Rahm Emanuel Proposes 10% Federal Tax on iGaming Revenue for Innovation

Rahm Emanuel, the former Chicago Mayor, has proposed a 10% federal tax on revenue from online gaming and prediction markets. He hopes to use the tax revenue to fund an American Innovation Fund, which would invest in areas such as AI, quantum computing, fusion energy, life sciences, and national security tech.

Emanuel is expected to run for the 2028 Democratic presidential nomination. He outlined the plan this week in a Twitter/X post, stating “Let’s bet on America – not against it,”. Emanuel pointed to funding cuts in National Institute of Health and the Nation Science Foundation as a reason for the Innovation Fund. He estimates a federal tax could bring in as much as $50 billion for the fund. Emanuel told Bloomberg the tax could help fund research into AI, fusion energy, national security technology, and quantum computing.

The tax would help the US better compete with China on the technology front, according to Emanuel. He said, “Let’s fund cures, build new energy resources, lead in defense technologies and quantum tech. Stop falling further behind, start investing in winning again. That’s the American way.” Emanuel’s tax proposal comes at a time when state governments across the country have pushed to raise taxes on sports betting and online gaming operators over the last few years. Maryland recently raised the rate from 15% to 20%. Illinois raised the tax on the sports betting industry in 2024, with a progressive rate as high as 40%. A year later, the state added a 25-cent tax on wagers for an operator’s first 20 million bets, which rises to 50 cents per bet beyond that. In January, Chicago added a 10.25% tax on operators as well. State legislators have now moved to block the city’s efforts and operators have also sued, seeking a temporary restraining order against the levy. After a drop in gaming revenue, Illinois legislators are now considering dropping the per-wager tax. Before the tax was put in place, industry representatives warned the effort would drive bettors to unregulated sites. Industry representatives have also argued that constantly raising taxes could affect the industry’s ability to operate. In some states, if Emanuel’s plan were put in place, the total tax rate on the industry could reach over 60% of revenue. Peter Jackson, CEO of Flutter Entertainment, parent company of FanDuel, said “It is important to recognize that there is an optimal level for gaming tax rates that enables operators to provide the best experience for customers, maximize market growth, and maximize revenue for states over time.”