I've been planning on him being arrested, but just today, it hit me: he could die from a heroin overdose. It would make a much more dramatic scene.
When things like that happen, I always feel like I've been planting my own clues. Or like that Alzheimer's joke: the advantage is that you can hide your own Easter eggs.
Too bad Denny has to die. I kind of liked him. But it's for the good of the book.