Appeals court revives suit claiming Atlantic City casinos used AI software to fix room prices
A three-judge panel has overturned the US District Court for the District of New Jersey’s October 2024 rejection of the complaint.
US.- The US Court of Appeals for the Third Circuit has revived a proposed antitrust class action alleging that major Atlantic City casino-hotels and software provider Cendyn Group used an AI-powered revenue management platform to coordinate and inflate hotel room prices. A three-judge panel has overturned the US District Court for the District of New Jersey’s October 2024 rejection of the complaint.
Karen Cornish-Adebiyi, Luis Santiago, and Monica Blair-Smith, acting as plaintiffs allege that the casino-hotels provided Cendyn’s Rainmaker platform with non-public, real-time data on room pricing and occupancy. AI algorithms allegedly processed this information along with comparable data from competitors to generate pricing recommendations. Allegedly, the hotels accepted these recommendations about 90 per cent of the time, which helped them maintain elevated rates while reducing the risk of being undercut.
The activity allegedly violated Section 1 of the Sherman Act, according to the lawsuit. The parties being sued include Caesars Entertainment and its properties in Atlantic City, namely Caesars, Harrah’s, and Tropicana. Also included are MGM Resorts International, with its Borgata Hotel Casino & Spa; Hard Rock International, along with the Hard Rock Hotel & Casino Atlantic City; and the Cendyn Group.
US District Judge Karen Williams had dismissed the case after finding the plaintiffs had not adequately shown how the hotels used the confidential data once it reached Cendyn or that an agreement existed among the competing properties. However, writing for the panel of Circuit Judges Restrepo, McKee and Smith, Circuit Judge Theodore McKee held that the allegations were sufficient to support a plausible inference of conspiracy.
The court stated that “AI software can facilitate collusion by enabling competitors to coordinate prices and share information without ever communicating with each other.”
The decision diverges from an August 2025 ruling by the Ninth Circuit, which affirmed the dismissal of a similar class action against Las Vegas casino-hotels that used the same Cendyn software.
Christopher Cormier of Burns Charest, counsel for the plaintiffs, said: “The ruling applies established legal principles in a common-sense way to modern technologies that have the capacity to cause widespread harm to competition and consumers across vital segments of the economy.”
Zach Fields, associate at Susman Godfrey, who argued the appeal on behalf of the plaintiffs, said: “We are encouraged that the first federal court of appeals to address horizontal conspiracy claims like ours rightly held that the use of AI-powered pricing does not immunize anticompetitive conduct from the Sherman Act’s reach. Antitrust law was always meant to adapt to the times and to protect consumers. Our clients look forward to having their day in court, and holding these defendants accountable.
“On a personal note, I’m incredibly grateful to our clients, Susman Godfrey, Burns Charest, and all class counsel for trusting a second-year associate to argue this important appeal.”
The case now returns to the district court.
