Usually, in such tournaments, traders simply increase the trading volume, and in this case, the trader does not receive a profit from the order being closed. And such a trader expects to compensate his expenses for the commission spent with the rewards he receives.
That does happen if a trader just wants to win the competition without thinking about his profit/loss from the trade. It might happen if the winnings are quite high which can make us ignore the losses incurred or the fees paid. This can be a common mistake of those who newly have joined the competitions without any prior experience. But after experience, we will sit down with a pen and paper and start calculating the expenses and forecasting profit and losses instead of just winning the bonuses.
Exchanges do not provide charity. They have some strong calculations backing these competitions. Without those, how can they earn commissions? These competitions can lure anyone but thinking wisely is really required before blindly jumping into.