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Spending on social activities is fine, and in theory there is no limit on the cost. However, the issue is proving how the money was spent. If your mother spends the money as cash, how does the Medicaid agency know whether it was lost at the casino or given to someone else? The latter would be an uncompensated transfer and result in a Medicaid penalty period. If it is possible for her to get receipts from the casino or to pay with a credit card, she would have proof if the agency questions where the money went. In addition, as you suggest, the smaller the amount spent, the less likely the agency will be to question the transaction, though this is less a legal difference and more of a strategic one.

For more information on spending down money to qualify for Medicaid, click here.