Consumers have reignited a lawsuit against several prominent Las Vegas casino resorts, claiming an intricate price-fixing scheme that could have broad implications for antitrust enforcement in technology-driven markets. These allegations were recently brought before the 9th U.S. Circuit Court of Appeals after a Nevada district court judge dismissed the initial claims earlier in the year.
The appeal, filed on Thursday, September 26th, seeks to advance a class-action lawsuit against prominent players such as Wynn Resorts, Caesars Entertainment, and Treasure Island, alongside the software developer Cendyn Group and its subsidiary, Rainmaker Group Unlimited. The plaintiffs argue that these entities collaborated to manipulate room pricing algorithms to artificially elevate rates, thereby breaching antitrust laws.
Allegations of algorithmic collusion in pricing:
The core of the lawsuit alleges that the involved casino operators and Cendyn’s software orchestrated room rates above competitive levels by manipulating data fed into the pricing algorithms. This tactic, the plaintiffs assert, represents a modern form of collusion, which is more subtle yet effective than direct price-setting agreements among competitors.
“Today, competitors can use algorithms to collude more easily and effectively than in the past,” claimed the plaintiffs in their September 26th court filing, as reported by the Las Vegas Review-Journal. They contend that if unchallenged, this practice could set a dangerous precedent, essentially granting immunity to algorithmic price fixing from antitrust scrutiny.
The accused casino operators have maintained their innocence, previously denying the allegations. The filing highlighted the significance of this case, especially as similar allegations have surfaced in other jurisdictions, such as a pending case in Atlantic City involving some of the same defendants.
Chief Judge Miranda Du of the U.S. District Court in Nevada had dismissed the lawsuit in May, expressing skepticism over the plaintiffs’ ability to prove a coordinated effort among the defendants. Her 18-page decision pointed out the theoretical nature of the claims, suggesting that the plaintiffs were attempting to fit sparse factual evidence into a novel antitrust framework.
Implications and industry response:
The plaintiffs’ brief from September 26 argued that the district court’s decision was flawed, accusing it of drawing inferences against them and disregarding established legal precedents. They emphasized the need for judicial scrutiny over emerging business practices that leverage technology to potentially stifle competition.
In another related development, a class action lawsuit was initiated this Wednesday, accusing Las Vegas Strip hotel operators of using a revenue management platform to exchange real-time pricing data. This system, according to attorneys from Hagens Berman, enables these operators to set prices that unfairly maximize profits at the expense of consumers.
The implications of these lawsuits extend beyond the courtroom. The average daily room rate on the Strip has reached historic highs, with significant spikes during major events. These rates not only affect consumer costs but also have broader economic implications, including funding major projects like the Allegiant Stadium and the expansion of the Las Vegas Convention Center.
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