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First of all, I do not think that you can say Israel practices genocide since the population of Palestinians in Israel has increased from 156,000 in 1948 to more than a million. As to whether Israel is a racist state; this is much more problematic. In its inception, Israel was not a racist state, but after years of Arab attacks and internal rebellions, Israel may have a more racist attitude than previously. It is important to remember that when Israel became a nation, there had been no Palestinian state, nor a state of Jordan, or Lebanon for more than 1000 years if ever. The original Israeli government never asked Palestinian people to move, or leave the country but at the urging of other newly founded Arab states such as Jordan, they left in droves. There they have never been resettled by the countries who invited them to come, but have spent generations in refugee camps.
There is a definite economic gap in Israel between Palestinians and Jews who live there, and while some of the gap is definitely due to discrimination, much of it may also be due to self imposed separatism and revolt. Israel is not perfect in any sense, but I believe that much of their prejudice against Palestinians came after the many Arab Wars rather than before.
Some of this information comes from Western Civilization, by Jackson Spielvogel.
The simple answer, is that no, Israel is not a racist state. However, it is a state where one religion and culture is valued over others-- race does not really come into the equation.
In Israel, the US State Department notes that there are vast inequalities between the state's Jewish and non-Jewish citizens. Education, infrastructure, jobs, housing... the list goes on and on. It is demonstrably true that to be a Jew in Israel is to belong, otherwise you face daily economic, social, and cultural discrimination.
The areas of the Palestinian territories are a different story-- there we do not see "discrimination" because the citizens are not citizens of Israel and are rather under military occupation with limited rights and daily violence and denial of basic rights and services. Is it racist? I do not think so, it is more related to trying to expand Israel rather then the hatred of any specific race or religion.
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