Vegas hotel giants MGM, Caesars, Wynn and Treasure Island sued over ‘algorithmic price fixing’

A Nevada federal lawsuit is seeking class action damages for countless hoteliers who have booked rooms in Las Vegas since 2019, alleging that most hotel casinos on the Las Vegas Strip used a third-party seller to illegally fix prices.

The complaint, filed Wednesday in US District Court in Las Vegas, alleges that casino giants MGM Resorts International and Caesars Entertainment, along with Treasure Island and Wynn Resorts, share information with a company that uses pricing algorithms to “maximize market-wide prices.”

It accuses the resorts and Rainmaker Group Unlimited, a revenue management company owned by the Cendyn Group, of “algorithmic price fixing… at the expense of consumers and in violation of antitrust laws.”

The Associated Press sent an email to Rainmaker seeking comment. Michael Bennett, a representative for Boca Raton, Fla., declined to comment.

The lawsuit was filed on behalf of plaintiffs Richard Gibson and Heriberto Valente by attorneys from the Seattle and Berkeley, California, office of Hagens Berman Sobol-Shapiro.

“Dozens…if not hundreds of thousands”

The lawsuit seeks class status and unspecified monetary damages for “tens of thousands if not hundreds of thousands” of people based on alleged antitrust violations of the federal Sherman Act.

MGM Resorts, which operates properties including Bellagio, New York-New York, MGM Grand and Mandalay Bay, responded Thursday with a statement calling the lawsuit “meritless.”

“The allegations against MGM Resorts are factually inaccurate, and we intend to defend ourselves vigorously,” she said.

Wynn Resorts declined to comment. The Associated Press left messages seeking comment from representatives for Treasure Island and Caesars Entertainment.

Caesars Entertainment operates properties on the Las Vegas Strip including Caesars Palace, Harrah’s, Horseshoe, Paris Las Vegas, and Flamingo.

In a statement, plaintiffs’ attorney Steve Berman invoked and recreated a ubiquitous ad campaign slogan introduced in early 2003.

“What happens in Vegas will not stay in Vegas anymore,” Berman said. “We are determined to expose the under-the-table deals being executed by these Vegas hotels.”

price maximization algorithm

Alan Feldman, longtime executive director of MGM Resorts and now a fellow at the International Gaming Institute at the University of Nevada, Las Vegas, said hotels, airlines and rental car companies monitor costs and rates through what he calls the “travel ecosystem.”

“Rest assured, they’re watching each other,” Feldman said. “Then they can decide if they want to override it, under it, or just ignore it.”

“But I can’t imagine these companies talking to each other, certainly not about price,” he said.

The suit cites concerns about the computational pricing specified in A 2017 Speech by Maureen UhlhausenActing Chairman of the Federal Trade Commission.

Ohlhausen defined a computer algorithm as a set of rules or instructions that can model thousands of “extremely complex and subtle behaviors” in a split second and “react almost instantly to changes”.

It said companies provide their pricing data to a “common third-party agent” who uses the information to program its algorithm to “maximize industry-wide pricing”.

“We even have an old term for that, pivot-and-talk plot,” Ohlhausen said.

“In fact, the companies themselves do not directly share their pricing strategies, but this information is still in common hands, and this shared information is then used to maximize pricing at the market level,” she said.

The court filing said two former Rainmaker employees told attorneys that the company’s products are used at 90% or “almost everything” on the Las Vegas Strip that surrounds the resort. The lawsuit did not identify the former employees.

the Las Vegas Review-Journal reported Average daily room rates for Strip resorts hit record highs in 2022, topping $200 per night in October during a busy conference month.

For the year ending in November, the average price was $170.45, the newspaper said, the highest in history, and did not include additional resort fees or the expense of free VIP rooms.