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New York seizes $20 million in lottery prizes from people on public assistance

Jul 5, 2017, 9:27 am

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New York LotteryNew York Lottery: New York seizes $20 million in lottery prizes from people on public assistanceRating:

New York state has reclaimed nearly $20 million in lottery prizes since 2013 from winners who had received public assistance in the last 10 years.

The little-known program, one of the toughest of its kind in the country, has grabbed back prizes from an estimated 30,000 winners in the last four years.

At least six other states have similar programs, but New York is the only state that seizes prizes of those on public assistance, experts said. Other programs take back unpaid child support payments or unpaid taxes.

Here's how it works: Lottery players who win prizes of more than $600 can only get their prizes at state lottery centers. There, lottery officials process winners' Social Security numbers and other identifying information to determine, among other things, whether they've received public assistance over the last 10 years.

If they have, the state can seize up to 50 percent of the winner's payout to help pay back what they've gotten in welfare. The state cannot take more than what a recipient received in welfare.

Welfare recipients can contest it if they believe they are wrongly penalized. In 2016, winners appealed 667 times and won their appeals 476 times, according to the state Office of Temporary and Disability Assistance.

The OTDA has estimated these "intercepts" have happened about 30,000 times in New York since 2013, though the number is hard to determine.

What is known is that the state has garnered about $20 million since then, according to OTDA data. The agency also estimated it withheld money about 300 times in Onondaga County since 2013, taking $26,650 from lottery winners. 

While the clawback policy has not received much publicity, lottery players and dealers in poor neighborhoods know about it and have built an underground economy to get around it.

In some places, lottery players who stand to lose some prize money have learned, in effect, to pay someone to safely claim their full jackpot.

Two state agencies — the Gaming Commission and Department of Tax and Finance — last month launched an effort to crack down on lottery winners who try that move.

Two accused schemers — Neil Ferguson, 50, and Eduardo Moran-Barrera, both of New York City — were charged with criminal tax fraud. Both are accused of cashing in a combined 777 tickets on behalf of those who were trying to avoid paying back the state. 

Nonie Manion, the tax department's executive deputy commissioner, said the so-called "discounting schemes" deprive "New York State taxpayers of revenue needed for vital services."

"We will continue to root out criminals who try to evade these obligations," she said.

That so many people on welfare have won $600 or more on the lottery shows the game's popularity among the state's neediest residents, who experts say often have gambling addictions or buy the tickets out of a misguided attempt to escape poverty.

Quik-Mart customers know the program

The program was well known among players at the Quik-Mart Express in one of Syracuse's poorest areas.

The South Salina Street shop was bustling with lottery commerce. It sold the highest number of winning tickets in Syracuse in 2016 — $124,838 to 18 winners, according to data obtained by the Columbia University School of Journalism.

By 1 p.m. on a recent Monday, the shop had sold 1,327 lottery tickets, not including scratchoffs, in four hours.

At the store, one woman said she was on public assistance and played the lottery and bought scratchoffs. She said the trick is to hand the ticket to someone who is not on public assistance and give that person a cut of the winnings.

"We know all about it. If we win, we give the lottery ticket to someone that works," the woman said, declining to give her name unless a reporter bought her another scratchoff ticket. 

Another woman buying a lottery ticket, who identified herself only as Clara, 75,  said a neighbor once offered her $500 to cash in a $5,000 winning ticket. She declined the offer, she said.

National critics condemn it as cruel

Lottery critics ripped the program. Those who play the state lottery often do so out of "financial desperation" or addiction, so a program that further reduces infrequent winnings is cruel, said Les Bernal, national director of Stop Predatory Gambling, a nonprofit organization.

"They're just sucking as much money out of people as they can," said director Les Bernal. "New York state goes after those funds because the intent of state-sanctioned gambling in New York state is to maximize profits. It's not to promote the public interest. It does not improve people's lives."

Welfare recipients are required to pay back money if they have other windfalls, such as a lawsuit settlement or inheritance.

Both agencies involved in the program — the State Lottery and OTDA — declined to describe what they saw as the program's intent. Instead, spokesmen said the agencies are simply implementing a decades-old program and referred comment to state legislators who enacted the law.

On average, lottery winners on public assistance saw about $670 of their winnings taken away, according to a Syracuse.com review of the state data. In Onondaga County, the average amount the state took was about $623.

Welfare reform

The program started in 1995, created in then-Gov. George Pataki's package of reforms to the state's Medicaid and welfare programs. The 100-plus-page bill ends with a three-page section, giving the state the power to take the winnings.

Pataki's statement accompanying the law's passage did not address the lottery program specifically but said the reforms were aimed at preventing welfare cheats and recipients becoming too dependent on the system.

"This legislation enacts changes to our welfare system which emphasizes work, personal responsibility and temporary assistance instead of permanent dependence upon a system which can no longer support those who are in desperate need of assistance," Pataki wrote in June 1995.

Former state Assemblyman Patrick Manning (R-Dutchess County) introduced legislation that same year that would have created a program like the one passed in the welfare reform package. His legislation said the bill's purpose is to "recover any benefits paid to recipients who now may be able to repay those dollars because of lottery winnings."

Several experts told Syracuse.com that New York's practice of taking public assistance money is unique to the country by taking public assistance funds, not just child support or back taxes.

Those experts are David Gale, executive director of the North American Association of State and Provincial Lotteries, and Richard McGowan, a finance professor at Boston College who's written three books on the gambling industry.

Michigan's Health and Human Services in 2014 did cut some state-funded benefits to welfare recipients in light of a report that found more than 7,200 people who won at least $1,000 in the Michigan Lottery the previous year living in households that received public assistance.

Robert Barksdale, a Quik-Mart customer who said he spends about $10 a day on lottery tickets, said he agrees that people on welfare are making poor choices by spending money on lottery tickets.

But he said he understands the allure of prizes in the millions of dollars to folks struggling to get by. His cousin, for example, spends $100 a day on tickets.

"I wouldn't say he's got a gambling problem. I'd say he has a hope problem," Barksdale said of his cousin. "A lot people are struggling out here, man. They want to win it big."

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21 comments. Last comment 3 years ago by TheOtherOne.
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Raven62's avatar - binary
25
New Jersey
United States
Member #17842
June 28, 2005
125928 Posts
Offline
Posted: July 5, 2017, 9:42 am - IP Logged

The government collects taxes to finance public assistance programs. this program should help reduce Taxes!

A mind once stretched by a new idea never returns to its original dimensions!

Catch-22: A dilemma or difficult circumstance from which there is no escape because of mutually conflicting or dependent conditions.

Corruptissima re publica plurimae leges: When the republic is at its most corrupt the laws are most numerous.

    wander73's avatar - Lottery-008.jpg

    United States
    Member #153769
    March 24, 2014
    4627 Posts
    Online
    Posted: July 5, 2017, 9:49 am - IP Logged

    I didn't get to read all of it.  However it was mentioned they want to hit big.  They want to spend money everyday yet they complain about other things.  That's not good.  I recall someone in Michigan who was on welfare kept it even after winning then finally was kicked off because the state obviously knew about it.  The article might be archived in this site somewhere.

      Avatar
      Wyomissing, PA
      United States
      Member #161045
      November 15, 2014
      481 Posts
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      Posted: July 5, 2017, 10:37 am - IP Logged

      Easiest way to avoid such problems is to play games with prizes of $600 or less. One can play multiple times to win more than that, such as $10 worth of Pick-3 straight tickets for the same number to win $5K total.

      Obviously, many players are seeking to hit the big one, so playing small isn't an ideal option. In which case, it's likely best to play super-large so that the prize will more than cover whatever is owed to the government, etc while leaving a bundle of cash remaining. The proposed Mega Millions Just the Jackpot option ($3 for 2 jackpot only plays) will likely appeal to many players facing a similar situation.

      On a related note, have such seizures adversely affected NY Lottery sales? NY state likely doesn't care, but am curious, nevertheless.

        OneTrickpony's avatar - rocking horse.jpg

        United States
        Member #167652
        July 25, 2015
        118 Posts
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        Posted: July 5, 2017, 10:48 am - IP Logged

        I didn't get to read all of it.  However it was mentioned they want to hit big.  They want to spend money everyday yet they complain about other things.  That's not good.  I recall someone in Michigan who was on welfare kept it even after winning then finally was kicked off because the state obviously knew about it.  The article might be archived in this site somewhere.

        I remember that story.  She won $1 million, then couldn't understand why everyone was up in arms about her still using food stamps.  I think she died of a drug overdose not long after she was charged with welfare fraud.  Sad.

          JoeBigLotto's avatar - Lottery-049.jpg
          melbourne , florida
          United States
          Member #121136
          January 3, 2012
          244 Posts
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          Posted: July 5, 2017, 11:36 am - IP Logged

          The state of NY is not really smart. The best thing to do is charge winners that owe a maximum of 10 to 15 percent at a time extra and let the winners enjoy their remaining money. Because winners are lossers too they don't win all the time. This way the state legally put middle dealers out of business. They are in business now because the state is too greedy to collect every penny . Remember never over fish the ocean so fish carefully so players won't mind your little shark bite off . DanceCoffee

            TheMeatman2005's avatar - lightening
            Brooklyn, NY
            United States
            Member #169719
            October 29, 2015
            1481 Posts
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            Posted: July 5, 2017, 12:19 pm - IP Logged

            I remember that story.  She won $1 million, then couldn't understand why everyone was up in arms about her still using food stamps.  I think she died of a drug overdose not long after she was charged with welfare fraud.  Sad.

            This is the story you were referring to....

             https://www.lotterypost.com/news/251311?q=Amanda+Clayton

            The Meatman 🥩🍗🍔🍖🍤🌭

            “The quickest way to double your money is to fold it in half and put it in your back pocket.” Will Rogers

            Winning happens in a flash, Like A Bolt Of Lightning!  Patriot

              MillionsWanted's avatar - 24Qa6LT

              Norway
              Member #9517
              December 10, 2004
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              Posted: July 5, 2017, 12:33 pm - IP Logged

              A lot of welfare recipients in Onondaga county?

                Groppo's avatar - cat anm.gif

                United States
                Member #162626
                January 7, 2015
                778 Posts
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                Posted: July 5, 2017, 2:55 pm - IP Logged

                .

                Greed is not good.  Please,  all LP members, if you win, remember not only me,  ha ha,
                But the government too.  They want to know about any windfalls, that benefit you.

                Don't try to rip off Uncle Sam.  That's a big no-no.   We need to make sure our
                Armed Forces are well equipped, especially in light of North Korea's  threat, from young
                Uncle Blimpo.

                Mr. Groppo

                • Don't chase the numbers you play.
                • Play only numbers you've already played, plus however many random picks.
                • But, ALWAYS the regular numbers you play.  This will make you a winner, not a chaser.
                           (so far, though, I've yet to win any significant lotto prize)
                • Oh, but always know where your tickets are, as well as your ticket's deadline.
                  Cassie8620's avatar - oGH0ok
                  California
                  United States
                  Member #180566
                  March 13, 2017
                  3910 Posts
                  Offline
                  Posted: July 5, 2017, 4:41 pm - IP Logged

                  I'm remembering this in the news. I think it was 1 of the most tragic"lottery-related stories."She yep, still wanted her um food stamps,even though she was rich $

                  I recall she was later, a short time dead,from drug overdose allegedly, as some family members, an ex was on news talkin'bout she was also still using, but it was so much "easier $$$"to score drugs, with cash at every turn.Or something like this i read. so sad.

                  So very tragic for her, rip.

                  I won over 13G's!( Spring 2020 ) + total (2019) 22,000! Time 2 break the bank, baby! $ $ $ Banana                                                             

                  0800 0068 0806 1027 1608 0620 0862 6800 8602 8620 1211 1215 1216 1236 1623 3193 3533 3009 3150 3159   

                  1038 1236 3241 2579 1438 0476 1417 1671 1467  4773.5593.5635.5925.7159.9159.

                  2464 2426 2446 3522 4764 6442 4949.4950.6231.7664 7678 8779 9203.9513.9152.9561.9899.

                    eddessaknight's avatar - nw paladin.jpg
                    LAS VEGAS
                    United States
                    Member #47728
                    November 22, 2006
                    6988 Posts
                    Offline
                    Posted: July 5, 2017, 5:58 pm - IP Logged

                    .

                    Greed is not good.  Please,  all LP members, if you win, remember not only me,  ha ha,
                    But the government too.  They want to know about any windfalls, that benefit you.

                    Don't try to rip off Uncle Sam.  That's a big no-no.   We need to make sure our
                    Armed Forces are well equipped, especially in light of North Korea's  threat, from young
                    Uncle Blimpo.

                    Mr. Groppo

                    I Agree!

                    You can't win that kind of m oney and not owe up!

                    Do the right thing & pay the man the $2 dollars -

                    Eddessa_Knight 

                      Avatar
                      Chasing $ Millions.
                      White Shores- California
                      United States
                      Member #136473
                      December 12, 2012
                      6209 Posts
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                      Posted: July 5, 2017, 6:10 pm - IP Logged

                      l guess the NY State authorities have not been following through on Mark 14:7.

                       * Voice of Reason *   

                       

                      People who say it cannot be done should not interrupt those who are doing it- George Bernard Shaw.

                        Avatar
                        Marana AZ
                        United States
                        Member #145337
                        August 3, 2013
                        253 Posts
                        Offline
                        Posted: July 5, 2017, 7:13 pm - IP Logged

                        It sounds like more people ought to appeal since 71% of those who appeal win their case.

                        Also, there should be a deduction from what the state claws back for the amount the people lost playing.  I'm sure very few win more than what they spend.

                          TheGameGrl's avatar - Lottery-012.jpg
                          A long and winding road
                          United States
                          Member #17083
                          June 10, 2005
                          6408 Posts
                          Online
                          Posted: July 5, 2017, 7:46 pm - IP Logged

                          Firstly, most who are on welfare paid in thru earnings! There is no shame in a person receiving what they already paid into.. New York is double dipping...as some of these welfare programs are federally aided...

                          Going back ten years??? Pathetic. 

                          New York is a shambles...

                          3443 2445 1220 1500 1320

                          Value that which cannot be bought or sold.

                            Avatar
                            Poinciana, fl
                            United States
                            Member #176355
                            August 1, 2016
                            757 Posts
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                            Posted: July 5, 2017, 8:39 pm - IP Logged

                            It shouldn't matter public assistanc3 our Nottingham, poor ppl cash in soda cans for money, what is the it takes a dollar and dream and win big. It's the way out of the struggle they had, and now got taxes u on ur win then takes it back yes the frauds go after but ppl struggle to survive and win and loose it cause of mishaps in the past kinda crappy