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

The recommendation is designed to head off another case like the one involving a Poconos 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 A. DeNaples, and the controversy that followed, had damaged public confidence in the Gaming Control Board and its process of background checks for casino-license applicants.

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

DeNaples was charged by Dauphin County prosecutors in January 2008 with four counts of perjury over alleged lies 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 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 suspected that 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."

Wagner said, "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 specific recommendations on how to accomplish that. But in an interview yesterday, Wagner said he supported legislation backed by a group of House and Senate Republicans, Dauphin County prosecutors, and 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 stood 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.