A Las Vegas judge has dismissed a proposed class action alleging that MGM Resorts, Caesars Entertainment and other Las Vegas hotel operators conspired to unlawfully inflate room rates in violation of US antitrust laws.

Chief US District Judge Miranda Du ruled that the current action was marred by “ambiguity” and “numerous deficiencies.” He granted the plaintiffs 30 days to file an amended lawsuit.

In a Nevada legal battle sending ripples through the world of hotel accommodation, plaintiffs have levelled accusations against hotel operators on the Las Vegas Strip, alleging an illicit agreement to artificially inflate room prices above competitive levels.

The alleged conspiracy

Plaintiffs claim that all hotel operators on the Las Vegas Strip came to a secret agreement to employ a shared set of pricing algorithms provided by the Rainmaker subsidiary of Cendyn.

 These algorithms recommended prices beyond what normal market competition would dictate.

The Las Vegas Strip comprises the four-mile stretch in the unincorporated towns immediately south of the city of Las Vegas. Plaintiffs assert that this area is unique, making it a relevant antitrust market.

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Impact on consumers

As a result of the alleged conspiracy, the plaintiffs allege that hotel operators began charging substantially higher prices for rooms. They contend that this practice has harmed consumers, who are now left footing the bill for more expensive hotel stays.

They claim that the widespread adoption of Rainmaker’s products in this market has disrupted what was once a competitive industry.

The plaintiffs raised a single claim for violation of Section 1 of the Sherman Act. They insisted that the defendants’ conspiracy is a per se violation of this act, or alternatively that it violates Section 1 of the Sherman Act under the Rule of Reason.

The defendants moved to dismiss the complaint, alleging that it failed to state a valid claim under Fed R Civ P 12(b)(6).

The judge issued a 13-page order pointing out that the consumer lawsuit against the hotel companies and the pricing software platform was plagued by unclear language and multiple shortcomings.

However, he permitted plaintiffs to submit a revised lawsuit within a 30-day window.