Third Circuit Revives Antitrust Claims Against Casino-Hotels’ Use of Algorithmic Pricing Software: Cornish-Adebiyi v. Caesars Entertainment, Inc.

On July 29, 2026, the U.S. Court of Appeals for the Third Circuit reversed the district court’s dismissal of a putative class action alleging that several Atlantic City casino-hotel operators (casino-hotel defendants) and their shared algorithmic pricing software vendor, Cendyn Group, LLC, participated in a hub-and-spoke conspiracy to fix hotel room prices in violation of Section 1 of the Sherman Act. Cornish-Adebiyi v. Caesars Ent., Inc., No. 24-3006, 2026 WL 2182291 at *2-3 (3d Cir. July 29, 2026). Taking the well-pleaded allegations of the consolidated amended complaint (CAC) as true, the panel concluded that the plaintiffs had plausibly alleged a horizontal price-fixing conspiracy; a restraint that, if ultimately proven, is treated as per se unlawful. Id. at *4.

In framing its analysis, the court drew on academic literature to distinguish between descriptive and predictive AI systems on the one hand, and prescriptive systems on the other hand. Id. at *3. The court observed that prescriptive AI systems, such as dynamic pricing algorithms, allow sellers to optimize pricing decisions in response to market conditions by drawing on a wide range of supply and demand data. Id. The court noted that researchers and legal scholars have suggested that, in some circumstances, such capabilities may also be used to facilitate coordination among competitors without traditional forms of direct communication. Id. The panel emphasized, however, that “[t]here is nothing inherently wrong [or anticompetitive] with using [algorithms] to engage more effectively in commercial activity, regardless of whether that activity is participation in the financial markets or the selling of goods and services.” Id.

I. Third Circuit Identifies the “Rim”

In its legal analysis, the Third Circuit focused on how the CAC plausibly alleged the “rim” of the hub-and-spoke conspiracy (i.e., a horizontal agreement among the casino-hotel defendants), contrary to the district court’s holding. Cornish-Adebiyi, 2026 WL 2182291 at *4. The district court had found the allegations a horizontal agreement insufficient for two principal reasons. First, it reasoned that the casino-hotels adopted the software over a 14-year period, which in its view undermined the allegation of parallel conduct — an important piece of circumstantial evidence for an antitrust conspiracy. Id. at *6. Second, it concluded that additional indicia of a conspiracy (plus factors) were lacking. In particular, the district court held that the plaintiffs had not adequately alleged how Cendyn’s algorithm “pooled” or “commingled” confidential pricing information among competitors, making the alleged information exchange less plausible. Id. The district court also found the conspiracy less plausible because the casino-hotel defendants retained final pricing authority under their contracts, allowing them to override Cendyn’s recommendations. Id.

The Third Circuit disagreed with each of the district court’s conclusions. On the sufficiency of information-exchange allegations, the Third Circuit rejected the view that the plaintiffs were required to plead in greater detail how Cendyn’s algorithm operates to facilitate the exchange of confidential information among competitors. Id. at *10-11. The panel found that such an approach would effectively impose a heightened pleading standard because it would require the plaintiffs to describe the mechanics of the proprietary “Rainmaker” software without the benefit of discovery. Instead, in the “context of AI-driven dynamic pricing,” the Third Circuit held it was sufficient for the CAC to allege that (1) “each casino-hotel knew and ‘understood’ that ‘the recommended room rates they were receiving from [Cendyn’s software] were based on real-time, non-public pricing and occupancy data [that] they and their co-defendants all were providing to the platform’”; (2) each casino-hotel understood that its co-defendants shared the same understanding; and (3) “the casino-hotels understood that each of them was committed to a common plan of setting room rates based on the recommended rates received from Cendyn’s software, the hub for their collective data, while also knowing that their competitors would not lower their room rates to take market share.” Id. at *10.

With respect to the casino-hotel defendants’ contractual final pricing authority, the Third Circuit held that such authority did not preclude the possibility that defendants’ partial delegation of pricing decisions to Cendyn served as an effective enforcement mechanism for the alleged conspiracy. Id. at *11. In particular, the panel found that the casino-hotel defendants’ alleged 90% compliance rate with Cendyn’s pricing recommendations was sufficiently high to support an inference of agreement. Id. That inference was reinforced by the alleged practical difficulties of deviating from those recommendations, as special override permissions were reportedly available only to select staff. Id.

The Third Circuit also concluded that the district court failed to consider many other allegations that, taken together, could plausibly support the inference that the defendants “agreed to fix their room rates through Cendyn’s dynamic pricing algorithm.” Id. at *7. It pointed to the plaintiffs’ allegations regarding the incongruence between the casino-hotel defendants’ pricing behavior and their individual economic incentives, statements from Cendyn’s former Vice President of Data Science and Analytics encouraging casino-hotels to avoid a “race to the bottom,” and Cendyn-led discussions involving industry executives on “best practices for maximizing room revenue and profitability while avoiding price wars.” Id.

The Third Circuit then proceeded to analyze the sufficiency of the allegations with respect to the specific types of circumstantial evidence underlying a horizontal agreement: parallel conduct and plus factors. Id.

II. Parallel Conduct: Synchrony of Rates and Occupancy

After reviewing key precedent, the Third Circuit reiterated that parallel conduct refers to similar or identical behavior among competitors that, while not independently sufficient to establish an agreement, may serve as circumstantial evidence of concerted action when accompanied by additional indicia of conspiracy. Id. When evaluating the plausibility of parallel conduct in this case, the panel found it irrelevant that the casino-hotel defendants adopted Cendyn’s software on various dates over a 14-year period because that was not the relevant parallel conduct alleged in the CAC. Id. at *8. Notably, the court observed that because AI-driven tools can adapt and adjust based on new data, collusive conduct may arise at later points in time irrespective of when each competitor initially adopted the software. Id. at *8 n.91. Instead, the appellate court identified two other forms of parallel conduct addressed in the complaint that it deemed sufficient:

• Contemporaneous Use of Software: The casino-hotel defendants’ contemporaneous and continuous use of Cendyn’s Rainmaker software as a “shared pricing agent,” through which each defendant provided its non-public, real-time pricing and occupancy data knowing that competitors’ data would inform the algorithm’s recommendations, constituted the parallel delegation of pricing decisions. Id. at *7. This was reinforced by the allegation that all casino-hotel defendants accepted Rainmaker’s pricing recommendations approximately 90% of the time. Id.
• Synchronized Price/Output Movement: During the class period, room rates increased significantly (between $15 and $60 per night) while occupancy rates simultaneously declined, a pattern that departed from the casino-hotels’ traditional business model of discounting rooms to drive gambling revenue. Id. at *8.

III. Plus Factors Supporting the Court’s Inference of Conspiracy

The Third Circuit then analyzed the sufficiency of the CAC with respect to various “plus factors” — additional indicia of conspiracy beyond parallel conduct. Cornish-Adebiyi, 2026 WL 2182291 at *9. Nevertheless, the court found that the casino-hotel context presented unique considerations that strengthened the inference of an agreement. Id. at *10. Notably, the court acknowledged that in an alleged oligopolistic market, the first two categories of plus factors — motive to conspire and actions against self-interest — may sometimes reflect conscious parallelism rather than collusion. Id. at *9.

The Third Circuit identified the following plus factors as reinforcing, in its view, the inference of an unlawful agreement:

• Motive to conspire: Extended financial hardship in the Atlantic City casino-hotel market following the 2008 recession, combined with structural market features such as high barriers to entry, lack of substitutes and high concentration, created strong incentive for coordinated pricing. Id. at *9.
• Conduct against economic self-interest: Casino-hotels maintained elevated room rates despite declining occupancy, even though in the casino-hotel context — where gambling revenue far exceeds room revenue — economic principles dictate reducing rates to attract more guests. Id. at *10. The court noted that this pricing behavior “would only work if casino-hotels could maintain higher rim prices knowing that other casino-hotels would not reduce their rates to compete for the pool of potential guests.” Id.
• Exchange of non-public commercial information: According to the Third Circuit, the casino-hotels’ mutual provision of proprietary pricing and occupancy data to Cendyn’s platform, which then incorporated that collective data into price recommendations disseminated back to all participants, plausibly supported an inference of information exchange among competitors that could underpin a price-fixing agreement. Id. at *10.
• Opportunities to conspire: Defendants participated in industry events and discussions led by Cendyn concerning “best practices for maximizing room revenue … while avoiding price wars,” providing forums for coordination. Id. at *7, *10.
• Sudden departure from longstanding business practices: The casino-hotels abandoned historically independent room pricing in favor of an interdependent, algorithm-driven system during the class period. Id. at *7-8, *9.

IV. Concerns and Considerations Regarding Pricing Algorithms

Finally, the panel offered concluding observations that appeared to cabin the scope of its holding to the specific allegations at issue. The court expressly acknowledged the caution urged by amicus curiae International Center for Law & Economics (ICLE) that courts should not “criminaliz[e] industry-wide use of the same algorithmic software,” but distinguished the allegations here as involving materially more than the common use of an off-the-shelf tool. Id. at *12. According to the panel, what could elevate otherwise lawful conduct, such as the “common use of independently-operated software to set production levels” into a plausible antitrust conspiracy is whether the “spokes” (i.e., competitors) supply non-public information to a collective “hub,” which then circulates pricing recommendations back to the spokes based on the aggregated data in circumstances where the spokes know that their competitors will not be undercut by the resulting rates. Id. Applying that framework, the Third Circuit held that Cendyn’s Rainmaker software was sufficiently alleged to “operate as a single decision-maker or hub, coordinating pricing for a majority of the market.” Id.

The court also invoked the analogy offered by former acting FTC Chair Maureen K. Ohlhausen: “Is it ok for a guy named Bob to collect confidential price strategy information from all the participants in a market, and then tell everybody how they should price? If it isn’t ok for a guy named Bob to do it, then it probably isn’t ok for an algorithm to do it either.” Id. (quoting Ohlhausen). This analogy underscored the court’s view that the functional effect of the alleged conduct — rather than the technological medium through which it occurs — is the appropriate focus of antitrust analysis.

The court was also careful to clarify that it was not making any assumptions or conclusions about how Cendyn’s dynamic pricing software actually works. Id. at *11. Rather, taking the plaintiffs’ allegations as true, it concluded only that the software was, “in effect, facilitating collusive conduct by receiving from each client non-public commercial information, and in return, giving each client the benefit of their competitors’ non-public data in formulating a price recommendation which Defendants purportedly agreed to comply with.” Id. The court further noted that while there may be independent business reasons for using dynamic pricing software, “there are rarely legitimate business justifications for affording competitors the benefit of commercially sensitive proprietary information under the circumstances alleged here.” Id.

Attorneys at McGuireWoods have extensive experience counseling and representing companies facing a host of different antitrust and competition issues. For questions about the Third Circuit’s ruling on algorithmic pricing, contact the authors of this alert.