Casino operators win legal battle over the use of algorithms and AI in setting room rates

Major casino-hotel operators in Atlantic City won a key ruling in New Jersey when a federal judge dismissed a proposed consumer class action that accused them and revenue management platform Cendyn of overcharging for room rentals through the use of algorithms and AI.

U.S. District Judge Karen Williams ruled that the plaintiffs did not present enough evidence to let their price-fixing lawsuit move ahead against Caesars Entertainment (NASDAQ:CZR), MGM Resorts International (NYSE:MGM), and other operators. Williams dismissed the lawsuit with prejudice, meaning it cannot be filed again. The case could have broader implications, with other lawsuits also claiming that the use of revenue management platforms that pool data from competitors can be considered price-fixing within the industry. Consumers in a related case have appealed a Nevada federal judge’s order dismissing their lawsuit against Wynn Resorts (WYNN) Caesars Entertainment (CZR), and others.

In both cases, the plaintiffs claimed pricing information fed to Cendyn’s “Rainmaker” software was used to set artificially higher prices for hotel rooms. Cendyn and the hotel operators argued that there was no direct or circumstantial evidence that the defendants agreed to fix prices, and noted that the hotels were not required to accept the software’s pricing recommendations.