Jerry the Hat, 43, has been wearing his good-luck hat for eight years. It is an incredibly rumpled fishing hat with feathers in it and it is filthy. It is no ordinary hat because it exists under rigid rules. It is worn only until its daily 5 p.m. curfew. It is never worn inside Jerry's house, and it never travels across state lines.

Jerry lives in Las Vegas in a house that is bizarre. No, that's not strong enough: Jerry lives in Las Vegas in a house that is a model of wretched excess. On a tour of the place he punches a plastic Bozo the Clown that sits in a corner of the family room. In his office there is an orange basketball hanging from the ceiling; it was stolen from a banquet at a Final Four tournament. Hey, what's that buzzing? Oh, it's Donald Duck in a helicopter hanging from a light fixture. Please excuse Jerry, he has picked up his telephone—it is a Mickey Mouse telephone. He also has a talking clock and a model train that keeps jumping the tracks. And did we mention the huge stuffed animals everywhere?

This, in a nutshell, is Jerry the Hat—except for one bit of information as yet undivulged: his profession. You may find the idea too crazy to believe, but Jerry the Hat has a job that makes him an essential force in the lives of millions of Americans. Jerry the Hat, you see, is one of the handful of operatives who set the Las Vegas betting line on football, basketball and baseball games. It is true. The man with Donald Duck on his ceiling and the Mickey Mouse phone plays a key role in creating the point spreads on as many as 250 games a week for bettors from coast to coast.

Where did you think the Gospel according to Las Vegas comes from?...Miami 2½ over the Jets, Michigan 3 over Ohio State, Celtics 5 over the Knicks.... It comes from the likes of Jerry the Hat, a mere mortal known to the IRS as Jerry Taffel and to his friends as a somewhat flaky fellow who arrived in Vegas in 1974 from Minnesota, driving an old Chevy with expired plates and carrying $84 in his pocket.

It wasn't always this way. Time was, between 1967 and 1980, when The Line on all sports contests was set by one man, Bob Martin. He was truly the nation's odds-maker. Any sportswriter who wanted to know by how much Notre Dame was favored over Southern Cal called Bob Martin, and what he got was fact—it was The Line, and no one disputed it. Then Martin was convicted of transmitting wagering information across state lines by telephone and spent 13 months in prison. He has been back in Vegas for two years now, but at 67 he is pretty much retired. "I just have always known what was the right number," says Martin. "The right number fits like a glove."

Now that Martin is no longer doing it, the lead in setting The Line has been taken by the sports book at the Stardust Hotel, which did $143 million worth of sports bets in 1984. "There's just nobody as smart as Bob Martin around," says Scott Schettler, who runs the Stardust's sports betting operation. "If there was, he'd come to the top. No one has, so we're king. Everybody waits for our numbers at 8 a.m. every day."

Jerry the Hat has become a major influence on sports gambling in the U.S. because he is one of four men Schettler primarily relies on for establishing The Line at the Stardust. Another is Michael (Roxy) Roxborough, 34, the coat-and-tie antithesis of Jerry the Hat, an American University dropout who got hooked on the horses and blackjack and moved to Nevada in '73 because he devoutly believed that "it was my God-given right to be in Las Vegas." Jerry and Roxy are paid by Schettler for their expertise—$1,000 a month to the Hat, $1,400 a month to Roxy. The other two major Stardust consultants are one Bobby (The Owl) Beghtel, 51, a Los Angeles native who was the mascot for the basketball team at L.A. City College before he dropped out and went to Vegas 25 years ago, and Jeff Garrett, 28, a former Kansas City restaurant man who migrated to Vegas in 1980. Schettler listens carefully to, but does not pay, the Owl or Garrett. When there is disagreement in this learned quartet, Schettler, 43, a native of Grove City, Pa. who dropped out of the 11th grade when, shall we say, school lost interest in him, becomes the ultimate arbiter and picks a composite number.

Says Roxy, "One good person's opinion is good, but two good persons' opinions are better." Schettler is understandably skittish about comparing the merits of his experts, but he concedes, "You put Jerry in a room with the others for 10 minutes, and he'll have all their money." Hanging in the Hat's office, as if by way of confirming Schettler's words, are rows and rows of plastic-encased silver dollars, each one commemorating a big day. "I am not a gambler," Jerry says loftily. "I am an investor."

The Line does not really reflect deep analysis of which team will win a game—although Vegas goes out of its way to promote that myth. True comparative team strengths have surprisingly little to do with point spreads. What has everything to do with The Line is which team the public wants to bet on.

During the football season last fall the Hat spoke about this from behind a billow of pipe smoke at his kitchen table. "I favor Iowa, but the public will favor Michigan." He recommended that the Stardust start Michigan off as a 1½-point favorite. Why? Because all the Stardust wants—and all your corner bookie wants—is to have an equal amount of money on each side of any given betting proposition. If a team is a big favorite, the Stardust may start it off with an even bigger point spread than is warranted to ensure that money is bet on the underdog as well as on the favorite.

A gambler on football or basketball must bet $11 in order to win $10. (In sports such as baseball and boxing, odds are set and only winners pay off.) So, Gambler A bets Team A in a contest, and Gambler B bets Team B. Each man puts up $11, and therefore, a place like the Stardust ends up holding $22 from the two bettors. Gambler A wins and gets back his original $11 plus the $10, a payoff of $21. But Gambler B loses all $11. The house ends up with the extra $1. NFL football makes the most money of any sport for the books because its betting patterns are so predictable, relatively speaking, that it is easier to set a point spread that brings in cash on both sides.

"We are a grind joint," says Schettler. "We will get your money. Besides, gamblers always find a way to screw it up. That's the way they are."

During the 15-month period that ended last October, the Stardust had two losing months and 13 winners. In an autumn week the Stardust will typically handle $800,000 in bets on college football—generally setting a $5,000 limit on a single bet. On the pros the weekly action is about $700,000, with a $10,000-per-bet limit, although for the Super Bowl Schettler doesn't blink at $150,000 per individual. This is because he knows there will be enough money bet on the other side to offset such a wager. The system certainly works.

As successful as the Stardust is with its line, precious little formality—and even fewer facts—are involved in establishing it. Schettler confesses, "There is not one tangible thing to base your numbers on except the past record. And what happened in the past is useless."

If The Line is often dramatically "wrong," well, don't forget, it's just supposed to reflect how the public feels about the game.

Last college football season, Bobby the Owl made Washington a 31-point favorite over Oregon State. Roxy went to 39, the Hat went to 37, and Jeff to 38. Schettler, the arbiter, decided to hang up 37. Oregon State won the game and the Stardust lost $3,704. Similarly, nobody connected with the Stardust line had any doubts about the favorite when UTEP, which is one of college football's worst teams, played BYU, which is one of the best. Schettler put up the Cougars as 36-point favorites after his quartet of experts predicted 35, 37, 38 and 35. UTEP won the game 23-16.

Gamblers like to make The Line and the spread seem complicated or mysterious when, in truth, it's basically simple. The single most important factor for almost anyone establishing a spread in football and basketball is the use of power ratings. Perhaps the most respected power ratings are those provided by The Gold Sheet, an L.A.-based weekly news-letter that analyzes and predicts college and pro football and basketball games. The Gold Sheet ratings are simply numbers—the lower the better—that reflect a team's strength. The ratings are adjusted weekly, depending on how a team plays. If a team gets routed, its power rating will be raised a couple of points. Conversely, if it wins and looks good, the rating is dropped a point or two. It is not the most scientific of adjustments and indeed is sometimes rather arbitrary. In football, home field, for example, is always worth an extra one to four power-rating points. Last October Yale, with a Gold Sheet power rating of 41, was host to Penn, with a power rating of 42. Allowing two points for Yale's home-field advantage gave it a 39. So Yale was favored by four. Except that Penn won by 16. See how well it all works?

Jerry the Hat relies heavily on The Gold Sheet power ratings, but he always adds more than a dash of his own opinion. Here he's eyeballing the Alabama-Memphis State football game through his pipe smoke. He says, "There is such a class difference here. The game figures at four on the power ratings, but I have to make it Alabama by at least eight." Alabama won by 19 points, 28-9.

The NFL is infinitely more predictable and mechanical than the colleges when it comes to picking the point spreads. Any decent line-maker can knock off a whole Sunday/Monday NFL schedule in a matter of minutes. This is because everybody is something of an expert on the NFL. There are no secrets. As the abdicated king, Bob Martin, says of the difference between pros and collegians: "The whole world knows about the Dallas Cowboys and the Washington Redskins. On the other hand, does anyone know about Texas Tech and Southern Mississippi?" Whether college or pro, The Line can move rapidly during any given week because it is subject to quick adjustments, depending on how the money is coming in—and from whom. Money from the wise guys can substantially change a line, while cash from tourists or "squares" won't have any real effect. Last season Wyoming was put up by the Stardust as an eight-point favorite over Colorado State. The wise guys promptly jumped in and bet the underdog Rams so heavily that the Stardust was forced to reduce the number to six. Then Wyoming went out and lost the game by 11 points. Another example: Arizona was made a strong eight-point favorite over Stanford. The know-it-all sharpies leaped on the Arizona team at that number, so the Stardust responded by promptly increasing the spread to 10. Stanford won by 11 points.

The alltime nadir for the Vegas line? The 1979 Super Bowl between the Steelers and the Cowboys. "Everybody in this town," says Vic Salerno, president of the Nevada Association of Race and Sports Book Operators, "remembers where they were when President Kennedy was assassinated and when the Steelers beat the Cowboys 35-31." No wonder. Because the Steelers were solid four-point favorites, the game was a point-spread tie—a "push" in gambling lingo—and all money bet on them had to be returned. For the Stardust, the situation was even worse. The Stardust had let people take Dallas and 4½ points in a desperate attempt to get fresh money down on the Cowboy side. Because of that extra half point, Dallas beat the spread, and Stardust lost about $500,000.

This sort of thing makes a man philosophical. Not long ago, Schettler was sitting in his office at the Stardust, watching a full menu of events on a dozen TV monitors—eight football games and four horse races. He kept a sharp eye on everything that was happening on the tubes while he mused to a visitor, "There is just no equation to get to the right number. I'd rather go on a good feeling and a little bit of luck than on any scientific base." Of course, it's also nice to have the considered input of Jerry the Hat, who, back in his house, blows out a billowing cloud of pipe smoke and bops his friend Bozo one more time before he settles in to help produce the numbers that millions of Americans are waiting breathlessly to receive.

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CARL IWASAKI

Jerry the Hat wields considerable influence on millions of Americans' lives.

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CARL IWASAKI

Roxy is the buttoned-up opposite of the Hat, but they often agree.

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CARL IWASAKI

Schettler (above) tries to set The Line so that money is bet evenly on both sides, which assures that the Stardust money counters have plenty to count.

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CARL IWASAKI

Ex-line-maker Martin always knew "the right number."

"We are a grind joint. We will get your money. The gamblers always find a way to screw it up. That's just the way they are."