Former Chicago Mayor and US ambassador Rahm Emanuel has put forward a proposal for a 10 percent federal tax on online gambling revenue that, if enacted, would fundamentally reshape the economics of the rapidly expanding US iGaming market and could significantly affect operator profitability at a moment when several of the country’s largest online casino companies are only just reaching sustained profitability after years of investment.
Emanuel’s proposal frames the federal tax as a mechanism to fund innovation and infrastructure investment, drawing on what he describes as existing precedent for federal taxation of vice-adjacent activities and positioning the measure as a way to direct some of the growing economic activity in the iGaming space toward public benefit rather than exclusively to operator shareholders and state tax authorities.
The US online casino market generated approximately $8.4 billion in gross gaming revenue across the eight states with legal real-money iGaming in 2025, establishing the United States as the third-largest regulated online casino market in the world behind the United Kingdom and Italy, a trajectory that Emanuel’s proposal suggests creates a meaningful and growing tax base to draw upon.
The proposal arrives at a moment of particular commercial sensitivity for the major operators in the space, with BetMGM having only recently achieved what management described as sustained profitability after years of investment losses, and Penn Entertainment’s theScore Bet iCasino division only now generating the kind of quarterly records that justify the capital committed to building the digital platform.
FanDuel’s parent company Flutter Entertainment is separately navigating what executives have publicly described as their most important near-term strategic priority, expanding FanDuel’s 18 percent iGaming market share to match its dominant 45 percent position in online sports betting, a campaign that would become significantly more capital-intensive if a federal tax layer were added on top of the state tax obligations operators already manage.
The specific rate of 10 percent is notable for being positioned below the rates many states charge on their own online casino gross gaming revenue, with Pennsylvania taxing operators at 36 percent, New Jersey at 15 percent, and Michigan at approximately 20 percent of adjusted gross revenue, though the cumulative impact of adding a federal layer on top of existing state obligations would vary significantly by jurisdiction.
Michigan’s record March 2026 gross gaming revenue of $322 million provides the most recent illustration of the scale involved: a 10 percent federal tax applied to that single month’s revenue across that single state would have generated over $32 million in federal receipts, annualised to roughly $380 million from Michigan alone if the market continues on its current trajectory.
New York remains the single most consequential pending iGaming legalisation decision in the country, with analysts projecting a $3 billion to $4 billion annual market if Albany passes the legislation currently stalled in committee for the fifth consecutive year, and Emanuel’s federal tax proposal would materially affect the commercial modelling of any operator evaluating whether and at what scale to compete for New York licences.
The gaming industry’s initial response to the proposal has ranged from sceptical to hostile, with operators arguing that layering a federal obligation onto an already heavily taxed product would compress the unit economics that have taken years of investment to establish, while advocates for the proposal argue that the scale of profits being generated by the major operators in mature markets demonstrates there is room for additional public contribution without fundamentally undermining the viability of legal, regulated online gambling.
Whether Emanuel’s proposal gains legislative traction will depend on the same dynamics that have driven every other federal iGaming discussion for the past several years: the difficulty of reaching bipartisan agreement on an issue where commercial interests, state sovereignty concerns, religious opposition, and harm reduction arguments all pull in different directions simultaneously, leaving comprehensive federal iGaming legislation perpetually on the horizon but never quite within reach.
