Rahm Emanuel proposes 10% federal tax on online gambling
Former Chicago Mayor and US Ambassador to Japan, Rahm Emanuel (as depicted in the featured image), has proposed a 10 per cent federal tax on online gambling and prediction markets, aiming to generate significant revenue for national investment, according to Bloomberg. The proposal would apply the tax to total wagers placed on licensed platforms, including sports betting, online casinos, and prediction markets, rather than operator revenue.
Emanuel estimates the plan could raise between $30 billion and $50 billion annually. The funds would be directed towards an “Innovation Fund” to support research and technological development.
Growth of online gambling industry
Online gambling has grown significantly in the last few years, especially in the US following the Supreme Court’s 2018 ruling that lifted the federal prohibition on sports betting. In just five years, US sports betting revenues increased from over $2.5 billion in 2018 to nearly $20 billion. The global online gambling market was estimated to be worth over $121 billion by 2025. Forecasts point to sustained expansion, fuelled by mobile technology and further legalisation.
Prediction markets allow users to place bets on real-world events, including elections and geopolitical developments. While they can reflect public sentiment, they also raise ethical and security concerns. Reports have indicated that individuals with access to sensitive information may have profited from such platforms, prompting calls for stricter oversight.
Emanuel emphasises the risks and economic potential of prediction markets by incorporating them into his tax plan. His stance is in line with the rising discussion over how these platforms should be governed to strike a balance between accountability and creativity.
Estimated revenue and economic impact
Emanuel’s proposal estimates that a 10 per cent tax on online gambling and prediction markets could generate between $30 billion and $50 billion annually. This level of revenue would place it alongside major federal programmes and reflects the scale of activity in the sector. Such a tax would function as a “vice tax,” like those on tobacco or alcohol, raising funds from activities considered socially harmful. The approach is designed to increase federal resources without raising income taxes or cutting existing programmes.
According to Emanuel’s plan, the tax’s proceeds would go into an Innovation Fund that would make investments in a number of high-priority sectors. These include improving national security technologies, boosting work in the domains of biotechnology and medicine, fostering research into fusion energy, creating quantum computing capabilities, and advancing automation and artificial intelligence. The objective is to direct resources towards industries that are thought to be essential to sustained economic expansion and technical leadership.
The idea intends to enhance national security, employment creation, and technical advancement by directing monies into these areas, positioning the US to maintain its competitiveness in international innovation.
Political strategy behind proposal
Since completing his role as US ambassador to Japan in January 2025, Emanuel has reentered public debate with a series of policy proposals. Analysts view these moves as part of an effort to shape his profile ahead of the 2028 Democratic presidential nomination race.
California Governor Gavin Newsom is currently regarded as the leading contender for the Democratic nomination. Emanuel’s proposals are seen as attempts to distinguish himself in what is expected to be a competitive field.
Speaking at a Wall Street Journal Live event in Washington, D.C., Emanuel outlined details of his online gambling tax plan. He also proposed a $25,000 tax credit for first-time homebuyers, changes to Freddie Mac and Fannie Mae to support housing access, and raising the federal retirement age from 67 to 75.
When asked whether these ideas were intended to set him apart from rivals, Emanuel acknowledged that visibility could be a “side benefit.” He emphasised that his focus is on advancing policies he believes will help Americans and strengthen the country. At 66, he confirmed he is considering a run in 2028.
Previous attempts
Federal attempts to control online gambling have encountered difficulties. In 2023, Rep. Paul Tonko proposed the Betting on Our Future Act, which aimed to outlaw sportsbook online marketing. The law, which was based on prohibitions on tobacco promotion, was unpopular and lacked co-sponsors. Its opponents cited First Amendment rights.
Tonko returned in 2024 with the SAFE Bet Act, which Richard Blumenthal co-sponsored in the Senate. This plan called for restrictions on gambling advertisements during prime time and live sporting events rather than outright banning advertising. Additionally, it recommended a nationwide self-exclusion registration, regulation of AI-driven targeting, and limitations on promotional language.
Despite Tonko’s efforts to build support, including outreach to sports league commissioners, the SAFE Bet Act has stalled. The lack of momentum highlights the difficulty of advancing federal legislation in this area, even as the online gambling industry continues to grow.
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