SAN FRANCISCO, Oct 16: California Governor Arnold Schwarzenegger has a warning for state voters: "The Indians are ripping us off."

Arnold Schwarzenegger has taken up the line to convince them To reject a tribe-backed initiative on the Nov. 2 ballot that would allow rapid expansion of American Indian casinos in the nation's most populous state and derail the governor's own effort to manage casino growth.

Some critics say the governor is going too far with his campaign - tapping a deep vein of hostility that dates back to the settlers' conquest of the U.S. West.

"His statement touches on racism," said Virgil Moorehead, chairman of the Big Lagoon Rancheria tribe in northern California. "It's so uneducated and so far-fetched to say that we are ripping off the state."

Added Victor Rocha, an American Indian who edits a Web site related to casino gambling: "I don't think it is racist but it sure fans the flames of racism by going and saying that and just having that type of hatred of Native Americans."

American Indian casinos have expanded dramatically across the United States since the late 1980s following court rulings and new laws.

The expansion helped some tribes rise from poverty, but it also triggered a backlash. Schwarzenegger made casino payments to the state an issue in his run for governor last year, saying tribes were not paying their fair share.

"There always has been resentment of any special thing that the Indians seemed to have, whether it was their land or whether it was business concessions," said Robert Berkhofer, author of a 1978 book on American Indians. "In California there is lots of residual racial antipathy."

Schwarzenegger spokesman Vince Sollitto said the governor's comments about Indians "ripping us off" referred to tribes that back Proposition 70, which would allow the expansion of casinos in return for payments on par with state corporate taxes.

Schwarzenegger earlier this year struck a deal with five tribes to guarantee payments by Indians, who have a monopoly on slot machines. The ballot measure would nullify that deal and set the payments at the corporate rate of 8.84 percent.

It also would allow tribes to sign contracts with the state to operate as many slot machines as they want on their land and introduce roulette and craps, both of which are now banned in California.

UNEVEN PROSPERITY: Experts say the debate overlooks the fact that many tribes have no casinos.