Atlantic City Casinos Sued Over Alleged Conspiracy to Jack Up Room Rates

Posted on: May 11, 2023, 08:25h. 

Last updated on: May 11, 2023, 01:16h.

Devin O'Connor @CasinoorgDevinO Read More

Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

Several Atlantic City casinos have been named in a proposed class action lawsuit. The action accuses the resorts of conspiring to increase their nightly hotel room rates.

In a federal lawsuit filed this week in New Jersey’s US District Court, two plaintiffs from New Jersey — Heather Altman and Eliza Wiatroski — contend that several casinos in Atlantic City have conspired since at least 2018 to collectively increase the going room rates.

The lawsuit names MGM Resorts, which operates the Borgata, and Caesars Entertainment, which operates Caesars, Harrah’s, and Tropicana. The suit additionally names Hard Rock as a defendant. The lawsuit also involves Bally’s when it was still operated by Caesars until November 2020.

Defendants are engaging in an ongoing conspiracy to fix, raise, and stabilize the prices of casino-hotel guest rooms in Atlantic City, New Jersey, in violation of Section 1 of the Sherman Act,” the lawsuit alleges. The Sherman Act is the federal government’s antitrust law that prescribes the rule of free competition.

The suit also names Cendyn Group, a leading provider of online booking services for the travel industry. The defendants reportedly each use Cendyn to help set prices for their rooms in Atlantic City.

Cendyn at Center of Lawsuit

The two defendants are proposing a class action lawsuit that their attorneys believe could result in “tens if not hundreds of thousands” of consumers joining the litigation. The crux of the legal contention is that Cendyn’s software manipulates rates to the hotelier’s benefit.

Casino-Hotel Defendants’ knowing use of a shared pricing algorithm platform that Cendyn sells and promotes has enabled and facilitated an anticompetitive scheme that has caused Plaintiffs and class members to pay supra-competitive prices for guest rooms they have rented directly from Casino-Hotel Defendants or their co-conspirators,” the lawsuit states.

The lawsuit says the defendant casinos have been engaged in the alleged scheme for the past five years. The defendants claim casino rooms keep getting more expensive despite visitation waning in the New Jersey beach town.

Data supplied by the New Jersey Division of Gaming Enforcement (DGE) seems to back up those claims. Last year, the average nightly rate for an Atlantic City casino hotel room was $178. The nine casinos reported an occupancy rate of 73.4%.

In pre-pandemic 2019, the Atlantic City casinos experienced a higher occupancy rate of 78.9%, but they charged significantly less — $142 a night. The difference is a 25% increase or $36 a night.

The plaintiffs suggest the occupancy rate isn’t lower only because of the higher rates but because there are fewer guests overall in town.

“There are no market factors, like rising costs or increased demand, that sufficiently can explain the kind of increase in room rates and corresponding revenue that Casino-Hotel Defendants each have obtained during the class period,” the lawsuit declares.

Attorneys for the casinos have not yet responded to the litigation.

Case Follows Las Vegas Lawsuit

The lawsuit against the Atlantic City casinos comes a month after similar litigation was filed in Nevada’s US District Court that names several Strip resorts as defendants. The lawsuit contends that MGM, Caesars, Wynn Resorts, and Treasure Island illegally share data on their room bookings in order to set the highest prices possible.

Attorneys representing the casinos in Nevada have asked for the case to be dismissed.

“The complaint fails at the outset because it is missing every essential ingredient necessary to plead an antitrust conspiracy,” the defendants wrote in a joint motion to dismiss the case. “The complaint fails to identify a single communication between hotel defendants, much less one that suggests a conspiracy was afoot.”