Four Vegas Casinos Face Lawsuit for Allegedly Fixing Room Prices

A class-action lawsuit was filed Wednesday against four Las Vegas-based gaming and hospitality companies. It alleges that they engaged in illegal activities. “an illegal price-fixing scheme to raise the cost of hotel rooms.”

Rainmaker, which is used by approximately 90% of the hotels on the Las Vegas Strip, gathers real-time information from competitors about the availability and pricing of room rentals rates. It also offers recommendations. “designed to unlawfully maximize profits for its hotel operator users,” According to a Jan. 25, 2005, Press release By the lawyers who filed the lawsuit. This pricing strategy based on algorithms is a violation of antitrust laws. “expense” Customers, the attorneys claim.

Hagens Berman from Seattle filed the lawsuit in Nevada federal courts. The suit names MGM Resorts (Casas Entertainment), Wynn Resorts Holderings and Treasure Island as defendants. Las Vegas Strip. Combined, the four groups control roughly 20–30 hotels in the area.

“Our antitrust attorneys have uncovered what appears to be an unlawful agreement in which Rainmaker collects and shares data between Vegas hotel competitors to unlawfully raise prices of hotel rooms,” Steve Berman is the managing partner at Hagens Berman. He also represents consumers in the case.

“What happens in Vegas will no longer stay in Vegas. We intend to expose the under-the-table deals perpetrated by these Vegas hotels, and we intend to hold them accountable.”

Inflating Room Costs

According to the lawsuit, hotel rates in Las Vegas are at an all-time high. “record highs.” Each of the four defendants is said to have used Rainmaker’s algorithms for pricing recommendations. Rainmakers was focused on “maximizing defendants’ profitability, at the expense of competition,” According to the release.

It was not about chasing occupancy growth but maximising profits. This practice, according to attorneys, is against the spirit of a free and fair marketplace where producers don’t raise their revenue by restricting or growing supply.

“By incentivizing its users to suppress the supply of hotel rooms, Rainmaker artificially drove up prices and directly harmed consumers,” Berman. “These corporations created a scenario in which the house will always win, and they’ve broken the law to do so.”

The lawsuit cites a hotel that used the Rainmaker software to produce 70 percent of their prior year’s revenue with 50 percent of the volume throughout the pandemic despite this period witnessing restrictions and closures.

The hoteliers are being sued for violating the Sherman Antitrust Act by using Rainmaker. Lawyers believe that those who rented a Las Vegas Strip hotel room after Jan. 25, 2019, could have paid more.

In addition, the lawsuit cites a speech from 2017 (PDFMaureen Ohlhausen (ex-acting chairperson, Federal Trade Commission) raised concerns regarding algorithmic pricing.

Ohlhausen used the example of a subcontracting group of competitors pricing decisions to one vendor that uses algorithms for pricing strategies.

“Because the same outside vendor now has confidential price strategy information from multiple competitors, it can program its algorithm to maximize industry-wide pricing,” She spoke.

“In effect, the firms themselves don’t directly share their pricing strategies, but that information still ends up in common hands, and that shared information is then used to maximize market-wide prices.

“Again, this is fairly familiar territory for antitrust lawyers, and we even have an old-fashioned term for it, the hub-and-spoke conspiracy.”

Hotel Response, Room Rates High

MGM Resorts spokesperson called it a “litigation” “factually inaccurate” In a StatementAccording to Reuters. The resort plans on defending itself “vigorously against these meritless claims.”

The Epoch Times has reached out MGM Resorts (Caes Entertainment), Wynn Resorts (Wynn Resorts) and Treasure Island to get their comments.

According to the The Las Vegas Strip Report, the average daily rate of resort rooms on the Las Vegas Strip reached record levels in 2022. Las Vegas Review-Journal.

The April 2022 report by the Las Vegas Convention and Visitors Authority showed the highest ever room rates. Its average rate was $173.63 per day. The average hotel rate on the Las Vegas Strip was $187.72.

In September, this record was broken. The next month saw average room rates surpass $200 per night. The average room rate for 2022 to November was $170.45. This is the highest historical rate.