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California welfare cards work in casino ATMs

Alerted to the problem, Gov. Schwarzenegger said he'll put a stop to it.

By Karen Datko Jun 24, 2010 5:54PM

Intrepid newspaper reporting in California -- the state with the $19 billion budget gap -- has found that state-issued welfare debit cards can withdraw cash from ATMs in half the casinos in the state.

State officials, who were clueless, are scrambling to block the cards' use on gaming floors. They're also trying to calculate how much cash was withdrawn from casino ATMs by welfare recipients. Likely not very much, but you know that, if it can be done, some people will do it.


The Los Angeles Times, which brought this to light, reported:

The cards, provided by the Department of Social Services to help recipients feed and clothe their families, work in automated teller machines at 32 of 58 tribal casinos and 47 of 90 state-licensed poker rooms, the review found.

Gov. Arnold Schwarzenegger, who learned about the situation from the Times, said he would work to quickly stop it. His spokesman said, "It is reprehensible that anyone would use taxpayer money for anything other than its intended purpose."


A private network administers the ATM transactions for the state. The Times matched up addresses of the network's thousands of ATMs -- available at a state website so recipients can find ATMs that accept the welfare cards -- with the addresses of gambling establishments. The newspaper couldn't learn how much Temporary Aid for Needy Families money had actually been withdrawn at those locations. Most cards have a $300 daily limit. The maximum monthly TANF benefit, available to needy families with children, is $694 in California, the Times says.

Prepaid debit cards are the norm these days for all kinds of state government benefits -- welfare, food stamps, unemployment compensation. Starting in March 2011, the federal government wants to eliminate paper checks for new recipients of benefits such as Social Security. Your "check" will either be direct-deposited into your checking account or to a prepaid debit card. (Those now getting paper checks wouldn't have to make the switch to electronic transfer until 2013.) 

How widespread is dipping into a welfare fund to feed the nearby slots? The Times notes that New Mexico has made it impossible, and so does a Las Vegas firm that supplies ATMs to more than 1,000 U.S. casinos. Blocking those transactions, a company spokeswoman said, "is really easy to do."


L.A. Times readers (you can read some of their comments here) were angry to learn that welfare recipients can access cash at casinos or at any ATM. (Note: Food stamp benefits on the card cannot be accessed that way, and restrictions are in place on how food stamps can be spent.) What do you think?


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