CASCADE LOCKS, Ore. — Along the main drag of this Columbia River town, the signs of despair read "closed" and "for sale."

Many key businesses packed up long ago, others are leaving and the school is struggling to stay open. Most of the 1,100 residents drive elsewhere for jobs.

About 100 miles to the south, the Confederated Tribes of Warm Springs are having their own troubles. Unemployment on the reservation is about 26 percent. The tribal lumber mill is closing.

The tribes and many Cascade Locks residents also have this in common: They see building an Indian casino on the banks of the Columbia River as their salvation.

It is an ironic twist of history. Cascade Locks sits on part of 10 million acres ceded by the Wasco and Warm Springs Indians to the U.S. government in 1855. In exchange for the land, the tribes got government services, fishing rights and a 640,000-acre reservation.

Now many in the town and on the reservation hope the tribes will be permitted to build an off-reservation casino on a sliver of the land they gave up.

But the proposal has pitted tribe against tribe and neighbor against neighbor, and it has angered environmentalists who say a casino would be a blight on the Columbia River Gorge National Scenic Area, an 85-mile strip of river where the town is located.

Leading the opposition are the Confederated Tribes of Grand Ronde, which have a flourishing casino about 65 miles southwest of Portland. They worry that a Warm Springs casino in Cascade Locks, just 45 miles from Portland, would siphon off the city's gamblers.

Cheryle Kennedy, tribal chairwoman of the Grand Ronde, pointed out that the Warm Springs tribes already have a small casino on their reservation. The tribes say revenue from the existing casino is insufficient to help them out of poverty, and say they will close it if they can build at Cascade Locks.

Federal hearings have just begun on the proposal, but the debate started three years ago when Gov. Ted Kulongoski and the Warm Springs tribes signed an agreement that would allow Oregon's first off-reservation tribal casino.

Only three off-reservation casino applications have made it through the legal labyrinth since the federal 1988 Indian Gaming Regulation Act.

The off-reservation application for Cascade Locks is one of six the Interior Department recently allowed to proceed. Most of those rejected were judged to be too far from reservations to provide jobs for tribal members.

Cascade Locks isn't far from the edge of the reservation, but is about 100 miles each way from where most members live.

Some in Cascade Locks fear the casino, a 250-room hotel and several restaurants would run off the handful of businesses still here.

Mayor Roger Freeborn doesn't see it that way: "This community is limping along where we are now. There might be negative impact, but we think the positive will far outweigh it. We're comfortable to deal with that."

Cascade Locks was a boom town in the 1960s when Interstate 84 was being built, a new powerhouse was being added to nearby Bonneville Dam and the timber industry was thriving.

But when all that went away, Cascade Locks began to wilt. Today, there is no police department. The city buys 40 hours of coverage a week from the Hood River County sheriff's office.

"In the 1960s we had about 60 licensed businesses,"' said Charles Daughtry, port manager in this former timber town in the scenic Columbia River Gorge. "We now have about 12, and half of them are for sale."

Debora and Brad Lorang run an art gallery in Cascade Locks, having moved here to give their two children the small-town experience.

The Lorangs acknowledge that the casino, projected to draw an average 8,000 visitors a day to the town, could bring unwanted social baggage.

"But what do unemployment and despair bring?" asked Brad Lorang.