Lawsuit claiming travel firms cost Nevada millions in taxes can move forward

A legal fight alleging high-profile online travel companies avoided paying hundreds of millions of dollars in hotel room taxes in Nevada can move forward, the Nevada Supreme Court ruled after the companies tried to get the lawsuit dropped.

The decision comes out of a 2020 complaint that claims the companies negotiated with hotels to rent a room at a wholesale rate, but then marked up the price for consumers to the retail rate.

The travel companies allegedly calculated their tax obligations at the wholesale rate but collected taxes at the retail rate and pocketed the difference.

The suit seeks damages on behalf of the state against some of the biggest online booking businesses, including Orbitz, Travelocity, Expedia, Priceline and Hotels.com.

Dominic Gentile, the lead attorney representing the plaintiffs who sued on behalf of the state, said the Thursday ruling was a successful step forward.

“It was a win for us, but it was a win for the people,” Gentile said. “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.”

Lawyers representing the online travel companies in court did not immediately respond to requests for comment Friday afternoon.

The lawsuit was originally filed the Nevada False Claims Act, which prohibits anyone from knowingly concealing or improperly avoiding an obligation to pay money to state and local governments. It was filed by well-known Las Vegas communication consultants Sig Rogich and Mark Fierro on behalf of the state.

Nevada Attorney General Aaron Ford previously backed the suit.

Clark County filed a similar case in federal court that seeks to reclaim tax revenues. The judge dismissed the suit but the county filed for reconsideration, and no decision has been made.

In Thursday’s ruling, the Supreme Court decided that the civil suit could move forward because it was brought on behalf of the state, while the county’s action did not include the state’s involvement.

The room taxes pour hundreds of millions of dollars each year into the Las Vegas Convention and Visitors Authority, the Clark County School District, Nevada Department of Tourism, state and local general funds and other public agencies, according to the lawsuit. The funding makes up the majority of the LVCVA’s budget to promote Las Vegas tourism.

Gentile and his legal team estimate that more than $1 billion in lost revenues and damages could be recovered if the plaintiffs win a judgment at trial based on estimations from economists and reports from the Las Vegas Convention and Visitors Authority. The windfall would be split between state and county governments.

“There’s so much money at stake here that the litigation could go on for quite a while,” Gentile said.

McKenna Ross is a corps member with Report for America, a national service program that places journalists into local newsrooms. Contact her at mross@reviewjournal.com. Follow @mckenna_ross_ on X. Reporter Katelyn Newberg contributed to this story.