Arts and music festivals won't be able to access millions in provincial gaming grants this year, says the B.C. government.

The announcement, which represents an abrupt shift in government rules introduced in March, means events such as Victoria's Fringe Festival are effectively locked out of what was once a lucrative and fairly stable source of government funding.

The province had announced in March new restrictions for thousands of charities and non-profit organizations hoping to access $120 million in annual gaming grants.

It cut all funding for school playgrounds, environmental groups and adult-based arts, culture and sports organizations, but provided an exemption for "fall fairs and exhibitions, arts and music festivals, and museums operated by non-profit societies."

But as the May 31 deadline for grant applications nears, that has changed. Fairs and festivals that celebrate the arts or music are now not eligible for gaming money, said Housing and Social Development Minister Rich Coleman.

Many of those festivals are commercial enterprises that charge admission and should be able to operate without government subsidies, said Coleman.

"When we started doing these changes, it was very obvious there were some festivals that had been running for 25 years and they were saying if they couldn't get a $10,000 grant they wouldn't be able to survive for a year," said Coleman.

"I'm thinking, you've got to wonder what have you been doing as far as planning for your organization ... the past 25 years?"

The changes brought an angry reaction from Victoria's arts community, which has been outraged at recent funding cutbacks.

The general manager of Victoria's Intrepid Theatre, which attracted 22,253 people to 400 paid performances during its Fringe Festival last year, sharply criticized Coleman for the changes.

"The arts has a thousand-year history of being subsidized, whether it be by nobles, aristocracy or the government -- it doesn't work any other way," said Ian Case.

"I think it shows an extreme ignorance of a business sector."

The Intrepid Theatre applied for $45,000 in gaming grants this year but left that out of its budget in anticipation of receiving no government support, said Case.

Scott Walker, co-ordinator of the ProArt Alliance of Greater Victoria, said some festivals might have to cut back or limit the number of performances unless audiences want to pay significantly more.

"I don't know how many more blows like this the arts can take from this provincial government," said Walker, whose alliance represents 17 organizations, including JazzFest Victoria, Victoria Film Festival and Intrepid Theatre, which runs the Fringe and Uno festivals.

"In order to make festivals or in fact any arts affordable, it requires investment by all sources -- government, private investment and public investment foundations. Otherwise, ticket prices would be at least double and in some cases 10 times [higher]."

Coleman said it's not government's job to decide whether a festival is commercially viable by subsidizing it. Instead, he said, the province has redirected the bulk of its gaming-grant money -- pulled from more than $1 billion a year in gambling revenue -- to programs for children and youth.

Opposition NDP arts critic Spencer Chandra Herbert said the government is deliberately not telling organizations about the funding changes.

rfshaw@tc.canwest.com