Miss North Carolina Kristen Dalton was crowned Miss USA on Sunday, but the big story to come out of the normally politics-free telecast was Miss California's comments regarding gay marriage.

When asked by judge Perez Hilton, an openly gay gossip blogger, whether she believed in gay marriage, Miss California, Carrie Prejean, said "We live in a land where you can choose same-sex marriage or opposite. And you know what, I think in my country, in my family, I think that I believe that a marriage should be between a man and a woman. No offense to anybody out there, but that's how I was raised."

Keith Lewis, who runs the Miss California competition, tells FOXNews.com that he was "saddened" by Prejean's statement.

"As co-director of the Miss California USA, I am personally saddened and hurt that Miss California believes marriage rights belong only to a man and a woman," said Lewis in a statement. "I believe all religions should be able to ordain what unions they see fit. I do not believe our government should be able to discriminate against anyone and religious beliefs have no politics in the Miss California family."

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Co-director Shanna Moakler said that she fully supported Lewis' statement.

But Prejean told FOXNews.com that she has "no regrets" and is happy with the answer she gave.

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Miss California's answer sparked a shouting match in the lobby after the show. "It's ugly," said Scott Ihrig, a gay man, who attended the pageant with his partner. "I think it's ridiculous that she got first runner-up. That is not the value of 95 percent of the people in this audience. Look around this audience and tell me how many gay men there are."

Charmaine Koonce, the mother of Miss New Mexico USA Bianca Matamoros-Koonce, argued back.

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"In the Bible it says marriage is between Adam and Eve, not Adam and Steve!"

The pageant had enjoyed a scandal-free year until earlier this month, when Miss Universe 2008 Dayana Mendoza was skewered for a blog posting from a trip to Guantanamo Bay. The entry described having "aloooot of fun" at a base that houses the notorious military prison; it was later deleted from the pageant's Web site.

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The winner, Miss North Carolina Kristen Dalton, a 22-year-old aspiring motivational speaker and entertainer from Wilmington, edged out first runner-up Miss California, and second runner-up Miss Arizona USA Alicia-Monique Blanco, of Phoenix.

"It feels really natural," Dalton said of her win. "I've worked so be here and this has been my lifelong dream and it's finally here. And whoever knew you could win in a turquoise gown?"

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Contestants from all 50 states and the District of Columbia competed in the pageant, aired live on NBC. Contestants were judged by their performance in swimsuit and evening gown modeling contests and their responses to a question asked onstage; unlike the rival Miss America pageant, Miss USA contestants do not perform a talent.

The top 15 contestants worked the stage in white string bikinis designed by pop star Jessica Simpson's swimwear line. Rocker Kevin Rudolf performed his song "Let it Rock," followed by The Veronicas, who performed their single "Untouched" as the top 10 beauties showed off their choice of glittering evening gowns.

Dalton's was a flowing, blue Grecian number that stood out among a series of white gowns.

Her title comes with a year's use of a New York apartment, a public relations team, a two-year scholarship at the New York Film Academy and an undisclosed salary.

She also will go to the Bahamas in August to compete in the Miss Universe pageant, where American beauties haven't been lucky in recent years. Both Miss USA 2008 Crystle Stewart and her predecessor, Rachel Smith, wiped out on stage during the evening gown competition, becoming accidental YouTube stars.

The Associated Press contributed to this report.