Hedge fund mogul David Tepper has a new bargaining chip in his high-stakes battle over troubled casino giant Caesars Entertainment.
A group of bondholders, including Tepper, are pushing back against Caesars’ efforts to transfer control of its first-of-its-kind player loyalty rewards program to a separate entity, The Post has learned.
The chain’s private-equity owners, led by Leon Black’s Apollo Global, are seeking approval from about a dozen state gaming commissions to make the move. Their first stop is New Jersey, where regulators were scheduled to vote on the issue Thursday.
Instead, the New Jersey Casino Control Commission tabled the request to grant a license to the rewards entity — Caesars Enterprise Services — until next month.
New Jersey’s Division of Gaming Enforcement confirmed to The Post that it’s investigating the license request and has not yet issued an opinion on whether it will recommend it.
However, Caesars’ unsecured debtholders have told New Jersey gaming regulators that if they allow the transfer to happen, Atlantic City will suffer as Caesars would likely put Bally’s Atlantic City and Caesars Atlantic City into bankruptcy, a source close to the creditors said.
Those would be two of the eight casinos left in Atlantic City. There were 12 when the year started, but four, including Caesars’ Showboat, have announced they are shutting down.
The move to split off the rewards program is the latest in a contentious battle to restructure Caesars as it struggles with an unsustainable debt load. Apollo and TPG Capital led the $30 billion buyout of Caesars in 2008.
In a bid to salvage their investment in the casino giant, Apollo and TPG last year split the chain into three companies — including one with faster-growing online assets and another with troubled brick-and-mortar casino operations.
Bondholders, including Tepper’s Appaloosa and Paul Singer’s Elliott Management, are fighting the maneuver in court, claiming Apollo is moving assets between entities to protect “good” assets from creditors as the rest of the company deteriorates.
Bondholders believe the split will make it easier for Apollo to put the original Caesars Entertainment into bankruptcy, while it pushes ahead with a newly created Caesars Growth Partners.
For the new Caesars to succeed, however, it will likely need the rewards program, which serves as a powerful customer tracking tool. It allows the casino chain to keep tabs on customer spending habits and incorporates that data into a slew of marketing programs.
Tepper and the bondholders would gain some significant leverage if New Jersey regulators stop the transfer.
If Caesars files for bankruptcy, it could get control of the asset and partner with a Caesars rival, such as Mirage Resorts, giving them the valuable customer lists, according to sources.
Meanwhile, Tepper’s Appaloosa and fellow creditors have recently filed a Delaware lawsuit to stop the Caesars split.
A Caesars spokesman said the creditors were acting out of self interest. Appaloosa and Elliot declined to comment.