The media tycoon Richard Desmond has vowed to appeal after a resounding defeat in his claim for up to £1.3bn in damages from the Gambling Commission over its decision not to award him the 10-year licence to run the national lottery.

Mrs Justice Smith dismissed Desmond’s claim on Friday, in a sometimes scathing written high court judgment that reserved particular criticism for “inexcusable” failings on the part of Desmond’s legal team.

Companies owned by the former proprietor of the Daily Express and Channel 5 launched action against the gambling regulator in 2022, starting a tortuous legal process in which Desmond’s costs were estimated to have reached £55m by May last year. Sources close to Desmond said the figure was significantly lower.

Lawyers for his Northern & Shell investment company and his lottery bid vehicle, the New Lottery Company, had argued that the commission made “manifest errors” in the labyrinthine process governing the UK’s largest public sector contract, worth £6.5bn.

The media mogul claimed the commission’s mistakes caused him to incur £17.5m of needless costs in pursuing his bid. However, he was also seeking up to £1.3bn in damages to reflect hypothetical lost earnings from running the lottery.

Allwyn, a new vehicle ultimately owned by the Czech billionaire Karel Komárek, won the 10-year licence in 2022 and has run the draw since 2024.

On Friday, Mrs Justice Smith dismissed Desmond’s claim entirely.

“The claimants have failed to make out any case of manifest error on the part of the commission in their process claim,” she wrote.

“They have also failed to establish that either [previous licence holder] Camelot or Allwyn should have been disqualified from the competition, whether by reason of incumbency advantage (Camelot) or conflict of interest (Allwyn).

“The competition that was conducted for the award of the fourth licence reached a lawful outcome.”

A spokesperson for Northern & Shell said: “They won. We lost. We appeal. It’s not over.”

Dubai-based Desmond – who also used to own the Daily Star, OK! magazine, Asian Babes and Readers’ Wives – launched a series of legal challenges linked to the lottery decision, at one stage rejecting a £10m settlement offer.

The former Tory donor and Brexit backer, who invoked EU law in his suit, claimed that the regulator presided over a flawed process that should have been rerun.

He urged the court to “err on the side of generosity” in assessing his claim for up to £1.3bn in damages, which would probably have been funded from the pot of lottery money allocated to good causes.

In her judgment, Mrs Justice Smith took aim at the “unfocused” way in which Desmond’s claim was conducted, with various elements of his argument being dropped at the last minute.

“The extent of this movable feast was regrettable and (given the legal resources available to the claimants) inexcusable,” she wrote.

“It led to significant time being wasted by the other parties in dealing with issues which were subsequently abandoned. It also risked leaving the court with an imperfect understanding of how the case was being advanced.

“To describe this as surprising, given the nature and alleged value of this claim, would be an understatement.”

A spokesperson for the Gambling Commission said: “This judgment makes clear that the Gambling Commission ran a fair and robust competition to award the fourth national lottery licence, and that none of the contested changes to the licence, in the course of its implementation, were substantial or contrary to the relevant procurement regulations.

“The judgment gives resounding support to good causes by enabling Allwyn, with oversight from the commission, to continue with their plans of investment in the national lottery without further distraction. Our priority remains to continue regulating the national lottery for the benefit of participants and good causes.”

Allwyn said the decision “draws a line under a long-running series of allegations about the integrity of the competition process, many of which were withdrawn during the proceedings, with the remainder rejected by the court”.

Desmond previously failed with a separate claim that Allwyn had received an unlawful £70m marketing subsidy from the Gambling Commission.