National Lottery operator says it will appeal the 'legally flawed and unfair' judgment
Camelot said the judgment was "legally flawed" and said it would appeal.
It applied for a judicial review of the commission’s oversight of the 51 community interest companies that make up the Health Lottery because it believed the Health Lottery was attempting to commercialise society lotteries in a way that broke both the spirit and letter of the law.
Camelot had claimed during the hearing, which took place at the High Court in London last month, that the Gambling Commission had failed to set up an adequate review of the Health Lottery scheme.
It said it had lost up to £1m every week in sales since the Health Lottery was launched by the media owner Richard Desmond in October.
But in today’s judgment, Lord Justice Stanley Burnton refused Camelot permission to proceed with its claim on the grounds of its delay in bringing the case and its "failure to establish a claim with a real prospect of success".
The judge said he agreed with the commission that the question of whether multiple society lotteries should be permitted, rather than a single one, was a political one "to be determined by the government or parliament".
"Multiple society lotteries are not prohibited by the [Gambling Act 2005]," he said.
"The commission has correctly determined that the real question relating to the Health Lottery is whether it in practice satisfies the licensing objective of fairness and openness, given the misleading widespread public perception of a single lottery benefiting a single society."
Camelot issued a statement that said: "Camelot is disappointed by today's judgment, and intends to lodge papers with the Court of Appeal against what we believe to be a legally flawed and unfair decision by the court.
"Despite this, we warmly welcome the fact that the case has clearly highlighted the need for urgent government action to close a loophole in the Gambling Act 2005, which has been used by the Health Lottery to position itself as a direct rival to the National Lottery," it said.
In a statement, Desmond said the judgment was "a complete vindication of all the hard work that has gone into launching the Health Lottery".
"If Camelot had succeeded in this case it would have shut down lifeline funding to hundreds of health projects and charities and the charity sector would have lost out badly," he said.
"I am thrilled that the court has seen through their tactics and that we can get back to work."
A spokesman for the Gambling Commission said it welcomed the decision.
"We will continue to adopt a proportionate and risk-based approach, focusing on the licensing objectives of keeping crime out of gambling, ensuring it is fair and open, and protecting children and vulnerable people," he said.