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A federal appeals court has revived a lawsuit accusing major Atlantic City land-based operators of using shared AI-powered pricing software to inflate hotel room rates.
The Federal Trade Commission and Department of Justice filed a Statement of Interest in March 2024, arguing that competitors could violate antitrust law by jointly relying on the same pricing algorithm even without communicating directly.
Six months later, US District Judge Karen M. Williams dismissed the lawsuit after finding that the plaintiffs had not plausibly alleged a price-fixing agreement among the casino hotels.
The plaintiffs appealed, and on July 29, the Third Circuit reversed the dismissal and returned the case to federal district court in New Jersey.
Why the Third Circuit revived the lawsuit
The district court had found that the complaint did not sufficiently explain how the five Atlantic City casinos named in the lawsuit exchanged information through the Cendyn Group‘s Rainmaker AI technology or establish that they had agreed to follow its recommendations.
In reversing the dismissal, the Third Circuit pointed to the alleged exchange of non-public data, the high acceptance rate and the pattern of room rates rising while occupancy fell. Taken together, the judges said those details were enough to make the price-fixing claim plausible.
The appeals court also said the plaintiffs should not have to explain exactly how Cendyn’s proprietary software worked before they had a chance to obtain evidence about it.
The ruling does not mean using the same pricing software automatically breaks antitrust law. The court said this case goes further because Rainmaker allegedly collected sensitive data from competing casino hotels and used it to recommend room rates to each property.
The decision puts the Third Circuit at odds with the Ninth Circuit, which affirmed the dismissal of a nearly identical lawsuit against Las Vegas casinos in 2025. The US Supreme Court declined to review that Nevada case in April 2026. The Atlantic City casino hotels had urged the Third Circuit to follow the Ninth Circuit’s approach, but the panel disagreed.
How Rainmaker allegedly influenced Atlantic City room rates
The case centers on the following five properties:
- Caesars Atlantic City
- Harrah’s Resort Atlantic City
- Tropicana Atlantic City
- Borgata Hotel Casino & Spa
- Hard Rock Atlantic City.
The lawsuit claims the properties continuously sent non-public data about room prices and occupancy to the Rainmaker platform.
According to the complaint, Rainmaker processed that information alongside data from competing properties and generated recommended room rates several times per day. The complaint alleges that those recommendations were automatically uploaded into each property’s room management system.
The complaint alleges that all five venues delegated their pricing decisions to Cendyn by accepting Rainmaker’s recommendations 90% of the time. Although the hotels retained final pricing authority, the complaint alleges that deviating from Rainmaker’s recommendations required override permissions available only to select employees.
The plaintiffs argue that the arrangement reduced the incentive for properties to compete by lowering their room rates. They point to market data showing that the properties’ combined occupancy allegedly declined by 8% between 2017 and 2019 while room revenue increased by about 22%.
Atlantic City properties often discount rooms because hotel guests may also spend money gambling, dining, and using other amenities. The lawsuit alleges Rainmaker helped the properties keep room rates higher by making it less likely that one venue would lower its prices to attract guests from the others.
What happens next for Atlantic City casino guests
When the case returns to federal district court, the plaintiffs may pursue internal documents and technical information about how Rainmaker operated.
The case has not yet been approved to proceed on behalf of a wider group of guests. No damages have been awarded, and the properties have not been ordered to change their room rates.
Whether customers were overcharged and could eventually qualify for compensation will depend on what the plaintiffs can prove as the case moves forward.
