New Mexico has wrestled with one of the nation’s highest error rates in determining who gets the Supplemental Nutrition Assistance Program, or SNAP benefits. That distinction now threatens the state with a federal penalty that could cost hundreds of millions of dollars. State officials, facing that pressure, are turning to an unlikely source of financial records: slot machine jackpots.

The initiative is still in its early stages. But it signals a broader shift in how New Mexico verifies who qualifies for SNAP benefits. Instead of relying primarily on applicants to report changes in income and household circumstances, the state is cross-checking electronic records from government agencies—and now, potentially, gambling establishments.

If the plan moves forward, substantial slot machine winnings of $4,500 or more at state‑regulated casinos could temporarily cut off some New Mexicans from food assistance. Federal rules count those winnings as income that can push recipients above SNAP eligibility limits.

The agreement is still in its development stage between the New Mexico Health Care Authority (NMHCA) and the Gaming Control Board. It is part of a larger campaign to reduce payment errors before a federal deadline in October 2027.

“We’re essentially trying to get as much data electronically into our hands,” said Niki Kozlowski, director of the Health Care Authority’s Income Support Division. The information would allow caseworkers to verify reported income during eligibility interviews instead of relying solely on self-attestation, a practice that expanded during the COVID-19 pandemic and has contributed to payment errors, officials say.

Under federal regulations finalized by the U.S. Department of Agriculture last year, states must account for “substantial lottery and gambling winnings” when determining SNAP eligibility. Federal rules define a substantial gambling win as $4,500 or more from a single payout.

The consequences may be immediate but temporary for the recipients. A jackpot big enough to trigger reporting requirements could make a household ineligible for SNAP benefits. Once households spend the money and again meet income and resource requirements, they may reapply for benefits. “It may kick a family off for a month or two,” said Sovereign Hager, public benefits director at the New Mexico Center on Law and Poverty. “Then they reapply. It’s burdensome for the agency, and there’s no data it makes a meaningful difference in solving hunger or food insecurity for families.”

The policy is less about rooting out widespread abuse than about satisfying federal oversight. According to the USDA, New Mexico’s SNAP payment error rate stands at 16.8 percent, the third highest in the country behind Alaska and Washington, D.C. The figure measures both overpayments and underpayments—not necessarily fraud—and includes mistakes by both recipients and state workers.

Officials warn that unless the state lowers that rate below 6 percent by October 2027, it could face financial sanctions. The state could potentially lose as much as 15 percent of statewide SNAP benefits, an amount legislative analysts estimate may reach $173 million.

That penalty has prompted the HCA to pursue new data-sharing with tax agencies, motor vehicle officials, Medicaid programs, and now gambling regulators. Health Care Authority Secretary Kari Armijo told lawmakers in June that substantial slot machine winnings may affect SNAP eligibility once the agreement is operational.

The Gaming Control Board said the data-sharing arrangement would cover only gambling venues under state regulation—five racetrack casinos and roughly 50 veteran and fraternal organizations. These venues include Elks Lodges and American Legion halls, which are authorized to operate slot machines.

The state’s tribal casinos, however, would not be included because tribal gaming operations are under separate arrangements. HCA must negotiate individual data‑sharing agreements with each tribe or pueblo and revisit existing gaming compacts before sharing those records.

Even state officials acknowledge that gambling winnings are unlikely to be a major source of SNAP payment errors. Agency analyses show that incorrect calculations involving household size, earned income, and housing expenses account for far more mistakes than unreported gambling income. The state also has no estimate of how many of New Mexico’s approximately 434,000 SNAP recipients have received qualifying gambling winnings.

Still, officials say collecting every available source of income data has become necessary as federal scrutiny heightens.

The agreement represents a straightforward compliance measure to protect the integrity of a program serving roughly one in five New Mexicans. It illustrates, however, the growing administrative complexity of a safety-net program in which a single windfall—often quickly spent—can interrupt the SNAP benefits for families already living on the edge.

The debate ultimately raises a question on whether tighter verification improves public confidence in government assistance or merely creates new barriers for households whose economic fortunes can change as quickly as a winning pull on a slot machine.