Camelot yesterday won the licence to run Britain's National Lottery for the next seven years. The National Lottery commissioners voted by four to one to give the current licence holder the new franchise, effectively reversing a previous decision to exclude the company from the new licence process. The decision to reject a bid by Sir Richard Branson's People's Lottery led to the resignation of commissioner Ms Hilary Blume. Ms Blume said: "I could not agree with the decision to award the licence to run the lottery to Camelot. I believe the lottery needs a relaunch to arrest declining sales."

Sir Richard was last night considering legal action against the British National Lottery Commission which yesterday awarded the next seven-year licence to operate the lottery to Camelot, the consortium that has run it since its inception.

Looking tired and upset, the entrepreneur and chairman of the Virgin group of businesses was "baffled" that his not-for-profits bid had failed. He ruled out bidding for the lottery again after two attempts and said his bid had cost £40 million sterling (€65.7 million), of which £3 million is believed to have come from his personal fortune.

The decision was all the more controversial since Sir Richard seemed on track to clinch the deal after the commission decided to negotiate solely with his People's Lottery in August after rejecting both bids as flawed. Ms Dianne Thompson, Camelot's chief executive, said she was "absolutely thrilled".

The commission, chaired by Lord Burns, a former Treasury permanent secretary, said it had decided Camelot would raise more for the good causes despite bidders' projections that the People's Lottery would raise £160 million more than Camelot for them every year.

But the commission had discounted this figure because of the greater risks associated with the Branson bid.