Why J.G. Wentworth wants to be the payment company for lottery players

J.G. Wentworth's quirky Broadway-style ads have made it familiar as a structured settlement purchase company, and as it attempts to grab share in the prepaid market it's looking to lottery agencies to make sure its strategy is no gamble.

The company is combining a virtual Visa prepaid gift card and a scratch-off ticket in a single product, enticing consumers with the chance that each gift card could be worth more than its face value.

"We're trying to transform from a structured settlement purchaser to a diversified payment company, and the prepaid channel is a big part of the transformation," said Sean Healey, vice president of payment solutions for J.G. Wentworth.

The goal of this new business line is to attract a different demographic to buy lottery tickets by tying them to online redemption and games of chance.

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"We see the current lottery demographic skewing older, and this is a way to get younger people involved, or the older generation could give the gift card to the younger generation…a niece or a nephew," Healey said.

Consumers buy the cards at a retailers that sell scratch-off lottery tickets and purchase a "Give Some, Play Some" Scratcher, which includes a $20 gift card and a scratch-off lottery ticket as part of the purchase fee (which is about $3).

The recipient plays the scratch-off game printed on the card's packaging, which could make the card worth up to $100 more. The recipient then electronically redeems the card online, with the lottery payout handled through the state's lottery commission.

J.G. Wentworth has announced one lottery agency thus far, the New Mexico Lottery Authority, which launched its version of the product last month.

J.G. Wentworth's lottery card is part of a broader product expansion that also includes other types of gambling The company recently introduced the WinStreak Visa prepaid card in partnership with FIS, aimed at internet gaming, fantasy sports and casinos that wish to issue payouts on a prepaid card.

Lotteries have drawn some attention from payment companies, through J.G. Wentworth's ability to use the venue to challenge established prepaid companies may face a technology and logistics challenge.

Verifone, for example, handles lottery purchases as part of its gas station EMV migration strategy. The general gaming industry has also drawn attention from mobile payment companies seeking to reap a windfall from the growth of digital gambling. First Data, Optimal Payments and Vantiv have each introduced gaming payment platforms in recent years.

Tying lottery payments to mobile apps or digital payouts is still relatively new compared to tying lottery games to traditional plastic cards, and there's more technology development that needs to happen before the digital lottery payment market can take off.

"It is too soon for any of the mobile 'pays' to have had an impact on online lottery purchases," said Tim Sloane, vice president of payments innovation and director of the emerging technologies services at Mercator. "First, the number of mobile apps with embedded Apple, Android or Samsung payments remains small and, second, most state lotteries don't allow online purchases."

There's also still a hole in lottery payment redemption, Sloan said.

"if the cardholder wins, they will still be required to claim the winnings through the state lottery commission and accept the payout in whatever form that state lottery supports — probably a check in the mail," Sloane said.