Until recently, few restrictions existed to stop welfare recipients from spending their benefits on lap dances, booze, slot machines, and other obvious frivolities. So in 2012, Congress passed legislation forbidding the use of cash benefits at such shady venues, and pushing state governments to help with the crackdown. Indiana’s response has been a runaway success.

The Hoosier State reports that in the last year it has cut this kind of unlawful use of welfare cash by more than half. The statehouse is partially to thank, for passinglegislation requiring ATM vendors to electronically block the withdrawal of cash benefits at restricted locations, a mandate that took effect last July. “Indiana overall has really tried hard to approach all issues in a conservative fashion that makes sense to taxpayers as well as the individuals that receive benefits,” says state senator Jean Leasing (R., Oldenburg).

The Indiana Family and Social Services Administration (FSSA) followed up with strong enforcement, too, spending about $45,000 up front to develop technology that matches EBT (electronic-benefits-transfer) transactions with data from the state’s Alcohol and Tobacco Commission and tracks users who have already received warning letters about potentially unlawful withdrawals. Today, it costs less than $400 a month for the administration to continue to monitor for potential abuses, an amount that includes not only postage but also staff time.

Beneficiaries caught withdrawing cash at a banned location get a strongly worded warning on their first offense; second-timers get another, harsher letter, and the administration turns the case over to its own internal investigative unit; on the third strike, the administration involves the local prosecutor, providing all the information it has gathered about potential abuse of welfare cash.

FSSA spokeswoman Marni Lemons says that it is “100 percent up to the local prosecutor as to whether or not they pursue these violations.” But withdrawing cash benefits at a restricted ATM is a class-C misdemeanor, and beneficiaries found guilty face penalties of up to 60 days in prison and a $500 fine.

The administration has also conducted a large-scale mail campaign to ensure that anyone receiving Temporary Assistance for Needy Families (TANF) cash benefits is aware of the new restrictions, says Lance Rhodes, who oversees Indiana’s TANF program. These rigorous measures are making a difference, Rhodes says — and so far, the statistics back him up.

In 2012, the investigative team at WISH-TV in Indianapolis found that Indiana TANF users had used their EBT cards to withdraw more than $120,000 from ATMs in liquor stores, strip clubs, tobacco shops, casinos, vacation resorts, golf clubs, and amusement parks. Of that, $68,000 was accessed at ATMs in locations forbidden by law.

But this year, Rhodes tells National Review Online, Indiana officials have found fewer than 15 first-time violations each month, even as the TANF program covers around 24,000 recipients. And “the thing I really think is telling are the few second and third violations,” Rhodes says: fewer than five second-time violations each month since January, and only two third-time violations since 2014 began.

WISH-TV also conducted a follow-up investigation and found only 46 potentially illegal transactions in the first quarter of 2014, a figure that “represent[s] a 60 percent drop in illegal transactions from the first quarter of 2013.”

Those are “pretty good numbers,” Rhodes says, adding that they’ve identified less than $6,000 in TANF funds potentially accessed unlawfully, out of a $250 million program. Indiana has aggressively gone after misuse of cash benefits “first of all, because it’s the law,” Rhodes adds. “And second of all, as taxpayers, we take our job seriously. It’s our responsibility and obligation to follow through.”

— Jillian Kay Melchior is a Thomas L. Rhodes Fellow for the Franklin Center for Government and Public Integrity. She is also a senior fellow at the Independent Women’s Forum.