INDIAN ISLAND – The debate over whether Maine is a racist state controlled by wealthy elitists doesn’t mean a lot to those living on Indian Island, struggling to pay their bills.

But the claims of racism and elitism made by tribal leaders after voters rejected a $650 million casino proposed by the Penobscot and Passamaquoddy Indians ring true to many living here.

The Penobscots and Passamaquoddys, who were somewhat overlooked in the public debate over the casino, can’t help feeling angry and frustrated. Like many others, they were counting on the casino to secure good-paying jobs and stem the tide of young people leaving Maine.

“I think they really had expectations because of the way we presented it to the state as being for everybody,” said former Penobscot Gov. Tim Love. “There was no willingness of our opponents to clarify the issues. There was an attempt to confuse.”

Focusing their campaign on job creation, the Passamaquoddys and Penobscots estimated that the casino and resort would create 10,000 new jobs and generate $100 million a year in state revenues.

It wasn’t the first tribal casino proposal to fail. In 1994, the Legislature voted down a bill to allow a casino in Calais.

But this latest defeat is hitting tribal members hard.

“I think people really had expectations, because of the way we presented it to the state as being for everybody,” Love said. “People are taking it on the chin.”

The disappointment over the 2-1 ratio against the casino is compounded by accusations of racism.

That’s because voters rejected the Indian casino, but gave their approval to slot machines at harness-racing tracks. The result is that Mainers will be able to play the slots at a racino at Bangor’s Bass Park, just 10 miles from the reservation, with the tribes receiving none of the profits.

That has left a bitter taste among tribe members.

“If it’s not Indian, they’ll pass it. They passed the racino,” said S.C. Francis, owner of the Penobscot Indian Art store in Old Town.

His wife, Cheryl Francis, said she doesn’t feel racially discriminated against as an individual. But, she added, the casino debate seemed to have brought out the worst in people.

“There has been some very racial comments made in signs, in verbal, leaving messages,” she said.

After the vote, Penobscot Chief Barry Dana issued a sharply worded statement blaming Maine’s wealthy elite for undermining the tribes’ proposal by bankrolling a campaign filled with lies.

“Once again this elite used all the power and influence their money could buy to keep Maine the way they want it to be,” Dana said.

On election night, Robert Newell, governor of the Passamaquoddys’ Indian Township, described Maine as a “racist state.”

The 560 or so residents of Indian Island live for the most part in small, modest homes and work in Old Town and the surrounding area. The median household income is $24,000, and the 2000 U.S. Census lists only 28 college graduates among the island’s 560 residents, well below the national average.

Penobscot member Brenda Fields said things are changing for the better, but slowly. More young people are getting college degrees, but they often move out of state to make a living because of the lack of jobs in Maine, she said.

“There’s a lot more people getting an education, and the question is what will they do now,” she said. “I hope Maine does have a plan. I sincerely do, and I hope it’s not too late.”

Opinions about what to do next are mixed.

Federal law requires that any Indian casino be located on Indian property. Under existing federal law, Maine is the only state in which the Legislature has the power to veto plans to build casinos on tribal land.

In addition, even among the state’s estimated 5,600 Indians, the casino wasn’t unanimously wanted. Penobscots living on Indian Island voted 271-19 in favor of the casino. The Passamaquoddy Reservation at Pleasant Point posted a 339-13 victory for the casino, and Indian Township had a 376-10 vote in favor.

Some think the tribes should give up the idea of a casino altogether and concentrate on building businesses that would put people to work.

“We go for these big pie-in-the sky ideas like a casino,” instead of investing in smaller ventures, said Penobscot member Eric Nicolar.

Dana has said he will reconvene parties that supported a casino to help determine the next step. But Love said it’s still too early to think about the future because emotions are too raw.

“Our intentions, we think, were honorable, and we think it’s sad,” he said.