Federal Appeals Court Revives Lawsuit Alleging AI Software Fueled Price-Gouging by Atlantic City Casinos

A federal appeals court has revived a proposed antitrust class action accusing major Atlantic City casino-hotels of using an AI-powered pricing platform to coordinate room rates and overcharge guests. The Third U.S. Circuit Court of Appeals in Philadelphia ruled Wednesday that the plaintiffs’ claims were strong enough to move forward, reversing a 2024 dismissal by a New Jersey district court.

The case, Cornish-Adebiyi v. Caesars Entertainment, Inc., targets five of Atlantic City’s nine casinos — Borgata, Hard Rock, Caesars, Harrah’s, and Tropicana — along with software company Cendyn Group. Plaintiffs allege the properties fed sensitive internal data, including real-time pricing and occupancy figures, into Cendyn’s Rainmaker platform, an AI-assisted revenue management tool that generates recommended room rates.

How the Alleged Scheme Worked

According to the complaint, each casino shared confidential booking information with Rainmaker, such as reservation activity for a given weekend. The software then aggregated that data across competing properties and spit out optimized pricing recommendations. Plaintiffs claim the participating casinos adopted those AI-generated rates roughly 90% of the time, effectively keeping room prices elevated in a market that would ordinarily see prices pushed down by competition. That pattern, the appeals panel found, is enough on its own to support an inference of illegal coordination — even without proof that executives from rival casinos ever directly communicated.

U.S. District Judge Karen Williams had dismissed the case in October 2024, ruling that plaintiffs failed to show how the hotels actually used the confidential data once it reached Cendyn. But a unanimous three-judge Third Circuit panel — Judges Theodore McKee, L. Felipe Restrepo, and D. Brooks Smith — disagreed, holding that the plaintiffs deserve a chance to gather technical evidence about how the software functions before any motion to dismiss is granted. The panel didn’t mince words about the broader stakes, writing that “AI software can facilitate collusion by enabling competitors to coordinate prices and share information without ever communicating with each other.”

A Split With the Nevada Case

The ruling is notable because it diverges from a nearly identical lawsuit out of Nevada, where the San Francisco-based Ninth Circuit tossed a similar case against Las Vegas casinos in August 2025. That split between circuits — one appellate court reviving an AI price-fixing claim while another rejected one built on the same underlying theory — could eventually put the issue in front of the U.S. Supreme Court, and it’s already drawing attention from antitrust watchers who see algorithmic pricing as the next major battleground in consumer protection law.

The case now returns to the District of New Jersey, where plaintiffs will move into a discovery phase and attempt to build a factual record on exactly how Rainmaker’s algorithm used competitor data. Legal representatives for the plaintiffs, from the firm Susman Godfrey, have called the decision the first federal appellate ruling to directly address horizontal price-fixing claims built around a shared AI platform, arguing it reflects how modern collusion increasingly happens through algorithms rather than back-room handshakes.

What It Means for Atlantic City Visitors

For now, nothing changes for guests booking rooms at Atlantic City casinos — the ruling only allows the lawsuit to proceed, it doesn’t establish that any price-fixing actually occurred. But the case is a reminder that room rates, like odds at a sportsbook, are increasingly shaped by algorithms rather than simple supply and demand, and regulators and courts are only beginning to sort out what that means for competition law. If the plaintiffs can show through discovery that the Rainmaker system did more than just recommend prices — and that casinos leaned on shared competitor data to keep rates artificially high — the case could reshape how revenue-management software is used across the hospitality and gaming industry well beyond New Jersey.