Acevo, the umbrella body for charity chief executives, has urged the government to close "loopholes" in lottery law after the High Court rejected Camelot's bid for a judicial review of the Gambling Commission's oversight of the Health Lottery.
Sir Stephen Bubb, chief executive of Acevo, has written to John Penrose, the minister responsible for lotteries, with copies to Nick Hurd, the Minister for Civil Society and David Cameron, the Prime Minister, calling on the government to review the National Lottery Act 2006 and the Gambling Act 2005.
Bubb says he is concerned that the Health Lottery could reduce the amount of money going to charity by damaging the National Lottery, which gives 28p in every pound to good causes compared with 20p in the pound donated by the Health Lottery.
In the letter, Bubb says there are "loopholes in the law that allow activities to take place that are contrary to the intentions of parliament. The loopholes allow the Health Lottery to pose a threat to charitable income in this country.
"Given the government’s commitment to the country’s charities, I believe it is now imperative that the government acts to close those loopholes.The time for wait and see - leaving the conundrum to the regulator and then to the courts - is now over."
Bubb says the fact that the High Court has ruled that the Gambling Commission was properly enforcing the law means that the law itself contains loopholes that need urgently to be closed.
Camelot, the operator of the National Lottery, applied for a judicial review in March of the Gambling Commission's oversight of the 51 community interest companies that make up the Health Lottery, launched by the media owner Richard Desmond last October.
It claimed the Health Lottery was unlawful and was attempting to commercialise society lotteries in a way that breaks both the spirit and the letter of statute and regulation.
The application was dismissed by the High Court after judges ruled that existing legislation did not prohibit multiple society lotteries and that it was up to government and parliament to determine whether to change the law.
Sir Stuart Etherington, chief executive of the National Council for Voluntary Organisations, said in a statement that a competition of lotteries could benefit the voluntary sector because it created funding streams for a diverse range of causes.
But he said the Health Lottery "must now turn its attention to planning how to increase the proportion of funding it gives to charitable causes".
"Otherwise this risks setting a dangerously low precedent and could reduce sector funding during an extremely challenging time," he said.
Asked to respond to both Bubb and Etherington's comments, a spokeswoman for the Health Lottery said: "There are 51 society lotteries that raise money through the Health Lottery. We have raised more than £22m for health-related charities and projects at a local level in every part of England, Scotland and Wales. This is new money that did not exist before and it is a funding lifeline to the charities who get support."