The U.S. Department of Justice has backed a class action lawsuit against several major Las Vegas casino resort operators. The suit accuses them of colluding to fix the prices of hotel rooms.
The lawsuit alleges that the operators shared internal information via a third-party platform to algorithmically calculate inflated prices.
The 9th U.S. Circuit Court of Appeals is currently considering an appeal from the plaintiffs against a Nevada District Court’s decision earlier this year to dismiss the case. The DOJ this week sent the court an amicus brief supporting the appellants’ case.
The defendants are Wynn Resorts, Caesars Entertainment, former Cosmopolitan operator Blackstone, and Virgin Casino Hotel operator JC Hospitality. Also named in the suit is Rainmaker Group, the data company that developed the hotel room booking system in question.
“Pricing algorithms can process more information more rapidly than humans aided by prior communications technologies. For this reason, such algorithms can increase the means and opportunities for collusion among competitors,” the Department of Justice said in its brief.
“The judicial application of Section 1 to claims of algorithmic price-fixing is therefore of significant importance. Because this case is the first of its kind to reach a U.S. Court of Appeals, it will establish precedent that will affect similar cases going forward.”
The Lawsuit
The price-fixing allegations were first filed in late 2023. Seattle-based law firm Hagens Berman Sobol Shapiro is handling the case on behalf of a dozen plaintiffs, plus any who join the class action.
The lawsuit accused operators of violating the Sherman Antitrust Act with their use of the software, among other things. It claimed that operators using the software were essentially in an unspoken conspiracy to share data in order to artificially raise room prices. It sought damages and compensation for all those guests who had overpaid since the operators began using the software.
A similar case has since been brought against Caesars, MGM Resorts International, and Hard Rock International in New Jersey, accusing their Atlantic City casinos of the same practices. However, in mid-2024, Nevada District Court judge Miranda Du ruled to throw the Las Vegas case out.
The Appeal and the DoJ
Du’s main point was that she agreed with hotel operators’ assertions that they were not beholden to use the price recommendation of the algorithm and oftentimes did not. She also said that the lawsuit did not prove price-fixing was going on just because the operators shared data that could allow them to.
In September, plaintiffs appealed to the Ninth Court of Appeals to have the case reinstated. The Department of Justice has now said it supports the reinstatement of the case in a brief to the appeal court.
It said the operator’s point that they did not always use the recommended price from the algorithm was null, as, in its view, the use of data shared with the algorithm to determine price is already collusion, even if it is not enacted.
“An agreement among competitors to use certain pricing algorithms to generate default or starting-point prices is per se illegal, even if there is no further agreement on final prices,” the DOJ’s brief said.
David is an online casino expert who specializes in online slots and boasts over 10 years experience writing about iGaming. He has written for a wide range of notable publications, including eSports Insider and WordPlay Magazine.
David graduated Derby University with a BA Degree in English Literature and Creative Writing.
