Get the state governments out of it.
License the lotteries themselves as regulated private entities. Include in the license the “fees” the lottery now pays to the state as a portion of its proceeds.
But leave the payouts as 100% administered by the licensed lottery entity, with the state having nothing to do with that.
If the winner oues the state some money, it is up to the state to make that claim in a mailing to the winner after the state gets a copy of the 1099 issued by the lottery for their prize payment, but meanwhile the winner has been paid.
“Get the state governments out of it.
License the lotteries themselves as regulated private entities. “
The state governments ARE out of it! Their only part is to pass legislation allowing the ticket sales.
The lotteries are run by a non-profit association.