Blair's deputy lands in new sleaze row over casinos

LONDON, July 5 (Reuters) British Prime Minister Tony Blair's deputy, John Prescott, today faced an official investigation into his contacts with an American billionaire who hopes to open a massive casino in London.

The latest revelations about Prescott, who has also embarrassed his boss by having an affair with his secretary and keeping a free mansion, follow months of allegations of sleaze and mismanagement in Blair's government.

Parliament's Standards Commissioner said he was launching a preliminary inquiry after Prescott said he had stayed at a ranch owned by US oil and entertainment mogul Philip Anschutz, who wants to turn London's Millennium Dome into a casino.

''Having considered the matter, (the Commissioner) thinks there is probably enough substance in the allegation to warrant further investigation,'' said a spokeswoman for Sir Philip Mawer.

Combative Prescott, known for punching a member of the public who hurled an egg at him at a 2001 election rally, sought to calm critics by entering the stay in a register of interests.

But he insists he has done no wrong as he has no power over gambling licence decisions. Opposition Conservatives smelt blood.

''Why on earth did the Deputy Prime Minister, the second most powerful political figure in the land, have seven meetings with somebody who wants to bid for the only slot available for a regional casino?'', said Conservative Hugo Swire on BBC Radio.

He also argued Prescott's department was responsible for planning policy, including issuing guidance for casinos.

Some Labour lawmakers were also uneasy.

''It does lead to a perception things were going on which clearly weren't going on,'' Labour's Rob Marris told BBC Radio.

Blair, who promised Labour would be ''whiter than white'' when it took power in 1997, has backed Prescott despite lurid headlines after he cheated on his wife.

But he was stripped of most governmental responsibilities, and later gave up a free official country residence after he was photographed playing croquet on its lawn in working hours.

Critics say he should go but losing Prescott would hurt Blair, whose spokesman said he had confidence in his deputy.

The former ship's steward has links to the party's left wing and is one of the few figures able to soothe tensions between Blair and his likely successor, finance minister Gordon Brown.

Prescott's exit could prompt calls for Blair, who has said he will not stand in 2009's expected election, to step down and allow simultaneous elections for Labour's leader and deputy.

REUTERS SHB RK2030