HARRISBURG - State Auditor General Jack Wagner called on legislators today to rewrite the state's five-year-old slots law to clarify what information should be shared among law enforcement agencies when a casino applicant is investigated.

The recommendation is designed to head off another case like one recently involving a Pocono casino owner who was accused of perjury only to have the charges dropped.

In a special performance audit, Wagner said that confusion over how a slots license was awarded to Louis DeNaples, and the public controversy that followed, has damaged public confidence in the Gaming Control Board and its process of background checks for casino licensees.

"The system simply must be fixed so that a situation like this does not occur in the future," he said, noting that the gaming board still has to issue two remaining casino licenses.

DeNaples was charged by Dauphin County prosecutors in January 2008 with four counts of perjury for allegedly lying about his ties to crime figures during interviews with regulators as he sought a license to open the Mount Airy Casino Resort.

Prosecutors dropped the charges in mid-April in a deal that had DeNaples turn over ownership of the casino to his daughter.

The state's slots law designates the gaming board's Bureau of Investigations and Enforcement as a "criminal justice agency."

But, the Pennsylvania State Police and the FBI do not recognize that designation. As a result, state police commanders, who had suspected DeNaples lied to the gaming board, did not share those suspicions with investigators before the board approved his license in December 2006.

The audit recommends that the gaming board "take the lead in seeking an immediate legislative change to clarify and better define the roles of all entities involved in sharing investigative information."

Said Wagner, "Jurisdictional gray areas must be eliminated to reassure the public that Pennsylvania's gaming industry is the cleanest and most professional in the nation."

The audit fell short of making specific recommendations on how to accomplish that. But in an interview today, Wagner said he supported legislation - backed by a group of House and Senate Republicans, Dauphin County prosecutors and even Gov. Rendell - that would hand over the background checks to the state police or the Attorney General's Office.

Gaming board spokesman Doug Harbach said the agency stands behind the work of its investigative division.

Out of 27,000 background investigations of prospective casino owners, vendors and employees, he said, "only a couple have even been called into question."

"We know that they are working effectively," he added, "and the proof is in those numbers."

Contact staff writer Mario F. Cattabiani at 717-787-5990 or mcattabiani@phillynews.com.