Alfred Henry Lewis introduced Masterson to President Theodore Roosevelt, and the two formed a friendship that resulted in Masterson being a frequent White House guest and also included regular correspondence. On February 2, 1905, after arranging for Masterson's appointment as deputy U.S. Marshal for the Southern District of New York, Roosevelt wrote: "You must be careful not to gamble or do anything while you are a public officer which might afford opportunity to your enemies and my critics to say that your appointment was improper. I wish you to show this letter to Alfred Henry Lewis and go over the matter with him." Masterson served in the position, earning $2,000 per year (equal to $57,607 today), until 1909.

He moved to New York City in 1902 and spent the rest of his life there as a reporter and columnist for The Morning Telegraph. His column covered boxing and other sports, and it frequently gave his opinions on crime, war, politics, and other topics, as well.

On October 25, 1921, at age 67, Masterson died at his desk from a massive heart attack after writing what became his final column for The Morning Telegraph. He was buried at Woodlawn Cemetery in the Bronx. His full name, William Barclay Masterson, appears above his epitaph on the large granite grave marker, which states that he was "Loved by Everyone".

Eleven years after Masterson's death, a collection of Damon Runyon's short stories was published under the title Guys and Dolls. These stories later formed the basis for the classic 1950 musical comedy of the same name. The central character is a high-rolling gambler from Colorado whom Runyon barely disguised under the name of Sky Masterson.