PokéBase - Pokémon Q&A
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Plot convenience probably
Maybe he knew he was able to become either a gym leader or a champion, and he decided he'd rather be a gym leader.

1 Answer

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This depends. Many outcomes come to this qustion. Maybe he knew if he beat the new Elite Four and Lance someone (hey, Ethan (or Gold) or maybe Red if he reappeared to them again) would beat him once again. Plus, a status of Gym Leader is more permanent than being a Champion, so Blue decided to try becoming a Gym Leader. After all, that position is still pretty good.
I personally like that answer, but it's also probably just plot convenience (mentioned in comments) or Game Freak.
But if it were in real life, I like this answer.

Hope this helps!

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To add on, I feel that Blue matured between the events of R/B/Y and G/S/C and does not really have an interest in becoming champion again. His goal throughout R/B/Y was to be higher than Red, as rivals are, and once he achieved that goal, he immediately had his downfall in losing. He tried taking a different route this time, as a gym leader, so he can learn how other trainers use love and strength in battle rather than brute force or as tools. Anyways, that's how I view it.