The Wall Street firm confirms its fantasy subsidiary is expanding its pay-to-play product by enhancing a smartphone app later this year amid rapid growth in the market.

Last week, Cantor Fantasy Sports, a unit of lower Manhattan-based investment shop Cantor Fitzgerald, confirmed it will be expanding its sophisticated pay-to-play fantasy products on smartphones later this year. The company is bringing a new playbook to the pay-to-play fantasy market dominated by CBS Sports, Yahoo Sports and others: Cantor’s niche is pay fantasy sports developed specifically for mobile devices.

“While currently a high percentage of people play fantasy on PCs and laptops, it’s a space that is rapidly moving to mobile. We believe we’ll see an uptick of mobile users,” said Cantor Fantasy Sports Vice President Matt Holt.

The Fantasy Sports Trade Association estimates that some 35 million Americans play fantasy sports, spending an average $95 each to play. Cantor’s entry fees range from $2 to $50,000.

Cantor Fantasy Sports, launched in 2012 by Cantor Data Services—a Cantor subsidiary based in Las Vegas—debuted a tablet app for fantasy games for Android devices last September and Apple devices at the beginning of the year.

Cantor’s fantasy push comes as pay-to-play fantasy games are seeing rapid growth and investor interest in New York. Manhattan-based pay-to-play fantasy provider FanDuel received an $11 million investment from Comcast Ventures earlier this year.

Cantor Fantasy Sports’ offering differs significantly from traditional fantasy leagues, most of which operate under a fictional salary cap. That is, users draft athletes—each assigned a dollar value—up to a set limit. Cantor’s new game allows users to pick any player who has been assigned a Cantor-generated point value that corresponds to each player’s expected performance.

The system is complex, but it more or less handicaps for the obvious stars—think LeBron James or Kobe Bryant—against lesser players who exceed their expected performance.

“We wanted to offer a game with no restrictions,” Mr. Holt said. “This means our customers can pick whoever they like.”

Big market

This kind of fast-moving fantasy sports represents a rapidly growing business, said Jason Waram, vice president of fantasy games and social media at ESPN, which offers more than 40 different fantasy games covering almost every sport imaginable. In the past several years, players have gravitated from hard-core, full-season fantasy-sports offerings to quick-decision, short-term games, usually involving only a handful of players for leagues that can exist for as short as one day.

“That’s something people can do quickly and still have a rooting interest when they go home at night,” Mr. Waram said.

But as competition for fantasy-sports dollars escalates, so does the risk that politicians will redefine the games as gambling and seek to impose regulations or taxes.

“Short-duration pay fantasy sports games introduce a really interesting wrinkle to the fantasy-sports world, legally,” said Jennifer Webb, regulatory and compliance manager with Gambling Compliance, a London-based gaming-industry market research firm.

Ms. Webb points out that regulators and legislators tend to focus on the integrity of the sport being played.

“If, hypothetically, short-duration pay-fantasy sports were to simulate or very nearly simulate a real-world sporting event or a real-world team, then the line between legal fantasy and illegal sports wagering starts to get pretty thin,” she said.

Marc Edelman, a law professor at Miami-based Barry University who studies the fantasy-sports industry, points out that these limits are almost certain to be tested in court.

“Even though Cantor seems to have very carefully eliminated the states with heightened risk,” said Mr. Edelman, “Cantor will have to show that their game involves more skill than chance [in order for it] to be legal.”

Cantor responded that it is aware of—and respects—the line between fantasy sports and gambling, and that its move into smartphone-based pay fantasy play is part of a long-term investment.

“We launched Cantor Fantasy Sports because we believe there is a robust fantasy-sports economy,” Mr. Holt said.

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