California is seeking to become the first US state to privatize its lottery to raise as much as $37 billion (£18 billion, €26 billion), with some of the funds used to finance governor Arnold Schwarzenegger's sweeping health care reforms.
Some of Wall Street's biggest investment banks have made unsolicited approaches to the state to convince it of the merits of privatization.
Goldman Sachs, Lehman Bros, JP Morgan, Bear Stearns, Citi, Merrill Lynch, Morgan Stanley and UBS have all made pitches.
Other US states are closely monitoring California's lottery plans, with Texas, Illinois and Florida considering their own privatizations.
The California move would see the state adopt a model similar to Britain's national lottery, which is run by Camelot, and is the "classic example of a privatized lottery", according to Kevin Klowden, managing economist with the Milken Institute think-tank.
Rather than sell the lottery outright, Mr Schwarzenegger is considering leasing it to a private operator for 40 years in exchange for a huge upfront payment, with the state continuing to regulate the game.
Under the Schwarzenegger plan, any money generated by the lease would be paid into an annuity. About $2 billion would then be spent annually on his universal health care proposal, which aims to ensure that every person in California has adequate health insurance. His plan has a projected cost of $14 billion a year.
The new lottery money would cover a funding shortfall in the health care plan, which has been adjusted and revised since it was first proposed last January.
In the pitch from Lehman Bros, which has been seen by the Financial Times, California's lottery revenues would be boosted by expanding the network of retailers selling tickets, better marketing and selling advertising space on lottery tickets.
"The California lottery significantly underperforms its peers, with per capita sales barely reaching half the national average," the Lehman pitch document says.
Selling or leasing the lottery would be beneficial to the state, Mr Schwarzenegger said recently. "There is someone who will do a better job, who will get more money for the taxpayers."
Revenues from the lottery would also be used by California to write down "economic recovery bonds", which the state sold at the start of Mr Schwarzenegger's first term as governor.
The bond program was launched four years ago because California was in dire financial straits. Redeeming the bonds in 2008-09 would, under Mr Schwarzenegger's proposal, cost $6.4 billion.
The privatization, which would have to be ratified in a public ballot, has already attracted criticism. The California Teachers Union says a privatization would jeopardize the $1 billion in annual funding the state education system presently receives from the lottery.
Mr Schwarzenegger is proposing use the state's general budget to replace the lottery funding for education. "To add more general fund pressure on education is a big issue," said Estelle Lemieux of the CTA.