The bill, which has bipartisan support, is up for a vote Thursday in the Assembly.
Non-profit organizations commonly race the little plastic ducks, with numbers on the bottom, as fundraisers. Participants usually buy a raffle ticket corresponding with a duck's number.
The first to float across the finish line wins.
Rubber duck races in Wisconsin include the "Ducktona 500" in Sheboygan Falls and the "Lucky Ducky Derby" in Menomonee Falls.
The bill comes after the village of Mishicot was warned by the Wisconsin Department of Justice that its annual rubber duck race amounts to illegal gambling.
The bill creates an exemption for duck races, similar to laws in Minnesota and Michigan.