I do not beleive a state lottery can go "bankrupt". A state lottery is secured by the amount of funds which are paid to it by people who pay lottery tickets. Additionally, all of the assets of the State, including government buildings, ect, would could technically be used to secure these kinds of payments. I beleive the entire state would have to go bankrupt--at least under my states concept of how they run their lottery. If the lottery of a state stopped paying annuity payments, those winners would have a claim for the full amount of the remaining amount due from the state government as a whole. I do not beleive the entire state of Texas is insolvent. I am not licenced in your state and you should talk to a lawyer with specific expertise in this area in Texas.