Caesars ‘loyalty’ ruling a win for Leon Black’s Apollo

Score one for Leon Black.

In one of the most heated battles in Atlantic City, Black's Apollo Global Management won a major victory over David Tepper — getting the okay from state regulators to transfer control of the highly valued player loyalty rewards program from its money-losing Caesars Entertainment into a new sister company.

The transfer, to Caesars Enterprise Services, takes it outside the reach of Tepper's Appaloosa Management — a move Tepper fought long and hard to prevent.

Appaloosa is a junior creditor of Caesars Entertainment, which owns Bally's Atlantic City and Caesars Atlantic City, two down-on-their-heels casinos.

If Apollo put Bally's and Caesars into Chapter 11 reorganization, the loyalty program could have given Appaloosa and other junior creditors some leverage.

Without it, the junior creditors are likely to get little return, sources close to the situation said.

The decision by New Jersey gaming regulators to allow the transfer — released Sept. 26 — increases the likelihood of a bankruptcy filing by the two casinos, sources said.

Before the loyalty-rewards program can officially be transferred, other state regulators where Caesars operates must also approve the move.

A fourth company, Caesars Entertainment Resort Properties, owns Harrah's Resort Atlantic City, the strongest among the chain's three Atlantic City casinos.

In a bid to salvage its investment in the casino giant, Apollo last year split the chain into three companies — including one with faster-growing online assets and another with troubled brick-and-mortar casino operations.

In addition to winning the right to transfer the loyalty program, Caesars announced last week that any proceeds creditors gain from suits against Caesars for fraudulently transferring assets between its companies would go first to first-lien bond holders.

That means even if junior creditors, like Appaloosa, were to win in court they may not collect the proceeds.

"I think Tepper is in a hard spot," a gaming analyst, speaking on the condition of anonymity, told The Post.

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