National Lottery operator Camelot is to seek permission next week for a judicial review into the Gambling Commission's "continuing failure" to revoke or suspend the Health Lottery licences.
Chief executive Dianne Thompson said they believed the Gambling Commission made a "fundamental error" in allowing the Health Lottery, launched five months ago by Northern and Shell, to operate in its current form.
She said that by licensing the Health Lottery, the Gambling Commission was in "real danger" of setting a precedent allowing other commercial operators to set up as rivals to the National Lottery.
This would have a potentially "devastating" effect on returns to the National Lottery good causes and Lottery duty revenues to the Treasury, she said.
"As you can imagine, no business likes to be publicly at loggerheads with a regulator," she said at a news conference at Camelot's London offices.
"But the issue at stake here is so important, not just to us, but to the good causes that the National Lottery exists to support, that we can no longer remain silent.
"The issue is this: we believe that the Gambling Commission has made a fundamental error in allowing the Health Lottery, launched five months ago by Northern and Shell, to operate in its current form."