The Nevada Supreme Court has ruled that a lawsuit involving big-name online travel sites and their alleged avoidance of hotel room taxes in the state will move forward, despite the firms’ attempts to dismiss the suit.
The claims were first brought to light back in 2020, when several high-profile sites—including Expedia, Travelocity, Hotels.com, Orbitz and Priceline—were accused of negotiating with hotels to rent rooms at discount prices and subsequently marking up the prices for consumers.
According to the suit, the sites then used the discounted rates when accounting for their own taxes but then used the retail rate for collecting them, creating a difference that the firms then pocketed.
The head attorney for the plaintiffs seeking damages on behalf of the state, Dominic Gentile, told the Las Vegas Review-Journal that the ruling was “a win for us, but it was a win for the people.”
“When we get to the end of this lawsuit, if we successfully obtain that money, a whole lot of money goes into funding education and other services,” Gentile added.
Neither the sites nor their attorneys gave comment to the newspaper.
The suit, which was filed by local consultants Mark Fierro and Sig Rogich on the state’s behalf, alleges that the sites have operated in violation of the Nevada False Claims Act, which bars any entity from attempting to avoid or conceal obligations related to paying local and state governments.
A similar suit was also filed by Clark County in federal court, but was dismissed; the county has appealed the decision, and is awaiting another ruling.
In its September 29 ruling, the Supreme Court held that the suit could move forward because of the state’s involvement, indicating that the county’s action may not hold up for the same reason.
Several state-funded agencies, including the Nevada Department of Tourism, Clark County School District and the Las Vegas Convention and Visitors Authority, rely on revenue generated by the room taxes.
Gentile indicated to the Review-Journal that the “litigation could go on for quite a while,” given the amount of money at stake. He and his colleagues estimate that the potential damages could reach $1 billion or more, which would be allocated to both state and county initiatives.
