If I were comfortable with my chance of winning, the prize, and the licensing terms, I would enter.
You appear to take the position that if the organizer is winning, everyone else must lose, and that this makes a contest illegitimate. But from the point of view of a competitor, it doesn't matter whether the organizer makes a profit. What matters is whether I come out ahead - i.e. whether:
(chance of winning * prize value) - cost of entry [including opportunity costs] > 0
This is why fraud is so important. If the estimation of chance or prize value is inaccurate, it throws off the calculation.
Most lotteries are a bad deal, unless the house has made a mistake. Charity raffles might be an exception; the entry fees need not cover the prize, so the organizer need not care if the average prize is higher than the entry fee.
A contest of skill is a different matter. Consider an expert poker player who enters a casino, knowing that the house takes a cut. His action may be rational, because he can beat the other players.
Similarly, a skilled artist may rationally enter such a contest, as long as they have a sufficiently high chance of winning. (Of course, their opportunity costs are also higher - they could probably get a commission with a guaranteed return.)
I license almost all my photos under CC-BY-SA. My opportunity cost is minimal - if I have a chance of winning $100, I might well go for it. If the organizer turns around and sells that photo to someone else for $200, that's fine; they probably have contacts or business knowledge which I lack. It doesn't follow that I could have made that $200 directly.
It's not necessarily a zero-sum game, and what is a bad deal for some contestants (or for third parties, like photographers who used to sell photos for $500 but now find the market depressed) may be good for others.
If I were comfortable with my chance of winning, the prize, and the licensing terms, I would enter.
You appear to take the position that if the organizer is winning, everyone else must lose, and that this makes a contest illegitimate. But from the point of view of a competitor, it doesn't matter whether the organizer makes a profit. What matters is whether I come out ahead - i.e. whether:
This is why fraud is so important. If the estimation of chance or prize value is inaccurate, it throws off the calculation.
Most lotteries are a bad deal, unless the house has made a mistake. Charity raffles might be an exception; the entry fees need not cover the prize, so the organizer need not care if the average prize is higher than the entry fee.
A contest of skill is a different matter. Consider an expert poker player who enters a casino, knowing that the house takes a cut. His action may be rational, because he can beat the other players.
Similarly, a skilled artist may rationally enter such a contest, as long as they have a sufficiently high chance of winning. (Of course, their opportunity costs are also higher - they could probably get a commission with a guaranteed return.)
I license almost all my photos under CC-BY-SA. My opportunity cost is minimal - if I have a chance of winning $100, I might well go for it. If the organizer turns around and sells that photo to someone else for $200, that's fine; they probably have contacts or business knowledge which I lack. It doesn't follow that I could have made that $200 directly.
It's not necessarily a zero-sum game, and what is a bad deal for some contestants (or for third parties, like photographers who used to sell photos for $500 but now find the market depressed) may be good for others.