BUSINESS

New York lottery takes $20m winnings from welfare recipients

TAGs: Lottery, New York

new-york-reclaim-lottery-winnings-welfareA controversial program has allowed New York state to claw back close to $20m in lottery winnings over the past four years from recipients of social assistance programs.

Lots of people arched their eyebrows this spring when Republicans in the House of Representatives unveiled their proposed (and ultimately rejected) health care legislation, which devoted an inordinate amount of its copy to specifics on how to deny Medicaid benefits to anyone lucky enough to have won a significant lottery prize.

At least seven US states have some type of clawback program on their books that allow local governments to deduct unpaid taxes or child support payments from gambling winnings. However, New York state is the only one that enforces this policy against social assistance payments.

Under New York law, anyone wishing to claim a lottery prize over $600 must present themselves at a state lottery center, where their Social Security number is checked against the register of social assistance programs. If the search turns up a match, the state can claw back the entire amount of public funds the winner has received over the past 10 years, provided it doesn’t exceed 50% of the lottery prize being claimed.

New York Upstate reported that the state government has reclaimed roughly $20m from around 30k lottery winners since 2013. The annual amount clawed back has been rising, from $4.9m in 2014 to $5.7m last year, according to the state’s Office of Temporary and Disability Assistance (OTDA), with the average individual clawback amounting to $670.

The lottery-buying public has become increasingly aware of this reclamation project, leading some winners to enlist the help of proxies whose names aren’t on social assistance records to claim the prize as their own in exchange for a commission. (Multi-State Lottery scammer Eddie Tipton, who finally confessed to his crimes last week, engaged in similar duplicity to redeem his ill-gotten millions.)

But New York authorities are also capable of adapting and have begun cracking down on these so-called “discounting schemes.” In June, the state’s Gaming Commission and Department of Tax and Finance brought their hammers down on a pair of schemers who redeemed a combined 777 lottery tickets won by individuals who’d received social assistance.

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