We will, soon enough, get to the unicorns and the sharks, the billion-dollar game of Prisoner’s Dilemma and the carpet-bombing that unleashed the mayhem, the FBI investigations, the conspiracy theories, and the nerds and impostors who waged a battle that forever rearranged the landscape of sports in America. First, though, we must begin with the three prophets in the desert, the men who saw a war coming and sought to win it long before it started.
It was 1991, and the three men had a plan. They would travel across the country, coast to coast, pitching their idea to anyone willing to listen. Inside casinos and horse-racing tracks, they would install establishments where people could wager on the outcome of sporting events and in turn win, or lose, money. These outfits—sports books, they were called—would be linked through a computer line, a line connected to a hub in central Nevada, a hub the three of them owned and controlled. They only had a vague idea of what this network could be worth one day, but they knew that the line would give them an edge in a clash they were certain was about to erupt.
If anyone understood what was at stake, it was these three men from that neon-lit oasis in the desert, gambling’s birthplace in America—Las Vegas. Art Manteris lorded over the sports book inside the opulent Las Vegas Hilton, then the largest hotel in the world, a modern-day Versailles that illuminated the entire Strip like a great lantern. Roxy Roxborough was the most influential oddsmaker in town—every morning in his office in a downtown strip mall he sat at his desk in a resplendent suit and set the opening line for the entire world, from Vegas to Monte Carlo to Macau. Vic Salerno ran Leroy’s Horse & Sports Place, Vegas’s largest independent sports book, a dark, smoke-filled, gin-stinking parlor where the town’s biggest sharps and wiseguys gathered to place their bets and watch their fortunes rise and fall.
This concept of linked sports books had worked for them before, beautifully, on a smaller scale. With the help of a computer whiz kid from Pakistan, Vic built the first electronic system that took bets, which meant that he no longer had to lug home trash bags from Leroy’s, cursing as the bags burst with pencil-scribbled tickets that he would sift through late into the night at his kitchen table, sorting the winning tickets from the losers. In 1989, when Art opened up a sports book down the road from the Hilton, at the Flamingo, he used Vic’s computerized system to connect his operations. “It was so easy—easier than anyone imagined it would be,” says Art. The result was the first linked sports book in America.
Years earlier, Art had arrived in Vegas, in this world, in a roundabout way. The son of Greek immigrants, he was twenty-one when he dropped out of community college, left home in Pittsburgh, and headed west to become an actor. On his way to LA, he made a stop in Nevada to make money for rent, working as a cashier for his uncle’s business: the sports book in the Barbary Coast, a little shop with golden chandeliers and faux stained glass that sat on a prime corner of the Strip, the nexus of what was, in the early 1980s, a fledgling industry in America. Sports betting—then legal in Nevada and, on a much smaller scale, in Oregon, Montana, and Delaware—was always the odd, slightly uncouth child of the gambling family. Its stature began to grow after an obscure tax cut in 1974: when Congress slashed the sports betting tax rate from 10 percent to 2, it was worthwhile for someone like Vic Salerno to walk away from his career as a dentist and go into business as a full-time bookie. In 1983, just as Art arrived in Vegas, the tax was slashed again, from 2 percent to just 0.25 percent, and that peculiar profession became a potentially profitable one. The Nevada handle—the total amount placed in bets—had ballooned by 450 percent after the first tax cut and rose to $894 million after the second in 1983, and with all the money that was gushing into this world, Art’s aspiration to become Hollywood’s next leading man was put on hold.
Art had a handsome face and, even in his twenties, a dignified presence; he floated above the wiseguys and fleas around him, but without an air of condescension. Within a few years, by 1987, he was running the sports book at Caesars, at twenty-six years old the youngest director in town. A few years later, he was cutting the ribbon at the entrance of the glittery, $17 million, state-of-the-art SuperBook at the Hilton—a magical realm in which men sat in leather chairs sipping on Stolichnayas at 11 a.m., all of them gazing up at one of the fifty-three flashing, cinema-scale TV screens with live sporting events beamed in from around the world. The SuperBook was the first of its kind—a case study for every casino in town on how to create the ultimate man cave for any out-of-towner.
It was now the early 1990s, and Art was leading a new venture that was even more ambitious: if he, Vic, and Roxy could persuade casino and racetrack operators outside Nevada to let them provide the infrastructure and expertise to bring sports betting to their states, then they could be the ones leading the movement to take sports gambling nationwide. A tsunami, they believed, was coming. At the time, legislatures in more than a dozen states, salivating over the prospect of increased tax revenue, were considering proposals to legalize gambling on sports. The potential value of the network of connected lines that the three of them were trying to build was unknowable. Even to take a stab at a ballpark estimate, by extrapolating the numbers, was a pointless exercise in imagination: if the handle in the state of Nevada, where the population was less than one million, was nearly $1 billion, then the nationwide handle, with New York, Boston, Philly, and Los Angeles all in play . . . well, the numbers were mind-blowing. Vic put the figure for the potential nationwide handle at, conservatively, somewhere around $300 billion; other longtime Vegas bookies floated $1 trillion with a straight face. To anyone who thought that Vic’s number was preposterous, to anyone who didn’t seem to grasp how pervasive this activity was, Vic liked to note that he knew of a town of one thousand in rural Wisconsin that alone had three illegal bookies to service people’s desire to bet the farm on the Packers.
In pockets across the country, plenty of casinos and racetracks, it turned out, wanted to listen to what the three men from the desert had to say—from the dingy Boardwalk in Atlantic City, New Jersey, to the regal Churchill Downs estate in Kentucky and the quaint Laurel Park racetrack in Maryland, where the owners were most eager to pounce. This could happen fast, Art thought, as the track in Laurel began erecting booths and hanging TV sets for an on-site sports book. But as word trickled out that a racetrack just outside the Beltway was sniffing around the possibility of expanding sports betting, opposition voices, many out of Maryland and Washington, DC, suddenly emerged—and loudest of all were other local racetrack owners, who thought that sports gambling would steer their customers away from betting on horses. “That it was Laurel that was most interested initially turned out to be the most harmful thing for our project,” says Art. “It was right outside of Washington, and once there was some opposition, well, there was a lot of it.”
In late 1991, those racetrack owners took meetings on Capitol Hill to discuss a piece of legislation that had been introduced in Congress: called the Professional and Amateur Sports Protection Act, it would effectively ban sports betting outside the state of Nevada. To hear the politicians tell it—foremost among them Bill Bradley, the New Jersey senator and former New York Knicks star who introduced the legislation—the law was about nothing less than saving the souls of our children. “Our youngsters will be learning to shave points before they’re able to shave their beards!” howled one lawmaker. But as with any piece of legislation in Washington, there were other, hidden forces behind it—perhaps none more influential than the hard-lobbying campaign initiated by the multibillion-dollar horse-racing industry. Suddenly, here came the sports league officials to join the lobbyists and lawmakers in their antigambling rants, tripping over themselves to rail against this new threat to society, refusing to admit that their sport reaped any benefit, that there was any relationship at all between the popularity of their product and fans’ eagerness to toss their favorite team into a three-team parlay to make their Sundays just a bit more dangerous. The National Football League’s television-rights deals, coinciding with the rise of Nevada’s sports gambling industry, had risen from a total of $400 million per year in 1982 to $900 million by 1990. Where did the NFL think its money was coming from? The games themselves weren’t suddenly that good. With the NFL and others behind it, PASPA was passed on June 2, 1992, by an 88–5 vote, making sports gambling illegal outside of Nevada. “The way this came out of nowhere and became the law of the land—it was eye-opening, to say the least,” says Art. His plan was crushed; the war Art saw as inevitable never began.
Roxy, who had relocated himself and his business to Atlantic City, expecting the Boardwalk to be the center of action outside the desert, closed up shop and returned home. Vic channeled his energy back into Leroy’s, expanding it to multiple locations and eventually selling the franchise to UK bookmaking titan William Hill for $18 million. Art had been teaching a sports book management course at the University of Nevada at Las Vegas, grooming future bookmakers and casino directors for a bright, shiny world in which gambling was prevalent coast to coast, border to border, a world in which the kind of expertise that Art Manteris could provide was rare and vital. While the outside universe clung to an image of gambling as two shadowy characters from an Elmore Leonard novel surreptitiously exchanging cash on a street corner, Art represented order and integrity in the regulated, thriving industry in Vegas. It was Art who, in 1999, would lead the Nevada Gaming Control Board in uncovering one of the most notorious point-shaving scandals in the history of American sports; Art who would be the only bookmaker in town who possessed the indomitable will to refuse bets from the most ruthless shark in the industry, a high-stakes gambler named Billy Walters, and from the growing pool of cold-blooded, algorithm-equipped bettors making a killing off the sports books.
Art had once envisioned a national system not so much modeled on Nevada’s as subsumed in it, with the state’s regulatory infrastructure in place across the country and the state’s bookmakers and casino directors acting as leaders for this billion-dollar industry. After PASPA, though, he didn’t know what to tell those bright-eyed students about the future and their place in it. The course was canceled. With the signing of that bill, the idea of legalized gambling across America had become a fantasy. Art’s worst fears were about to be realized: billions of dollars of liquidity were funneled underground, sustaining a thriving black-market industry that would ride the crest of the online gaming explosion of the late 1990s and 2000s and that existed in a legal and commercial phantom world, beyond the reach of regulation, authority, and the law. That bright, shiny world? Art had lost all hope that he would ever see it.
Then one night many years later, Art was returning home to Las Vegas. He was now in his fifties, softened around the edges since settling into a more serene life as the director of a chain of understated, elegant sports books for the locals, away from the rowdy out-of-towners, miles off the Strip. Art was walking out of his gate and through McCarran Airport, which was lined with rows of blinking slot machines, when he gazed up at one billboard-sized sign that seemed to shine brighter than any of the others in the terminal. He couldn’t turn away.
A NEW FANTASY MILLIONAIRE EVERY WEEK—PLAY FREE DAILY FANTASY SPORTS.
And then a strange word, in lime green and white script font, under a sparkling golden crown: DRAFTKINGS.
Art thought to himself, What the hell is that?
Somehow the world today still clings to the old sepia-rinsed image of sports gambling—of a man with a bag of cash walking up to a booth to place a bet in a cavernous, dimly lit room full of other men in bowler hats, or in a dark corner on the phone whispering a series of cities and dollar figures with life-or-death urgency. Those images are of a bygone time; the world it depicts is fading, replaced by a new world that is much more complex and one in which the money at stake is many magnitudes larger. This new world, fueled by a gushing spigot of venture capital, reflects the rapid and radical social and technological changes around us; in this world, gambling is becoming so widespread that one will be able to bet as often and for as much as one wishes, so long as there is a device nearby.
This book describes how this new world came to be through the story of a high-stakes game between two unlikely startups and the entrepreneurs who did battle: the individuals who were both uniquely suited to the moment and also completely unprepared for what it was about to do to them. Some would make a small fortune; others would be left shattered, or even destroyed.
As it turns out, the sign that Art Manteris laid eyes on that night at McCarran Airport was a weapon in the game between the startups. Art didn’t know who was behind that sign; he only had a quickly growing stack of questions: What exactly were daily fantasy sports games? How were these games not gambling operations? Art was aware of every single sports betting outfit in his state, so what was this one that he’d never heard of? One that had never gone through the gauntlet of his state gaming board—how were these guys operating in plain sight, in his own backyard? And finally: How were the people behind the sign not getting a loud and angry knock at their door from the FBI, like any other illicit gambling operation in America? How was this legal?
Art was about to find out that the battle he saw as inevitable back in 1990 was now, unbeknownst to him, being waged by a group of accidental disrupters: a band of nerds from Boston and a group of Brits who weren’t even sports fans. Soon there would be international scandal, FBI investigations, congressional hearings, and a historic Supreme Court ruling, in 2018, that would rearrange the landscape in ways that even the three men from the desert never foresaw.
How did the story of this war begin? Like the story of any startup, really. It began with a fantasy.