Emanuel proposes 10% federal tax on online gambling

Rahm Emanuel proposed a 10% federal tax on online gambling and prediction markets to fund a new American Innovation Fund aimed at research in artificial intelligence, fusion energy, quantum computing and national security technology.

Emanuel presented the plan on Wednesday at an event in Washington, D.C. He said the levy would apply to online sportsbooks, casinos and prediction markets and would require Congress to pass legislation to take effect.

Emanuel estimated the industry handles about $400 billion in total wagering and said a 10% tax on that activity could generate between $30 billion and $50 billion annually for federally directed research programs.

Emanuel, who left his post as U.S. ambassador to Japan in January 2025 and has returned to public policy work, said he is considering a 2028 presidential run. He linked the proposal to efforts to improve U.S. competitiveness with China and compared the levy to existing federal taxes on alcohol and tobacco. “I’m more interested in the American people getting ahead and America staying ahead,” he told the audience, adding any political benefit would be a “side benefit.”

Alongside the gambling levy, Emanuel proposed other policy ideas including a $25,000 tax credit for first-time homebuyers, reorganizing Freddie Mac and Fannie Mae to prioritize first-time buyers, and raising the federal mandatory retirement age from 67 to 75.

Global online gaming produced about $121 billion in 2025 and is projected to exceed $123 billion this year. The U.S. legal sports-betting market grew from roughly $2.5 billion in 2018 to nearly $20 billion five years later, with forecasts pointing to about $40 billion by 2029. Industry groups, tribal gaming operators, professional sports leagues and state governments that collect betting revenue would likely oppose a new federal levy.

Emanuel also addressed prediction markets and national security. He called for a ban on federal employees and their families placing wagers on such platforms and proposed expanding ethics restrictions across the judicial, legislative and executive branches. He cited cases in which people with access to sensitive information were alleged to have benefited from bets tied to military actions in countries including Venezuela and Iran.

Previous federal efforts to limit online gambling practices have not advanced in Congress. A 2023 bill that sought to ban online sportsbook advertising failed to gain support, and a later, narrower proposal to restrict gambling ads and establish a national self-exclusion register also stalled.

Emanuel’s gambling tax would require congressional approval and faces political and procedural hurdles. Lawmakers will consider revenue goals, state-by-state gambling rules, and pushback from a growing legal gaming sector. The proposal’s progress in Congress will depend on fiscal priorities, lobbying efforts and how it is received alongside other technology and competitiveness policies.