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Making a Fortune in Fantasy Sports

The stakes are getting higher—much higher

After graduating from high school more than 40 years ago, Joseph Sentef decided that college could wait. Sentef was an accomplished chess player, a U.S. master, and he wanted to play professionally. He was doing OK, as he recalls, until “my mother told me basically to stop playing games and go get an education.” So Sentef enrolled at the University of Mississippi, where he managed to win a national intercollegiate title for Ole Miss. After starting at the University of Mississippi School of Medicine, however, he largely put chess away. “Unfortunately, once you get into medicine,” he says, “you don’t get to play that many games anymore.” 

That may have been true for a long time, but last fall the 61-year-old family-medicine doctor from Chattanooga, Tennessee, decided he was ready to get back to playing games—for money. Big money, actually. Sentef’s son and some of his friends had become regular players at a daily fantasy sports website called FanDuel. They selected athletes from various professional sports, placed bets and, based upon the real-life performance of those players, won or lost money. Intrigued, Sentef opened an account and deposited $200. By the time the football season ended, he had won $25,000. Recently, Sentef bested a field of 900 to win a seat in FanDuel’s World Fantasy Baseball Championship and in August competed against 89 other players for a prize pool of $4 million.

Fantasy sports have been around for more than 30 years and are played by an estimated 41 million Americans. But daily fantasy sports (DFS) are the old-fashioned variety pumped up on steroids—and, in many cases, a whole lot more lucrative. Instead of choosing athletes at the start of a sports season, DFS players choose a new team—and win or lose money—every day. Stakes are very low or very high, from a couple of bucks to thousands of dollars a game. The industry’s two biggest sites, FanDuel and DraftKings, together claim more than 3 million users, though the pace of their growth makes it difficult to keep up with accurate numbers. FanDuel, for instance, increased users by more than five times last year—while producing revenue in the fourth quarter alone of almost $37 million. DraftKings, meanwhile, grew registered users tenfold. 

Wall Street, unsurprisingly, has taken notice. FanDuel, which was founded in 2009, has so far raised $363 million in venture capital—including a staggering $275 million announced in July—while DraftKings, founded in 2011, told the Washington Post in March that it has raised nearly $75 million of its own. With this kind of success, more established businesses are eager to cash in. USA Today has a DFS site, and Yahoo! recently announced that it will launch one too. Meanwhile, many pro-sports teams are signing marketing deals with FanDuel and DraftKings, and some of the sports leagues—which have long feared the taint of gambling—have even bought stakes in the companies.

Of course, the skyrocketing popularity of DFS has attracted another sort of investor: players who use these sites to make a lot of money. Alvin Zeidenfeld is on the phone from his Los Angeles office. “I have my spreadsheet open, I made my lineups, I’ve posted my head-to-heads, I’m kind of going over everything on the day,” he says. Zeidenfeld is a former poker professional who started playing DFS in 2012. He says some of the skills he developed in poker helped him make the transition to fantasy sports. “It just comes down to your feel for the game,” he says, “your understanding of the math, your understanding of the numbers, which all translate for players from the felt to daily fantasy sports.”

Today, Zeidenfeld is a DraftKings “pro,” meaning he is so good at DFS that he is paid to endorse the company. Still, he doesn’t actually consider himself a professional. “I don’t know how to classify myself,” he says. “There are people who do this for a living, that pay their bills with DFS, and there are people that play as hobbyists. I am a very involved hobbyist. I play for high stakes, I play at the highest levels, I play for the biggest tournaments.” Zeidenfeld’s single biggest score was the $350,000 he won in 2013 for placing second in a football tournament, but he says he’s equally good at baseball and basketball. When it comes to golf, hockey, NASCAR and mixed martial arts, he consults with experts in those sports for advice.

Peter Jennings is a 30-year-old former stockbroker from Colorado who became obsessed with DFS a few years back. “I was bringing my iPad in to work to do daily fantasy lineups on my breaks,” Jennings recalls. Finally, convinced he could support himself playing DFS, Jennings “took a plunge.” He quit his job to focus on fantasy sports full time. Weeks later, he’d already won almost $150,000. Last year, he banked $1 million in the DraftKings Fantasy Baseball Championship. Though he dabbles in the nine-to-five as a consultant, “by far,” he says, “the majority of my income comes from playing.”

During the busier fall and winter months—when the NBA, NHL, NFL and college ball are happening—Jennings spends most of his day on the computer. “I’m basically crunching numbers and doing models,” he says. Once games start in the evening, he sits back and watches them on the four televisions he has mounted on his living room walls. In between plays, he scans his computer monitors in preparation for the next day.

Daily fantasy sports are legal in 45 states because of what is either, depending on how you look at it, a quirk in the Unlawful Internet Gaming Enforcement Act, or a gift to the professional sports leagues thanks to lobbying by … the professional sports leagues. The UIGEA, as it’s known, was passed in 2006 to prevent gambling sites from accepting bets over the Internet. The law went largely unenforced for years, and millions of Americans played poker and bet on sports at offshore-based sites. Then, in 2011, the U.S. government instituted a mass crackdown. Several sites were shut down, and to this day, poker pros and other professional gamblers have to live outside the country if they want to play online. But UIGEA includes a specific exemption for fantasy sports.

Reps from both FanDuel and DraftKings insist that DFS is not a form of gambling. “DFS is very much a game of skill,” a DraftKings spokeswoman told me. But the same can be said of poker and horse racing. Of course, it’s easy to understand why those with a stake in DFS might be touchy. The UIGEA exemption rests on fantasy sports being distinct from gambling, and that notion also allows the leagues to keep an arm’s-length distance between sports and gambling while still generating all the additional interest and television ratings. 

Sentef, for one, insists he’s mostly in it for the fun, that DFS has allowed him to channel his competitiveness into a new form of entertainment. The chance to make a few bucks along the way? Well, that doesn’t hurt. As Adam Goulet, a mortgage broker from Charlotte who’s won millions playing in baseball and basketball tournaments, says, “At first my fiancée hated it, with me sitting there refreshing my phone constantly, but she’s come to accept it.” After all, “It kind of changed everything on the honeymoon front.”