HARRISBURG - The state Supreme Court ruled yesterday that a grand jury in Dauphin County could continue to examine whether a Poconos casino owner lied to state gaming regulators in his bid to win a coveted slots license.

The ruling is a blow to Louis A. DeNaples, owner of Mount Airy Casino Resort, who had asked the court to scuttle the investigation, alleging that Dauphin County District Attorney Edward M. Marsico was overstepping his authority.

It ended a two-month high-court-imposed hiatus for the grand jury and also set up the possibility that DeNaples - a central figure in the probe - will be compelled to go before the panel. In October, the high court temporarily froze the grand jury - and a subpoena for DeNaples to testify - pending its review.

Before the Supreme Court were allegations by DeNaples' attorneys that Marsico was spearheading a "rogue" investigation based on politics and distaste for how the Gaming Control Board conducted background checks on slots applicants.

But the court limited itself to the central question of whether Marsico had the authority to use a grand jury to investigate. It found that the district attorney shared that power with the state Attorney General's Office, which had ceded the case to Marsico months earlier and defended the district attorney's "concurrent jurisdiction" in the case.

"The essentially political points that [DeNaples' attorneys] allege - a runaway district attorney unhappy with the board's licensing decision, pursuing an agenda - are not relevant to the task of interpretation. The Gaming Act, as written, authorizes the investigation here," Justice Ronald D. Castille wrote on behalf of the high court.

In court briefs unsealed yesterday, the District Attorney's Office argued that, with his motion, DeNaples was seeking a "get out of jail free card."

Marsico applauded the court's ruling.

"It allows our grand jury to proceed, which is good news," said Marsico, who declined to elaborate, citing the secrecy surrounding grand jury proceedings.

Attempts to reach Kevin Feeley, DeNaples' spokesman, and Theodore J. Chylack, a DeNaples lawyer, were unsuccessful.

A political and business power in the Scranton area with large land holdings and widespread business interests, DeNaples, 66, won his license after assuring state regulators that he had no connection with William D'Elia, a reputed mob boss in Northeastern Pennsylvania.

Court briefs unsealed yesterday confirmed that the grand jury was examining perjury charges against DeNaples.

His $412 million casino in Paradise Township opened Oct. 22.

The seven-member Supreme Court was unanimous in the ruling, although Chief Justice Ralph J. Cappy and Justice Cynthia Baldwin expressed concern about the "perils" of giving too much power to a local prosecutor.

In a concurring opinion, Cappy wrote that Marsico elevated himself to the role of "a super-prosecutor of purported gaming violations merely due to the geographical circumstance that he presides in the county in which the politically charged gaming legislation was enacted."

In a footnote, Cappy also took a swipe at how the investigation was being handled in light of what he called "obvious" leaks of grand jury information to the media. "This smacks of a personal quest of someone either seeking personal aggrandizement or a vendetta against a family or an ethnic group," Cappy wrote.

Marsico, who is half-Italian, took exception to that. "Any contention by the chief justice that myself or my office would act based on someone's ethnic background is ridiculous," he said. "And, frankly, it's insulting."

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