Within minutes I received emails pointing out my error. The first guesses based on the picture alone was a Hohenbuehila species. A flurry of emails from Ken Olson and Jay Justice from MOMS eventually settled on its being in the Hohenbuehila petaloides group. Ken pointed out that "It is commonly found in the soil of potted plants where rotting wood mulch was used."
Tom Volk's Fungus of the Month is full of information as always.
Like many fungi, this one lives on decayed wood. However, it is also carnivorous- think Audrey in the Little Shop of Horrors. In his own word
"What about the wood decay I alluded to earlier? And what about the nematodes? Well as you might know, wood is a good source of carbon but a terrible source of nitrogen, which fungi need to make proteins. Both Hohenbuehelia and Pleurotus can supplement their protein needs by trapping nematodes, which are small flat worms that are very abundant in wood and soil. The fungi have "sticky knobs" on the hyphae that grow through the wood. These sticky knobs attach to curious nematodes as the nematodes attempt to eat the mycelium. The nematode thrashes around and additional parts of its body become stuck. The hyphae then grow into the body of the nematode and digest it, providing the fungus with the nitrogen it needs. That makes these fungi carnivorous"If we could grow enough of these, we could save money of glue traps. I wonder if it could eat a mouse.
* MOMS is the Missouri Mycological Society.