Independent group finds that more than 65,000 lottery winners stayed on food stamps after their wins 

By Kate Northrop

An independent group surveyed government data and found that over 65,000 individuals who won significant lottery prizes have continued collecting food stamps.

A think tank called the Foundation for Government Accountability (FGA) submitted Freedom of Information Act requests to all 50 U.S. states for data on lottery winners collecting food stamps since 2019 and found that tens of thousands of winners of varying prize amounts are still on the program.

In their study, the 65,000 figure comes from a survey of 13 of those states, not all 50. FGA Data and Analytics Director Hayden Dublois told Fox News Digital that it includes food stamp recipients who won a lottery prize since 2019 ranging from $4,250 to $2 million, amounts that, on their own, would place an individual or household above the federal threshold to qualify for the government assistance program.

"It shocks the conscious and defies belief," Dublois remarked. "And this is data from only 13 states. The 50-state number is likely titanic. The scale of the problem is staggering — even by government standards."

We think the FGA's study draws some good conclusions, but there might be some flaws to consider.

According to the USDA Food and Nutrition Service, the Supplemental Nutrition Assistance Program (SNAP) "provides food benefits to low-income families to supplement their grocery budget so they can afford the nutritious food essential to health and well-being."

An individual is qualified to participate in SNAP, which is commonly known as the food stamp program, if their household income is below the federal threshold. This threshold changes depending on the number of individuals in the applicant's household. For example, a household of one that does not exceed a net monthly income of $1,215 meets the eligibility limit, while a household of eight that does not exceed a net monthly income of $4,214 also meets the eligibility limit.

Possessions such as vehicles may be considered a liquid asset that contribute to an individual's total income as long as they do not have some sort of essential purpose, such as being used for long distance commutes, providing income (e.g. a taxi or delivery vehicle), or serving as a standalone home. There are additional considerations about an applicant's situation that SNAP will make to determine if any of their assets should be considered an exception.

According to the Center on Budget and Policy Priorities, another think tank, about 41.207 million participants in the United States were enrolled in SNAP in 2022, an increase of just under 300,000 from 40.92 million in 2020.

If we strictly abide by the lowest prize threshold in the FGA's study of $4,250 that should technically make a lottery winner ineligible for food stamps, then yes, it might be safe to assume that a prize of exactly that amount plus someone's pre-existing income might be enough to push their liquid assets over the limit.

But one important factor that the FGA's study does not claim to examine thoroughly is a well-known topic among lottery enthusiasts — taxes.

In Dublois' opinion piece submitted to Fox News, he mentions that the FGA inspected data for only 13 of the 50 states they submitted requests to because only those 13 responded. Among those states, 400 lottery winners were removed from the food stamp program since 2019. And while he mentions Illinois as "the worst offender, removing a mere 99 substantial winners out of more than 50,000 [lottery winners] on food stamps [in Illinois]," he does not mention what those other 12 states are.

The reason this detail is important is because every state taxes lottery winnings differently. Some states, such as New Jersey, will tax a prize from $10,000 to $500,000 at the rate of 5% or any prize in excess of $500,000 at 8%. Winners in New Jersey must pay at least an additional 24% federal tax on prizes above $5,000.

Dublois labels Illinois as "the worst offender" based on the number of lottery winners that meet the FGA study's minimum prize threshold of $4,250 who continue to remain on the food stamp program. If we look at Illinois as an example, we will see a huge difference between tax laws in New Jersey and Illinois.

A winner in Illinois must pay a 4.95% tax on winnings starting at prize amounts of just $1,000 and a federal tax of at least 24% on prizes of $5,000 or more. That means that winners are paying a tax rate identical to New Jersey's tax rate on prizes that are significantly lower, and that winners are even beginning to pay taxes on winnings at a much lower prize threshold.

Therefore, without criticizing the entire breadth of the FGA's study on data collected specifically from Illinois, this fact might partially account for why the numbers coming from Illinois look so egregious in terms of why so many lottery winners continue to remain on food stamps.

Dublois argues that "if a lottery winner's assets drop back below the threshold, they would qualify again for food stamps," but it might not be that simple.

Winning a prize of around $4,250 could certainly be a great help. It may instantly propel a household's liquid assets above the federal threshold to receive aid, but a one-time prize of that amount may be less helpful to a large household over a longer period of time enough to be considered sustainable, especially if you consider outstanding bills, debts, and essential repairs. Bump that up only $750 more to $5,000, and the winner suddenly has to pay both a 4.95% state and 24% federal tax, significantly reducing the long-term efficacy of the prize. It might be enough to pay an outstanding bill or make a much-needed, one-time home repair, but saying that simply winning a prize of that amount should immediately disqualify a household from the food stamp program might be ignoring the complexities of reality for those who are truly living below the poverty line.

The main flaw of this study is that broadly examining data collected from an unspecified group of states can be tricky when there are so many factors involved, such as household size, state and federal tax on lottery winnings, tax filing status, and whether the minimum threshold of $4,250 is simply too low of a prize amount to make a difference.

This is not to say that there may be deep-rooted issues in how and how often a state government cross-checks its database on SNAP participants — Illinois is a perfect example of a bigger problem, even if you potentially filter out the lottery winners of prizes fewer than tens of thousands. In fact, the FGA's study makes valid points about lottery winners who should undoubtedly be able to support themselves without government assistance, such as those who won prizes of, say, $500,000 or more. It is indeed disconcerting that the greatest outlier in the dataset is a prizewinner of $2 million. That individual is continuing to rely on government resources, and as such, taxpayer money from those whose household income may be significantly less.

"The food stamp program is a safety net meant to help the truly needy, not lottery winners or millionaires," Dublois told Fox News. "All it would take is a simple database cross-check and asset test, but most states don't do it."

Dublois says that what it boils down to is incompetence and a "federal loophole." Only eight states "have legally mandated robust data cross-checks that compare lottery winning records to food stamp records on a weekly or regular basis," he explained. While that may do well to cut back on government spending in those states, that leaves over 40 other states that "either have a bad system or no system."

As for the "federal loophole," a policy enacted by Congress called "broad-based categorical eligibility" essentially allows the government to ignore the food stamp asset limit if an individual is already receiving another taxpayer-funded benefit, Dublois contended.

"The assumption is that if you're getting the taxpayers' help in one area, you probably qualify for help in other areas," Dublois said. "But states have found ways to blatantly abuse this policy."

He draws attention to one common tactic, in which states will use federal funding for other welfare programs to print brochures about food stamps. These brochures are therefore considered a "taxpayer-funded benefit," which would theoretically enable someone to bypass the asset limit for food stamps.

"Substantial lottery winners can use this loophole, yet so can essentially anyone, including millionaires," Dublois continued. "Some 41 states and Washington, D.C., use this trick to get far more people on food stamps."

Dublois argues we should end broad-based categorical eligibility and instead calls on legislation to enact robust data checks between food stamp rolls, lottery winning records, and other key data such as death records and employment and wage records.

Perhaps what the FGA's study could have done better was to set the prize amount threshold to a higher amount when collecting data on lottery winners. That way, the data may have presented a more accurate picture of winners participating in SNAP who may not need to. This might also assuage the complications of comparing individuals from different states with varying taxes on lottery prizes — a state is more likely to implement a tax on lottery winnings the higher the amount, so maybe starting to analyze prize winners of a universally taxed amount amongst all states might serve the purpose of the study better. Of course, these changes would scale back the "staggering" 65,000 figure of lottery winners collecting food stamps, but then we would at least be able to have a more concise conversation about the core issue.

One thing that we can agree on is that if someone is winning $2 million in the lottery and is continuing to collect food stamps, we likely have a problem.