SACRAMENTO -- Negotiators for Gov. Arnold Schwarzenegger and eight Indian tribes have moved forward rapidly on a long-term deal that would expand casino gambling operations while dramatically increasing payments to the state, sources said Tuesday.

The sources said a deal could be reached as early as April or May that would secure $500 million from the tribes for next year's deficit-ridden budget and 15 percent of gaming revenues annually for future budgets.

Schwarzenegger's 2004-05 spending plan projects an infusion of $500 million from California's gaming tribes to help reduce a $14 billion deficit, and tribal gaming insiders and other sources said the administration could achieve that goal and more before mid-May, when the governor's revised budget proposal -- called the "May revise" -- is due.

If the administration agrees to a compact for 50 years or longer that raises the cap on the number of slot machines allowed in tribal casinos and permits the addition of high-stakes games like craps and roulette, then some tribes might be willing to pay even more than 15 percent of their annual gaming revenue to the state.

"Negotiations are going well. They're proceeding in a constructive, sleeves-rolled-up atmosphere, focusing on the issues most important to the governor and the tribes. That includes the number of slot machines, market conditions and revenue payments," said Sacramento attorney Howard Dickstein, who represents some of the tribes negotiating with the administration.

The Schwarzenegger administration declined to comment on the specifics of the negotiations. But spokesman Vince Sollitto said the talks have gone well and confirmed that the governor would like to reach a deal by early summer.

The governor contends that the state is not receiving -- but should get -- its "fair share" of gaming revenue. He wants tribal projects built on sovereign reservation land to adhere at least somewhat to the environmental regulations governing any other development, and wants municipalities to have more input regarding how their jurisdictions are impacted by casinos.

"(Schwarzenegger's lead negotiator) Daniel Kolkey has reported that he has been encouraged by the receptivity of the tribes to the issues important to the governor," Sollitto said.

California has 107 Indian reservations, with 52 tribes operating gambling facilities. Of those, about 20 run medium to large operations and have the financial resources to expand if the administration proposes a deal that includes legalizing more Las Vegas-style games and lifting or eliminating the cap of 2,000 slot machines per casino.

For the eight tribes in talks now -- some of which are among the wealthier in a California industry estimated to generate as much as $6 billion in gross revenue annually -- another linchpin to any agreement could be the number of years it lasts.

Some successful tribes have begun diversifying their business interests but cannot finance projects for longer than 50 percent of the remainder of their current compacts, which in most cases expire in less than 20 years. A 60-year compact would enable tribes to secure the 30-year terms available to most businesses.

"While the number of slot machines is important, another factor is the length of the compact," one tribal insider emphasized.

Among the eight tribes negotiating now are the Viejas Band of Kumeyaay Indians near San Diego and the Morongo Band of Mission Indians near Banning. But some of the 52 gaming tribes have not sought to participate, while others -- like the San Manuel Band of Mission Indians near San Bernardino -- are waiting to see how the current negotiations conclude before deciding whether to seek a new compact.

Many tribes signed a 20-year compact with the administration of former Gov. Gray Davis in 1999, and San Manuel Tribal Chairman Deron Marquez said he sees advantages to immediately renegotiating those compacts with Schwarzenegger. But for now his tribe has chosen to stand pat.

At some point, the San Manuel will probably contact the Schwarzenegger administration and seek to renegotiate its current compact. When it does, the only two things open for discussion will be the number of slot machines allowed per casino and the percentage of revenue each machine generates that the tribe would be willing to pay to the state.

"Like any other venture, you want the market to dictate what you can and can't do," Marquez said.