National Lottery operator Camelot will issue judicial review proceedings next week against the Gambling Commission for what it described as “continuing failure to take appropriate regulatory action” against the Health Lottery.

Camelot CEO Dianne Thompson said she believed THL was unlawful because it operated as a national lottery. The National Lottery Act 1993 only allows for just one national lottery.

The Health Lottery has always maintained it is an external lottery manager which operates on behalf of 51 independent and regional community interest companies.

But Thompson said the fact that every CIC had the same directors, offices and identical terms and conditions meant they did not have any effective, independent existence.

“The idea that each of the 51 societies that are said to make up the Health Lottery is a separate and distinct small-scale entity is absurd,” she said. “The Health Lottery was not created for the benefit of the 51 societies – precisely the opposite is the case: these societies were created to benefit The Health Lottery.”

And although regulation states that society lottery licenses can be issued to non-commercial societies, Thompson said there was plenty of evidence that the purpose of the 51 CICs was to “make profits for Northern and Shell”.

Thompson insisted she had no problem with Richard Desmond, whose company Northern & Shell operates The Health Lottery, but that allowing THL to operate would set a dangerous precedent and open the door for other new entrants to the market.

“The Gambling Commission is in real danger of setting a perilous precedent that will allow other commercial operators to establish what would effectively be further rivals to The National Lottery. This would have a potentially devastating effect on returns to National Lottery good causes and lottery duty revenues to the Exchequer.”

Under its license, Camelot distributes 28p for every £1 in sales to good causes, as well as 12p in lottery duty. The Health Lottery gives 20p for every pound to health-related charities but is not subject to lottery duty. “Our total contribution to society is 41% of revenues, which is double theirs,” Thompson said.

“I like Richard and admire his enterprise,” she added. “My fight is not with him. But I do have a problem with the Gambling Commission, who appear to have allowed statute and regulation to be circumvented in a way which is at clear odds with the intention of Parliament and the best interests of many good causes that rely on National Lottery funding.”

The announcement comes after The Gambling Commission wrote to Camelot to say it would challenge an application for judicial review and that in any case it believed Camelot had left it too late to bring a judicial review.

Health Lottery CEO Martin Hall said he agreed with the Gambling Commission that Camelot’s arguments were “devoid of merit”.