In a new business venture that adds to an ever expanding field, Yahoo announced that it will host daily and weeklong pay-to-play fantasy sports games for cash prizes.

To start, Yahoo will offer a baseball league only in the United States; expansion to the other professional leagues will occur once their respective seasons commence. Players can participate on desktops, on a mobile site, or an iPhone app, against a single competitor or a small group, with an initial prize package of about $6,500, Yahoo said.

"We're taking the game to the next level and giving fans what they've always wanted—the chance to compete with their friends and win cash every day," the company said in a press release about the new games.

Yahoo has already hosted season-long fantasy sports leagues for more than 16 years, with users spending an average of 500 minutes each month on its site, the company said. Research has found that players spend an average of $465 each year on fantasy sports and that the daily games could generate an estimated $2.6 billion in entry fees—with the potential for growth.

Although the Unlawful Internet Gambling Enforcement Act of 2006 prohibits online poker and sports betting, the statute contains an exception for fantasy sports as a "game of skill." However, betting on fantasy sports remains illegal in five states (Arizona, Iowa, Louisiana, Montana, and Washington). "We stay very close to the laws," Yahoo's Vice President for Publisher Products Ken Fuchs told The New York Times. "We certainly encourage people to play responsibly."

To read Yahoo's press release about its plans, click here.

Why it matters: With the company's built-in user base and estimated 56 million fantasy sports players in the United States and Canada, Yahoo's move could be trendsetting and lucrative, not just from entry fees but by selling advertisements or sponsorships around the games.