A proposed call-action suit filed by customers claims that a handful of Atlantic City casinos artificially inflated room rental prices for years.
The filing names Caesars Entertainment, MGM Resorts International and Hard Rock International for violating US antitrust law, according to a 109-page complaint filed on May 9 in US District Court in New Jersey. The suit also names Cendyn Group, a Florida-based hospitality technology company that provides room-booking software to hotel operators.
Caesars operates three casinos in Atlantic City: Caesars, Harrah’s Resort and Tropicana. MGM Resorts oversees Borgata Hotel Casino & Spa, the city’s highest-grossing property. Hard Rock Hotel & Casino Atlantic City stands as the second-best market performer.
Combined, these five casinos control an AC market share of between 72% and 80% since the summer of 2018, according to court documents.
Lawsuit: AC casinos ‘facilitated an anticompetitive scheme’
The suit claims the casino operators “facilitated an anticompetitive scheme” using Cendyn’s shared pricing algorithm to “fix, raise, and stabilize” hotel rooms. The plaintiffs say this amounts to “engaging in an ongoing conspiracy,” which resulted in guests paying “supra-competitive prices” since June 28, 2018.
The AC casinos “misrepresented to guests, through omissions, half-truths, and misrepresentations, how they determined room rates,” according to the complaint.
The casino companies have yet to respond to the court filing.
During that period, public data from NJ gambling regulators shows an increase in Atlantic City casino hotel room rates but a decline in occupancy rates. In 2019, the average room rate was $142.11 and the occupancy rate was 78.9%. Last year, the average room went for $177.89 with 73.4% occupancy.
“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 states.
Lawsuit could include thousands of customers
Heather Altman of Deptford (Gloucester County) and Eliza Wiatroski of Freehold (Monmouth County) filed the complaint on “behalf of a class of all others similarly situated.”
The lawsuit said there are “tens if not hundreds of thousands” of customers who could be part of a class action. The plaintiffs are seeking unspecified compensatory and triple damages under federal antitrust laws and a jury trial.
The case mirrors ongoing legal action in Nevada, where a similar complaint of antitrust conspiracy was filed against Las Vegas casino hotels. The operators have requested the case in Nevada be dismissed.