Chad Schroeder is on the clock. He’s one of a dozen men seated around a U of tables in a conference room at the Bellagio hotel in Las Vegas on the first Friday of September. No one speaks. Not the chief psychiatrist at a hospital in Memphis; not the securities analyst from San Diego; not the Canadian political pundit; and not the movie producer behind Cruel Intentions and Donnie Darko, who is calling in from his home in Long Island, where he’s recovering from surgery. Schroeder sighs heavily, lets out a quiet “f––k,” and says, “Steven Jackson.” And with that, he has made the St. Louis Rams running back his third pick in the National Fantasy Football Championship’s Diamond League draft.
The Diamond may well be the world’s most serious fantasy football league. The entry fee is $10,000. The winner stands to pocket $80,000. It is the most expensive among more than 300 pay-to-play leagues run by the sports information company Stats, which holds its drafts in Las Vegas, New York, and Chicago, as well as online. More than 1,000 players, nearly all of them men, will spend a combined $2 million for the right to manage some 4,000 teams in Stats football leagues this season. There are a handful of other companies with high-stakes leagues, but none with a five-figure entry fee, according to Greg Ambrosius, who runs the Stats leagues. “There was a competing contest that did a $25,000 [league] at one point,” says Ambrosius, “and they actually did fill it. But they, of course, took the money and ran.”
Photograph by Nathanael Turner for Bloomberg Businessweek
Ambrosius runs a luxury tier of what is now a $1.7 billion industry with more than 34 million players, according to the Fantasy Sports Trade Assn. The fantasy here is to make believe that you are the manager of a group of actual professional players you’ve selected from various teams. Their success becomes yours. When they score touchdowns in real games, you get credit in a fantasy world. The vast majority of fantasy participants, says FSTA President Paul Charchian, pay much smaller entry fees, or dues, to whichever friend acts as the “commissioner” of their private league. Among the hundreds of thousands of customers at Charchian’s company LeagueSafe, which offers an online payment system for fantasy players, the average entry fee is $70, and 95 percent of his customers play for under $250. “That’s the biggest I know of,” he says of Stats’s Diamond League.
As the league’s reigning champion, Schroeder has a claim to being the world’s top fantasy player. His Diamond team is one of about 150 he’ll run this year—40 with Stats and the rest with a half dozen other companies. On Thursday night he simultaneously drafted a $5,000 Stats team at the Bellagio and one for another league over the phone. All together he’s spending about $180,000 on entry fees, some of which comes from partners who invest in his winnings. He also plays fantasy baseball and is currently leading Stats’s two richest baseball leagues, which could win him more than $225,000. None of this appears to be making him happy. “The thrill of winning is fun,” he says during a break between drafts on a patio overlooking the Bellagio pool. “But quite frankly, I get more angry at my failures than I enjoy my wins.”
For the past 12 years, since he lost his job as a stockbroker for Ameritrade when the tech bubble burst, Schroeder has been supporting himself with sports betting and fantasy games. Now 38 and living in Omaha, he says he’s made as much as $300,000, in a good year, from fantasy football alone. But good years are hard to come by. While we talk on the Bellagio patio, he downs a bottle of Bud Light and puffs on a cigarette. He’s wearing a pale blue Kansas City Royals T-shirt, shorts, flip-flops, and a Titleist baseball cap. His eyes look weary and he discusses his fantasy teams the way a burnt-out trader might talk about his book. “We were having a really tough time last year,” he says. “I’d never been through a football season where I was wrong on so many guys that I’d drafted.”
The hardened-pro vibe is the exception in the Da Vinci wing of the Bellagio’s convention center. For most players, the trip is a giddy escape where no one looks askance at spending thousands to pretend-own a football team, and solemn discussions of the merits of Ray Rice vs. Arian Foster are welcome. At the Bellagio, Rob Silver, the Toronto political analyst, doesn’t have to explain the agony of losing out on $50,000 “just because a bunch of [players] I’ve never met before colluded to have a historically bad week all at the same time.” No one questions why Paul Clein, the Memphis psychiatrist, wakes at 4 a.m. on weekdays to spend a couple of hours preparing for drafts or researching possible free-agent pickups. And Sam Andy, a retired high-school basketball coach, can joke about having missed his wedding anniversary for the past seven years without risk of scorn. “We got married on the wrong weekend. Who knew that 49 years ago?”
Ambrosius understands these men. A cheerful, 52-year-old Wisconsin native, he’s worked in the fantasy business since 1989, when Krause Publications hired him to launch Fantasy Baseball Magazine. He started hosting the live fantasy drafts in the spring of 2004 as a way to drum up interest in the magazine, which slumped with the rise of the Web. He added football in the fall of that year. Initially the drafts lost money, but paying prizes in full and on time, Ambrosius says, helped establish trust with customers. Last year, after some ownership shuffles, he partnered with Stats.
Because fantasy players have a rooting interest in almost every game, they are among the NFL’s best customers. The guys at the Bellagio all talked about Sundays spent in front of NFL RedZone, the league-owned cable channel that shows the key moments of every game live, or DirecTV’s pay package, which carries every Sunday game in its entirety. “It just makes Sunday so damn fun,” Andy says of tracking his teams.
While the NFL sees gambling as a threat to its integrity and opposes efforts to legalize sports betting outside of Nevada, it caters to fantasy players. In 2000, the league began offering its own online fantasy service. And two years ago, as part of its efforts to keep fantasy players and other fans from staying home to watch games, it authorized teams to show the RedZone channel in stadiums.
The NFL can sanction fantasy sports, and Ambrosius can run his high-stakes leagues, thanks to a few paragraphs in the Unlawful Internet Gambling Enforcement Act (UIGEA). The 2006 federal law clamped down on U.S. companies processing payments for sports bets but left an exception for fantasy games where “outcomes reflect the relative knowledge and skill of the participants.”
This is where guys like Schroeder come in. Before UIGEA, he did most of his wagering through overseas sports books that offered a wide array of so-called “proposition bets.” He made a killing, for instance, on the Florida Marlins at 110 to 1 odds to win the National League pennant in 2003. But UIGEA made these bets much harder to place, which cut down on the volume the houses need to turn a profit on them. With fewer prop bets on offer, Schroeder turned to high-stakes fantasy sports to make up the difference. But now the king of fantasy football pines for the simpler world of straight betting, where you don’t have to spend your hours hunting for a replacement for an injured tight end. “I don’t enjoy it,” he says. “I don’t handle the stress of things too well sometimes. I’m used to gambling. If you have a bad day, it’s over.”