http://www.latimes.com/news/local/la-me-welfare-casinos-20100624,0,...




California welfare recipients are able to use state-issued debit cards to withdraw cash on gaming floors in more than half of the casinos in
the state, a Los Angeles Times review of records found.

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.

State officials said Wednesday they were working to determine how much
money had been withdrawn from casino ATMs by people using the welfare
debit cards.

Gov. Arnold Schwarzenegger, who learned of the issue when asked to comment for this story, promised to take immediate action.

"We have instructed our vendors to prohibit these cards from being
accepted at ATMs located in casinos and card rooms," Schwarzenegger
spokesman Aaron McLear said Wednesday. "It is reprehensible that anyone
would use taxpayer money for anything other than its intended purpose."

Administration officials said the social services agency contracts with
a private ATM network to handle the electronic transfer of benefits to
people on welfare, and hadn't noticed that the taxpayer money was being
withdrawn at gambling establishments.

McLear said the system of paying out welfare benefits via bank cards
was created under Schwarzenegger's predecessor, Democrat Gray Davis.
Since the late 1990s most states have adopted this system, which is a
viewed as a more efficient way of distributing and tracking government
aid.

Schwarzenegger has been wrangling with lawmakers over other efforts to
combat waste and fraud in the state's social services programs. He
fought back a legislative effort to discontinue fingerprinting of food
stamp recipients, a system designed to prevent double-dipping and other
abuses.

Casino ATMs account for a handful of the thousands of machines in the
contractor's network, and the amount withdrawn from them by welfare
recipients almost certainly would comprise a tiny fraction of the
state's multibillion-dollar welfare spending. But the issue is likely
to come up as lawmakers fight over how best to close their historic
budget deficit.

Schwarzenegger had already threatened to eliminate the state welfare
program in his May budget proposal, and that was before he and his
Republican allies in the Legislature knew that the cash could be
accessed by people strolling from poker games to blackjack tables.

"In a time when we have a $19-billion deficit, and we're taking a
serious look at the future of many safety-net programs, it's appalling
to think that welfare beneficiaries can use their cards in a casino,"
said Seth Unger, spokesman for the Assembly Republican Caucus.

Democratic leaders, who have vowed to protect the state's fraying social safety net, also began calling for reform Wednesday.

"In these tough times, when so many children and vulnerable families
depend on the safety net, we have to make sure food stamps and other
services are being used the way the people of California intended them
to be," said Shannon Murphy, spokeswoman for Assembly Speaker John A.
Pérez (D- Los Angeles). "Other states have closed this loophole, and
the Assembly will work with the Schwarzenegger administration to make
that happen."

The casinos are listed on a Department of Social Services website that
allows welfare recipients to search for addresses of ATMs where they
can withdraw cash provided under the Temporary Aid for Needy Families
program. The monthly grant ranges up to $694; most of the ATMs impose a
withdrawal limit of about $300 per day.

The Times compared the addresses on that website with lists of tribal
casinos and state-licensed poker rooms published on the California
Gambling Control Commission's website.

It's not clear which casinos are most frequently patronized by welfare
recipients because social services officials denied a January request
from The Times for data showing transaction information from all of the
ATMs in their network. Department lawyers argued that federal law
prohibits the state from releasing financial information about
merchants who accept cards issued to welfare recipients.

Those cards, known as Electronic Benefit Transfer cards, look and work
just like ordinary debit cards. They allow welfare recipients to access
two accounts: the cash offered so needy parents can provide a home for
their children while they train for better jobs, and an electronic
version of food stamps that comes with rules governing where and how
the benefits can be spent.

The cash benefits, however, can be withdrawn and spent just about anywhere.

The Capitol Casino, which occupies a pair of small rooms a few blocks
from the legislative chambers in Sacramento, appears on the social
services website showing where clients can get money. Each room has an
ATM: one is so close to a poker table that a player with long arms
could lean back and withdraw cash without leaving his chair; the other
is a few steps from the blackjack table.

At the Casino Royale on the outskirts of Sacramento, the first thing
patrons pass as they walk to the gaming floor is the ATM with a sign
next to it saying, "Exceed your ATM daily limit here!!"

Faye Stearns, a part-owner of Casino Royale, said she had no idea
people on welfare could withdraw taxpayer dollars from the machine, and
would not oppose a measure to prohibit it.

"I'm sure we wouldn't want to be taking money from children," Stearns
said. "The adults? Hey, that's their problem. But kids? No."

The cash portion of California's welfare benefits comes from the
Temporary Assistance for Needy Families program. Each year, California
gets $3.7 billion from the federal government for the program, while
state and local governments kick in an additional $2.9 billion.

The state of New Mexico and at least one company that supplies ATMs to
the gaming industry have already taken steps to make sure their
machines in casinos reject welfare benefits cards.

"I think it makes social sense," said John Monforte, executive director
of the New Mexico Gaming Control Board. "There's a balance with gaming.
There are wonderful things [casinos] do for tribal governments, but the
reality is there are also negative social impacts."

Global Cash Access, a Las Vegas firm that provides ATMs and other
equipment for more than 1,000 casinos in the United States, started
programming their machines to reject welfare cards more than a decade
ago.

"Unless a state tells us to allow access to their EBT cards, we will
continue to block these cards from being accepted at our devices," said
Katie Lever, the firm's general counsel. "It's really easy to do."