Rugby World Cup minister Murray McCully said public events associated with the tournament would win the new cash. Funding could go towards management and operating costs, artists' fees, publicity, and production costs.
"During Rugby World Cup 2011 we will be staging a nationwide festival which will showcase the best of New Zealand's arts, food and wine, heritage, entertainment, experiences, and lifestyle," said McCully.
"The New Zealand 2011 Festival Lottery Fund will support all sorts of community events associated with the festival. This could include everything from concerts, fairs, and exhibitions, to street markets and parades."
Applications for grants from the lotteries fund close on September 17.
