Atlantic City Casinos Face Lawsuit Over Hotel Room Rental Rates

Several of the Atlantic City casinos in New Jersey are named in a lawsuit filed by two residents of the state involving hotel prices. Guests can travel to Atlantic City and stay with NJ casinos, enjoying luxury suite accommodations or standard guest rooms. The lawsuit claims that brands like Hard Rock International, MGM Resorts International, and Caesars Entertainment illegally increased room rates.

Two residents of New Jersey filed the lawsuit and claimed that the casinos violated Section 1 of the Sherman Act. The more than 100-page suit was filed in the US District Court for the District of New Jersey and mentioned several brands plus Cendyn Group LLC, a hospitality tech company.

Cendyn reportedly shared a pricing algorithm that is the main reason the prices increase. The defendants, Heather Altman and Eliza Wiatroski stated that hotels like Harrah’s, Bally’s, and Borgata used the pricing algorithm of Cendyn to charge nightly rates that were higher than they would have normally been in a competitive market.

Data reportedly shows that substantial increases have occurred involving hotel room rates in AC and a decrease in occupancy. The suit covers a time frame of four years. Room rates increased by 25% in 2002 when compared to 2019. The increase was made despite hotels renting 5% less than before.

Occupancy rates for 2022 reached just over 73%, an increase of over 5% from the previous year. The final quarter of 2022 saw a 65% occupancy rate which was a decrease.

The lawsuit claims that the casinos did not have a justifiable reason to increase the nightly rates. No market factors were in place to justify the higher price point, such as a higher demand for rooms or rising costs. The lawsuit is considering room rates from 2018 to the present day.

The lawsuit also says that there was no justifiable reason to explain the revenue the defendants obtained during the period. The filing also says the casino hotel misrepresented guests with half-truths and omissions when creating the new room rates.

It is expected that tens of thousands of people, or more, were affected by the price increase, according to the filing. The plaintiffs want to receive compensation, but the amount has yet to be made public. They are also seeking triple damages based on federal antitrust laws.

This is not the first time that casino operators have been hit with a price-fixing lawsuit based on antitrust laws. Earlier this year, the same defendants were named in a class action suit for hotel stays in Las Vegas.

The New Jersey casinos named in this filing will most likely try to see the case dismissed as well. With many of the same companies named in this suit, they know how to fight the charges. It will be interesting to see if the case makes it to court and what the actual outcome will be if so.

Such lawsuits could have a lasting effect on hotel prices in the future, but it is highly unlikely that the case will move forward. Hotel prices fluctuate just as the amounts for goods and other services. It would not be surprising to see the AC casino hotels blaming inflation for the higher hotel stays.

Will the plaintiffs have enough to sway the court to hear their case? Or will the casinos be able to shut it down before the claim can even make it to court? Only time will tell what will happen as the two sides try to prove their point regarding nightly hotel charges.