The lysogenic-versus-lytic cycle is determined by repressor occupancy on the OR operators
The binding of λ repressor and Cro to operator sites. Lysogeny is promoted by λ repressor binding to OR1 and OR2, which prevents transcription from PR. On induction or in the lytic cycle, the binding of Cro to OR3 prevents transcription of the cI gene.
[Data from M. Ptashne and A. Gann, Genes and Signals, p. 30, Fig. 1-13]