A class-action lawsuit filed Wednesday against four of the largest gaming and hospitality companies in Las Vegas alleges that the businesses engaged in “an illegal price-fixing scheme to raise the cost of hotel rooms.”
The lawsuit, filed by Seattle-based law firm Hagens Berman in a Nevada federal court, names MGM Resorts, Caesars Entertainment, Wynn Resorts Holdings, and Treasure Island as defendants, while also pointing to the dominant market share of these entities on the renowned 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,” said Steve Berman, managing partner of Hagens Berman and an attorney seeking to represent consumers in the case.
Inflating Room Prices
The lawsuit claims that hotel room rates in Las Vegas are currently at “record highs.” Each of the four defendants is said to have used Rainmaker’s algorithms for pricing recommendations. Rainmakers focused on “maximizing defendants’ profitability, at the expense of competition,” according to the release.The aim was to maximize profits rather than chasing occupancy growth. The attorneys insist that this practice runs contrary to a free and fair market where producers do not raise their revenue by restricting supply but by growing supply.
“By incentivizing its users to suppress the supply of hotel rooms, Rainmaker artificially drove up prices and directly harmed consumers,” said 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 case against the hotels is for violation of the Sherman Antitrust Act through the usage of Rainmaker. According to attorneys, people who have rented a hotel room on the Las Vegas Strip on or after Jan. 25, 2019, may have overpaid.
In the speech, Ohlhausen gave an example of a group of competitors subcontracting their pricing decisions to a single vendor who 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 said.
“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.
Hotel Response, High Room Rates
An MGM Resorts spokesperson slammed the lawsuit, calling it “factually inaccurate” in a statement, according to Reuters. The resort plans to defend itself “vigorously against these meritless claims.”The Epoch times has reached out to MGM Resorts, Caesars Entertainment, Wynn Resorts, and Treasure Island for comment.
In April 2022, the Las Vegas Convention and Visitors Authority reported its highest-ever room rates in history, with the average rate coming in at $173.63 per night. The average rate for hotels on the Las Vegas Strip was $187.72.
This record was broken in September. In the next month, average room rates crossed $200 per night for the first time. For 2022 through November, the average rate was $170.45, which is the highest rate in history.
