer look at casino-resort receipts in the coming year. (Image: Alex Brandon / AP)}

The US Federal Trade Commission passed a rule 10 days ago that could have significant implications for casino resorts and force them to reassess their application of the much-criticised resort fees. 

Resort Fees in casino resorts, and Las Vegas in particular, have long been a controversial subject among gamblers. Lower prices are advertised and often, especially when booking through third party vendors, payment is taken up front. However, when you arrive at the property, you are also charged a daily resort fee on top. You are informed of that fee at the point of booking, but often not very prominently. 

That can make a huge difference to the consumer. For example, if you booked a week in a Las Vegas casino resort at $50 per night, you might think you’ve got yourself a bargain at $350 for the week. However, you’d actually be paying closer to $700, twice as much, once the resort fees are added on (as per current rates, which are on the rise).

In fact, a White House study claims American consumers spend $90 billion per year, or $650 per household, on “junk fees,” including resort fees. 

“I’ve always put families and hardworking Americans first,” President Joe Biden said in a White House statement on the FTC ban. “That’s why I called on my Administration to do everything we can to lower costs. Today, the Federal Trade Commission is doing just that by banning hidden junk fees when you book a hotel or purchase event tickets.” 

Biden explained the problem with these fees rather clearly. “We all know the experience of encountering a hidden fee at the very last stage of check out,” Biden wrote. “These junk fees sneak onto your bill and companies end up making you pay more because they can. Those fees add up, taking real money out of the pockets of Americans.”

I can add that they take real money out of the pockets of Brits who like to travel to Las Vegas, too. 

Biden’s announcement on Dec. 17 built on other work by his administration in the area of personal finance – including lowered overdraft and credit card late fees, required upfront disclosure of baggage and change fees for air travelers, and similar disclosure requirements for internet service providers. 

“Wherever big corporations try to sneak fees onto bills,” Biden said, “my Administration has been fighting on behalf of American families to ban them.”

FTC Chair Lina Khan concurred, saying: "I urge enforcers to continue cracking down on these unlawful fees and encourage state and federal policymakers to build on this success with legislation that bans unfair and deceptive junk fees across the economy." 

Resort Fees Aren’t the Same for All Gamblers

Naturally, there are contrasting views here. While the White House and Biden Administration specifically claim they are, casino resorts have a different perspective. 

They would argue that rooms at casino resorts are specifically designed for gamblers, and if you have a history of gambling with them then there is every chance the resort fee will be waived. At MGM resorts, for example, resort fees are waived for gold and higher tier members of the rewards club, while at Caesars it’s the same for anyone who has achieved Diamond level and higher. 

They are just the guarantees, too. Lower-level players receive offers without resort fees based on their gambling. 

Resort fees are then, casinos could claim, more like a surcharge for non-gambling guests who won’t be putting money through the slot machines and tables. 

Casino execs would also remind everyone that the fees are not hidden, and guests receive benefits for them such as WiFi, gym access, and digital newspapers. 

But really, the fact that proven gamblers are made exempt by properties demonstrates the reality that casino players simply have more value than non-gambling tourists, and resort fees are a way of creating almost a two-tier pricing system to reflect that. 

That’s not the official line, of course, but reality rarely is.

How Will the Junk Fee Ban Affect Casino Resorts?

It’s very difficult to say at the moment. For a start, there is no guarantee that the rule will actually stand the test of time given the transitional nature of US politics right now. 

It’s certainly noteworthy that the FTC did not vote for it unanimously. It was a 4-1 majority, but that one dissenter was Andrew Ferguson, a Republican who is poised to take over as the agency's chair when Donald Trump takes office.

Commenting on why he voted against it, Ferguson said, "The time for rulemaking by the Biden-Harris FTC is over." 

However, he did not actually state whether he was in favour of the rule or not, just that he thinks it should be the next administration who decides it.  

There are also sure to be legal challenges at the state level. Judges in Texas and Louisiana have blocked similar rules on credit-card late fees and airline baggage fees, and there is every chance this one will be challenged, too. 

In addition, it’s important to note that resort fees and their ilk are still allowed. The new ruling simply affects how they are advertised and presented at the point of payment.

So, for now, we may simply be at the point of an opening salvo in a lengthy fight before any meaningful change is noted by consumers. 

And even if the ruling does come into force, it’s unlikely that casino resorts will simply accept the hit to their income. Chances are they will just find a different way to get the same money, probably just by raising their rates – or simply being more brazen about charging resort fees.  

Stacking Up Surcharges

Resort fees are not the only “junk” fee that gamblers notice in casinos. In fact, the whole of Las Vegas is probably ground zero for the explosion of crazy fees and surcharges in modern times. 

The new ruling specifically deals with hidden ticketing fees, and that is sure to impact casino resorts. All of them charge a “service fee,” even if you do everything yourself digitally with the booking. Some also charge a “venue fee” – for what, I’m still not sure. 

Then there are the restaurants in Las Vegas and other casino resorts. Many now have what is called a “Concession and Franchise fee” (CNF), which is usually a surcharge of around 3-5%. You don’t actually get anything for it and you can ask for it to be removed if you can be bothered with the fight. Many will also sneak a service charge onto the bill, too, whilst also suggesting a tip for a server. 

There are additional fees in casino resorts as well for pool cabana and daybed hire, nightclub tables, and ATM use. Credit card use also often comes with an additional fee. That is most notable in taxis to get you to and from your casino resort, but you will also see it on some restaurant bills too. 

It’s generally going to be very interesting to see what survives the new rulings and which don’t. Generally speaking, if the fee is up front and honest no matter how appallingly high (ATM charges, I’m looking at you), then it will not need to change. 

However, resort fees and ticketing surcharges for casino entertainment venues may be forced into some significant changes should the rule survive the challenges it is sure to endure.