Federal authorities encourage court to consider lawsuit over hotel rates at Atlantic City casinos
The federal government is encouraging the U.S. District Court in New Jersey to accept a lawsuit against several Atlantic City casino hotels. The motion stems from allegations that the resorts conspired to raise nightly room rates.
The Federal Trade Commission and the Justice Department's antitrust division filed a 61-page joint statement in New Jersey's District Court this week, arguing that casinos' use of the same third-party services to set resort room prices may violate federal law. law. Federal authorities believe the casinos may have colluded by using the same pricing algorithms.
Authorities pointed to the Sherman Act, an antitrust law that enforces free competition rules. Sherman prohibits "any fiduciary or other form of contract, arrangement or conspiracy" that unreasonably restricts trade and consumer choice.
The FTC and Justice Department said they are interested in the "proper application" of the Sherman Act and the outcome of cases in court.
The case involves competitors using algorithms to allegedly set prices. The judicial disposition of such charges has enormous practical implications," federal authorities said in a statement.
"As technology has evolved over the 133 years since the Sherman Act enacted the federal price-fixing ban, companies have also evolved the mechanisms for engaging in illegal price-fixing," the testimony continued. "Personal handshakes were followed by phone calls and faxes replaced, and later replaced, by email. Algorithms were the new frontier. This new frontier posed a greater anticompetitive threat than previous frontiers, given the amount of information that algorithms could access and process.”
Casino Conspiracy
In January, New Jersey District Court Judge Karen Williams consolidated three lawsuits accusing Atlantic City casino resorts of price-fixing. The defendants are Caesars Entertainment, which operates Caesars, Harrah's and Tropicana, and MGM Resorts, which operates Borgata. Hard Rock International was also mentioned.
Casino has filed a motion to dismiss the lawsuit. Federal authorities asked the court to reject the request.
The plaintiffs allege that all casino companies use Florida-based Cendyn Group to provide price-fixing services for their hotel rooms. Cendyn says on its website that it helps hotels "increase profitability" through technology. Cendyn provides casino hotel reservations across the country.
The FTC and DOJ said previous federal rulings concluded that the Atlantic City Casino defendants did not have to communicate directly about using Cendyn to describe the conspiracy.
"The issue in this case is whether Defendants allegedly violated Section 1 of the Sherman Act by knowingly using their sensitive, nonpublic pricing and delivery information in the algorithms they relied on to make pricing decisions." Other Competition Adversaries are comprehensively expected to do the same," U.S. government attorneys wrote. "While not every use of a pricing algorithm will itself constitute a violation of Section 1, given the allegations made in the complaint, the alleged system itself is consistent with Legal standards for illegal pricing. "
Price increased
The average price for a night at Atlantic City's casinos continues to rise even as occupancy rates fail to keep up.
It was reported earlier this year that the resort's 15,100 casino-hotel rooms were about 81% occupied in 2018 and priced at just $137. In 2019, the same room was priced at $142, although occupancy was lower at 79%.
Post-pandemic, Atlantic City casinos averaged $173 per night in 2021, while occupancy dropped below 67%. In 2002, when occupancy was 73 percent, rooms were priced at $178.
According to the latest report, a casino room costs $186 per night through three-quarters of 2023 and is occupied 75% of the time.
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Source: www.casino.org
