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Feds Back Plaintiffs In Atlantic City Casino Collusion Suit

Alleged Scheme Set Artificially High Hotel Room Prices

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Atlantic CityTwo Atlantic City casino guests sued MGM Resorts, Caesars Entertainment, and other casino groups last May alleging that the companies colluded to set artificially high hotel rates in the East Coast gambling town. The Federal Trade Commission and the Justice Department’s Antitrust Division filed a statement of interest in the case last week, agreeing with the plaintiffs.

The original suit alleged that the properties used an algorithm to set artificially high prices that varied little among properties.

“The two agencies argued that the company’s use of the algorithm can still violate antitrust law even if the companies never directly communicated, responding to one of the legal arguments used by the defendants,” the Wall Street Journal reported. “The FTC and DOJ also said in their statement that the companies could have still violated U.S. law by using the algorithm to set a starting price, even if they ended up charging different amounts.”

Details On The Lawsuit

The move comes after the feds have also shown support for lawsuits in the real estate industry concerning similar uses of algorithms. The Atlantic City suit alleged the casinos used an anticompetitive booking model to set room prices.

Attorney Jacob Fabel said the properties enter their “commercially sensitive data on pricing and occupancy” into an algorithm that rigs pricing and prevents hotels from maximizing occupancy. Fabel sought a class-action suit against the casinos.

“As a result of this anti-competitive scheme, plaintiff and class members paid artificially inflated prices for guest rooms rented directly from casino-hotel defendants or their co-conspirators from June 27, 2018, to the present,” the lawsuits notes.

A similar suit was filed in January 2023 against Las Vegas casinos. Gaming companies have denied the claims and argued there was no direct evidence of collusion or conspiracy.

“The complaint fails at the outset because it is missing every essential ingredient necessary to plead an antitrust conspiracy,” attorneys wrote in the Nevada case.

In other Atlantic City-related gaming news, a judge in New Jersey recently ruled that casinos had no obligation to stop compulsive gamblers from betting.