It would depend on the laws of the state in which the lottery is held, as well as any specific rules in the lottery. In some states, it is illegal for a for profit enterprise, like a bank, to purchase a lottery ticket, especially if it would be considered an out-of-state purchase. I don't see why any bank would take the risk of paying you out first, and taking the chance that they aren't going to be allowed to receive the winnings.
What's far more likely is that you'd take the annuity payment from the lottery commission, and then the bank would buy out the rights to your annuity directly in exchange for a lump sum. I think that may be what you're describing there. It could make a very significant difference legally that the prize has been awarded to a private individual person and then the bank purchases the lottery annuity in the same way they could purchase an annuity settlement that came from an insurance policy or a law suit settlement. Ever see those J.G. Wentworth commercials? That's exactly what they're describing. However, the key difference is that they're not purchasing anything until AFTER the award has been made and the prize finalized, in order to minimize any risk to themselves.
If you have in fact won the lottery, you should seek an attorney to handle your affairs immediately. Some states, including California, have specific regulations on the assignment/collateralization of a lottery annuity payment. In California, this is from the Lottery Investments Office.
I'm linking below this article the California Lottery's "Winner's Handbook". It discusses this issue in section 13 and contains helpful contact information.
Best of luck.
I focus my practice on (video) gaming industry, casino gambling, and complex internet law issues, electronic free speech, entertainment law, copyright and trademark law, and computer fraud. I primarily represent game developers and founders of emergent internet technologies. The author is a Maryland attorney; however no answer given on Avvo is intended as legal advice or intended to create an attorney-client relationship.Ask a similar question