The earth's rotation rate is slowing down because of friction against the tidal bulges caused by the gravitation of the moon (major factor) and the sun (lesser factor). The earth's rotational energy is dissipated as heat, but where is the angular momentum going, and what physical mechanism brings that momentum there?
if the premise behind the question is correct (that the Earth's rotation is slowing down because of tidal bulges), then its quite simple. As said, the energy is dissipated as heat. Likewise, the Angular momentum is transfered to the individual particles along with the heat (momentum and energy are not separate concepts, but are linked)