Littlewoods, the leading pools operator, welcomed the measure: " We are pleased the Chancellor has given this reduction that will allow us to compete more effectively in a very competitive market. It is a cash boost which will aid investment in new technology to provide every collector with a hand-held computer terminal which will revolutionise the way the pools are entered."
The Chancellor said that the cut - the third in four years- would help pools operators to compete with the National Lottery and its spin-off games. In a related measure, he also announced that from 1 April, the gaming duty bands - levied on casinos - would be linked to inflation.
Britons spend around pounds 500m a year on football pools but their share of the pounds 40bn-a-year betting market has been in decline since the launch of the National Lottery four years ago.
In exchange for the cut, which comes four years after two 5 percentage points reduction, pools companies have agreed to fund the Football Trust and the Foundation for Sports and Arts until March 2002. The Football Trust, set up in 1990 after the Taylor report into the Hillsborough disaster, helps football clubs in meeting the safety recommendations of the report. The Foundation, established in 1991, supports small grassroots projects in the arts and sports.
The reduction was attacked by bingo operators. "We are very disappointed that the Chancellor has not helped us in the budget. Bingo operators cover a wider area of the country than pool operators (which are concentrated in Liverpool) and employ more people." a spokeswoman for the Bingo Association said.
The indexation of gaming duty, levied on the difference between the stakes received and the winnings paid out, will mean that casinos will start paying the highest 40 per cent tax rate on any takings above pounds 4.31m, compared with pounds 4.2m previously.