Sept. 23 (Bloomberg) -- Democrats are counting on shifting demographics, a surge in voter registrations and a wobbling economy to carry Nevada this year. The Republicans are counting on tradition and a ticket headed by two Westerners.

While both parties acknowledge the race is tight, Nevada is one of four Western states -- along with Colorado, New Mexico and Montana -- the Democrats believe can shift from red to blue as the worst crisis in the financial markets since the Great Depression deepens anxieties over the state of the economy.

Nevada, which voted Republican in eight of the 10 last presidential elections, has had the highest U.S. home- foreclosure rate for the past 19 months. Tourism, the top industry, is in trouble, and gaming revenue has fallen for seven consecutive months. Unemployment is 6.6 percent, above the national average.

``This is definitely ground zero for the economic meltdown,'' said David Damore, a political science professor at the University of Nevada in Las Vegas.

Foreclosures

Barack Obama, the Democratic presidential candidate, is focusing on the state's Hispanic community, which has been particularly affected by the housing crisis; in Las Vegas alone, more than 25,000 homes owned by Hispanics have been foreclosed.

Hispanics account for more than 25 percent of Nevadans, up from 20 percent in 2000. In 2004, they made up 13 percent of eligible voters, a number that may be 50 percent higher this year, according to the Washington-based Pew Hispanic Center.

Still, Republicans said the Democrats are too optimistic and that their presidential nominee, Arizona Senator John McCain, has galvanized his base with his choice of Alaska Governor Sarah Palin as his running mate.

Underscoring Nevada's importance, Palin chose Carson City for her first solo campaign appearance, on Sept. 15.

``There's going to be a tremendous emphasis on Nevada,'' said Rick Gorka, the McCain campaign's regional communications director.

The Palin nomination is already paying off, he said. Before the convention, new campaign volunteers averaged `a few hundred a week.'' Now it's ``well over 1,000 per week,'' Gorka said.

Clinton Backers

The Obama campaign may also have a Hillary Clinton problem, particularly with women and Hispanics, who supported the New York senator by a 2-to-1 margin in the Democratic primaries and have been hesitant to embrace the party's nominee.

Jan Terry, a former Clinton delegate and a keynote speaker at a McCain event last week in Las Vegas, said Clinton's loss is pushing many women like her toward the Republican candidate.

``All of her supporters know how she was railroaded and treated,'' said Terry, a 48-year-old retired business manager.

The challenge presented by the Latino vote was on display at an Obama rally in Las Vegas this month, which drew few Hispanics, even though it was held in a largely Latino neighborhood.

``There have been problems getting together'' for Obama, said Ricardo Castillo, a journalist for El Mundo, a Spanish newspaper in Las Vegas. ``They wanted Hillary Clinton.''

Sue Lowden, chairwoman of the Nevada Republican Party, said Obama can't count on the support of all Democratic voters.

`Democrats for McCain'

``We have a huge number of Democrats who are part of our `Democrats for McCain,' so the numbers this time around as far as registration do not mean as much to us,'' she said.

In response, the Democrats are sharpening their message on the economy and pouring resources into the state, where the unemployment rate in August rose to its highest level since 1985 and one in 75 houses was subject to a foreclosure filing.

Obama's campaign released new television advertisements targeting women and Hispanics, including Spanish-language ads. On Sept. 17, he held a rally at a baseball stadium in Las Vegas, where he cited statistics showing that one of three Latinos doesn't have health insurance.

``The Hispanic community has been especially hard-hit'' by the economic crisis, the Illinois senator told a crowd of about 14,000 at Cashman Center. ``Home values are falling, your paychecks don't go as far as they used to.''

Bill Clinton

Over the last 40 years, only one Democratic presidential candidate, Bill Clinton, has carried Nevada. He won the state narrowly in 1992 and 1996.

This year, the Democratic Party in Nevada has registered almost 80,000 new voters, shifting the registration balance from a 6,000-voter Republican advantage in 2006 to a 70,000- voter Democratic edge. The Obama campaign said that could make all the difference because President George W. Bush's victory margin was only slightly more than 21,000 votes in both 2000 and 2004.

``We just have to turn out really a fairly small percentage of these Democratic voters,'' said Kirsten Searer, an Obama spokeswoman in Nevada.

The outcome in Nevada will depend on whether the nation's economic troubles will allow Obama to appeal to some of the groups he needs to win, said Eric Herzik, chairman of the political science department at the University of Nevada in Reno.

``The ball's in Obama's court,'' Herzik said.

To contact the reporter on this story: Heidi Przybyla in Las Vegas at hprzybyla@bloomberg.net

Last Updated: September 23, 2008 00:00 EDT