Las Vegas Resorts Win Lawsuit Over Collusion on Room Rates... Currently
Recently, a federal judge dismissed a class-action lawsuit against MGM Resorts, Caesars Entertainment, Treasure Island, and Wynn Resorts, claiming they conspired to overcharge for room rates in Las Vegas using data-sharing software that violates US antitrust law. The lawsuit, filed in January by a Seattle-based law firm, had numerous issues that made it inadequate, leading to its dismissal.
Chief US District Judge Miranda Du stated on Tuesday in Nevada that the consumer lawsuit had ”ambiguity” and “numerous deficiencies.” One of these deficiencies was the lack of proof that all four hotel companies reached an agreement to use the same data-sharing software. The lawsuit didn't convincingly show that the hotel operators were forced to accept prices suggested by the software.
The Conspiracy Theory
The lawsuit accused MGM Resorts, Caesars Entertainment, Treasure Island, and Wynn Resorts of working together to artificially increase room prices by using Rainmaker, a revenue management platform utilized by most Las Vegas Strip hotels. It aimed to get class-action status for all guests of these properties since 2019.
Hagens Berman's attorneys argued that Rainmaker used real-time pricing and room supply data from competitors to “defy market dynamics,” a violation of antitrust laws. Cendyn, the company behind Rainmaker, and its subsidiary, Rainmaker Group Unlimited, were also named in the complaint.
How Does Software Set Prices?
In a competitive environment, hotel operators determine room prices individually, aiming to sell as many rooms as possible. However, the use of Rainmaker's software distorts this competition. Judge Du's decision stated that it disrupts conventionally established price dynamics, leading to higher room rates.
Rainmaker's software, Guestrev, reportedly analyzes hotel guest and room supply data, then manipulates supply, making biased dynamic pricing recommendations in favor of the hotels.
The plaintiffs were given 30 days to resubmit an amended lawsuit, but Judge Du reserved judgement on the substance of the dismissed lawsuit's antitrust allegations.
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Source: www.casino.org
