Increasingly, the evolution of artistic and cultural events like festivals evidences a shift from mere spectatorship to active participation, where attendees are construed as productive agents, creatively and constructively engaged with the event, driven more by a desire for self-expression than merely for entertainment. This development of “event co-creation” increasingly involves the audience in artistic and cultural programming, with an emphasis on immersion and play, rather than solely relying on presentational frameworks that solicit spectatorship. This chapter aims to study the recent development of event co-creation and how this allows for the development of novel perspectives for arts and cultural management. This chapter is based on ethnographic and qualitative research on festivals that are intentionally organized as co-creative events in the sense that they enable the active participation of multiple actors, including attendees. Utilizing a conceptual lens of “ritualization”—here understood as a culturally strategic practice for making distinctions and “making special”—this research shows how festivals serve as liminal spaces that enable an immersive, participatory experience, in contrast to ordinary, everyday settings and activities. The research further shows how event organizers strategically design and program festivals to enable co-creation as a kind of “programmed freedom,” rather than it being a purely bottom-up process that emerges in situ. The contribution of this chapter is a participatory perspective on arts and cultural management, focused on the organization of liminal spaces that facilitate cultural participation and (co-)production, and are thus instilled with innovative and transformative capacity.