The Duck Test

New products take advantage of legal gray areas, quacking they’re not ducks, they're mallards. Let’s call it what it is—gambling.

There’s an old saying: “If it looks like a duck, walks like a duck, and quacks like a duck, it’s probably a duck.”

The duck test is a handy shortcut for cutting through the legalese noise and calling a thing what it is.

And over the last twenty years, I’ve watched industries like online poker, daily fantasy sports (DFS), sweepstakes, skill games, DFS 2.0, and now prediction markets waddle through a legal gray area, quacking loudly about their legitimacy — we’re not ducks, we’re mallards — with mixed results.

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The serious players hire pricey law firms to pen secret legal opinions to explain ducks and why mallards should be separated from the broader duck category. The fly-by-nights don’t even bother. Either way, the duck test always leads to the same truth: if you need a team of lawyers to assert your product isn’t gambling, maybe it’s because it is; even if you want to call it something else.

Some have prevailed, gaining legitimacy or carving out a wholly new category of gambling. Others haven’t been so lucky, and slink into the shadows or are forced to water down their products to conform to a new regulatory reality.

New Day; Same Story

Take online poker. Companies swore up and down they were operating legally in the US, and they had the legal opinions to prove it. Poker is a game of skill, and we just facilitate the game between willing players. This isn’t gambling, it’s poker, a game as American as apple pie.

That charade ended with April 15, 2011 (Black Friday), Department of Justice indictments, hundreds of millions of dollars in fines, and the indicted eventually pleading guilty to lesser charges or settling with the DOJ.

Black Friday also pulled back the curtain on the online poker sites (more Full Tilt, Absolute Poker, and UB than PokerStars), exposing them for:

• Financial Mismanagement and Insolvency: Full Tilt Poker mishandled player funds, holding just $60 million against $390 million owed worldwide. The DOJ called it a "Ponzi scheme," as deposits weren’t segregated but used to pay owners over $440 million. Absolute Poker, already tainted by prior cheating scandals (see bullet point #3), couldn’t repay players post-shutdown either, with losses estimated at $50 million.

• Fraudulent Practices and Deception: The sites used third-party processors and shell companies to disguise gambling transactions to skirt US banking restrictions. Daniel Tzvetkoff, a former payment processor who turned informant, provided evidence of how poker sites manipulated transactions, disguising gambling transactions as legitimate purchases (golf balls or jewelry).

• Secret Ownership: The same leadership tied to Ultimate Bet and Absolute Poker’s 2007 "super user" scandal—where insiders exploited software to see opponents’ cards—still ran the site during Black Friday, despite assertions to the contrary.

Then there’s daily fantasy sports.