Plaintiff hotel customers are challenging a district court’s dismissal of their restraint-of-trade claims in which they allege Law Vegas casinos used Rainmaker Group Unlimited, Inc.’s algorithmic software to facilitate anticompetitive pricing (Gibson v. Cendyn Group LLC, No. 24-3576, 9th Cir.; No. 2:23-cv-00140-MMD-DJA, D.Nev.).
Plaintiffs argue the agreements resulted in supracompetitive prices, citing direct evidence of price increases compared to benchmarks) and indirect evidence of market power and coordinated pricing. The casinos counter that the agreements do not limit their decision-making, and that using public pricing data is lawful. Plaintiffs refute these claims, emphasizing the agreements’ harmful effects. They abandoned their hub-and-spoke claim and seek reversal of the district court’s decision.
Rainmaker was an independent company specializing in revenue management and pricing optimization solutions, particularly for the hospitality and gaming industries. Defendant Cendyn Group, LLC, a provider of CRM and marketing automation tools for the hospitality sector as well, acquired Rainmaker to expand its capabilities in revenue management. Casino hotels named include Caesars Entertainment, Wynn Resorts, and Treasure Island, which licensed the software.
Summary of Plaintiffs’ Arguments
Vertical Agreements as Restraints
Plaintiffs argue to the Ninth Circuit that the District Court in Nevada erred in finding that the software license agreements between Rainmaker and Casino-Defendants were not “restraints” under Section 1 of the Sherman Act. They assert that every commercial agreement inherently restrains trade, and the legality of such agreements depends on whether they unreasonably restrain trade under the rule of reason. Plaintiffs allege that Rainmaker’s software distorted the competitive process by aligning prices among competitors, creating price floors, discouraging discounts, and increasing pricing power.
Direct Evidence of Anticompetitive Effects
Plaintiffs present empirical analyses showing that Casino-Defendants’ room prices increased at a higher rate than comparable benchmarks, such as the Venetian (a non-Rainmaker user) and a nationwide Casino Hotel Index. They argue these price increases are direct evidence of harm to competition.
Indirect Evidence of Harm
Plaintiffs allege that Casino-Defendants collectively hold significant market power (35–40% of the Las Vegas Strip market) and that Rainmaker’s algorithms facilitated coordinated pricing among competitors, harming competition. They argue that the relevant market (casino-hotel guest rooms on the Las Vegas Strip) is properly defined and supported by economic theory and public recognition.
Rejection of Defendants’ Arguments
Plaintiffs refute Defendants’ claims that the agreements do not limit decision-making and therefore cannot be restraints. They argue that the practical effects of the agreements—supracompetitive prices—are sufficient to establish anticompetitive harm. Plaintiffs also challenge Defendants’ assertion that the use of publicly available pricing data is lawful, emphasizing that the issue is the collective use of Rainmaker’s algorithms to replace independent pricing decisions.
Abandonment of Hub-and-Spoke Claim
Plaintiffs formally abandoned their appeal of the district court’s dismissal of their hub-and-spoke conspiracy claim, focusing solely on the Vertical Claim.
Summary of Defendants-Appellees’ Arguments
No Restraint of Trade
Defendants argue that the agreements between Rainmaker and Casino-Defendants do not constitute restraints because they do not limit the parties’ decision-making. They assert that the contracts merely provide pricing recommendations, which Casino-Defendants are free to accept or reject.
No Direct Evidence of Harm
Defendants challenge Plaintiffs’ statistical analyses, arguing that the Venetian is an inappropriate comparator due to its unique circumstances (e.g., temporary closures for renovations). They also claim that Plaintiffs’ use of the nationwide Casino Hotel Index is flawed because it includes goods and services beyond room rates.
Market Definition and Power
Defendants argue that Plaintiffs’ market definition (Las Vegas Strip casino-hotel guest rooms) is both too narrow and too broad. They also contend that Plaintiffs cannot aggregate Casino-Defendants’ market shares to establish market power without alleging a horizontal conspiracy.
Lawful Use of Public Pricing Data
Defendants assert that Rainmaker’s use of publicly available pricing data to generate recommendations is lawful and does not constitute anticompetitive conduct.
Plaintiffs’ Request
Plaintiffs ask the Ninth Circuit to reverse the district court’s dismissal of their Vertical Claim, arguing that the agreements between Rainmaker and Casino-Defendants unreasonably restrained trade and resulted in supracompetitive prices that harmed consumers.