You've got to spend money to make money, Station executives say.

Capturing more of the booming locals casino business seems like a fairly simple task of "build it and they will come," some argue.

Clark County's population is expected to grow by about 4 percent this year, while employment will grow about 4 to 5 percent, according to statistics from UNLV's Center for Business and Economic Research.

But that's not all. Personal income will grow about 7 percent in the coming year — an indication that local casinos could capture more dollars from existing customers, not just money from people moving here.

As in the past few years, UNLV anticipates about 5,000 to 8,000 people will continue to move to Las Vegas each month. About one-third will leave again, but that still means more than 60,000 people each year who stay.

Station Casinos expects gaming revenue from locals casinos to grow to $3.8 billion by 2010, higher than Station's previous estimate of $3.5 billion. That compares to about $2.7 billion last year.

On a per capita basis, gambling revenue per person rose 10 percent last year to $1,480. That's a monster increase, as well as a big spending number. While the percentage increase is a good way to measure how much more people are gambling at locals joints, the value of the per person spending number is somewhat misleading.

The spending number is calculated by dividing Station's estimate of how much local casinos across the valley win from gamblers per year and dividing it by the local population.

The number makes more sense as a comparative benchmark. Using population growth estimates from UNLV and assuming that the local gaming revenue figure grows by about 2 percent per year — about the rate of inflation — that spending number would be $1,650 by 2010.

Future growth statistics are backed up by historic data showing that local gaming revenue has grown by about 10 percent each year for the past several years.

"There's nobody in this market that's positioned like Station Casinos to take advantage of that growth," Chief Financial Officer Glenn Christenson said. "Our primary focus over the next five years is figuring out how we can grab the lion's share of that (spending increase)."

The casino floor at Red Rock Resort is shown last week. Photo by R. Marsh Starks

Local gamblers are spending more in part because of the healthy economy and the fact that home prices have appreciated, giving residents more equity, he said. Interest rates also have gone up, which benefits seniors on fixed incomes, he added.

Which raises the question as to why Station needs to spend $925 million to draw Summerlin-area customers.

As big shareholders and long-term investors in the company, Station executives Frank and Lorenzo Fertitta say they're not building Red Rock for the first year's return or even the second year.

"This is a long-term project," Chief Executive Frank Fertitta III said during a recent conference call. "Over time you're going to get better returns than people that don't put in the full effort that we put into these projects."

In other words, build something fancy and you'll make more from wealthier customers who don't typically go to locals joints as well as your typical locals customer.

Wall Street appears to have accepted that notion, and analysts were generally wowed during a recent tour of the property in spite of disappointment about the lack of other news from Station about upcoming projects across in Las Vegas.

"Some may have questioned how (Station) spent over $900 million developing a local casino, but after seeing the quality of the rooms, restaurants, clubs, and public area it was clear that this may be a category-killer in the locals market," Goldman Sachs stock analyst Steven Kent said in a research note to investors last week. "The casino will have a broad appeal to locals and visitors of all ages."

Competitor Boyd Gaming Corp.'s South Coast property, which opened in December on South Las Vegas Boulevard, is "much less enticing than Red Rock despite only costing $300 million dollars less," Kent wrote.

Station is expecting Strip-like returns at Red Rock. Station's Green Valley Ranch resort, which is half-owned by the Greenspun family who also own In Business Las Vegas, generated more than $100 million in cash flow in its fourth year of operation. That's more than many mid-tier properties on the Strip.

While the company won't predict numbers for Red Rock, executives anticipate that growth to be at least similar to produced by Green Valley Ranch. Given that average household incomes in the Summerlin neighborhood are higher than those in the Green Valley region surrounding Station's Henderson casino, some are predicting bigger things from Red Rock.

Over the years Station has generated a return on investment in the high teens to low 20 percent range. That's generally higher than the Strip, where resorts are now looking at the low to mid teens given the higher cost of construction and maintenance capital needed to stay competitive.

"I can't tell you what the first year's cash flow is going to be, but in year three everyone's going to be real happy with what the return on investment is going to be," Fertitta said.