Partly this is because so many contests are a waste of time, with minimal prizes, negligible prestige, and zero cachet on your writing resume. Why not spend your energy on something that can get you closer to building a readership--submitting for publication, or publishing on your own if that's what you want to do?
There's also the risk of bad stuff in the entry guidelines--such as the MeeGenius Golden Owl Contest, where simply submitting constitutes agreement to publish and acceptance of a publishing contract that claims rights in perpetuity. Writers who don't read the fine print carefully enough may find themselves trapped by such provisions.
And then there are the contests with a hidden agenda: making money for the sponsor.
Published Book Contest Moneymakers
There are any number of moneymaking contests that focus on published books. Their M.O.: a huge entry fee, dozens or scores or even hundreds of entry categories, and the sale of additional merchandise to winners and honorees. Prizes are typically things that cost the sponsors little or nothing (website features, electronic press releases, vague promises of publicity campaigns). Judges are never named--and may not exist--and, although commercially published books are sometimes declared winners, the contests are marketed mainly to small press and self-published authors.
For instance, the USA Best Book Awards and the International Book Awards, both sponsored by JPX Media. Each contest has a $69 entry fee, over 150 categories, a prize that basically consists of a feature on one of JPX Media's websites, and the "opportunity" to purchase award stickers and certificates. If just 500 people enter each contest (and I'm guessing that's an extremely conservative estimate), JPX grosses $69,000--and that doesn't even include the extra income from sticker and certificate sales.
Other published book contest moneymakers include Readers Favorite ($89, over 70 categories, plenty of adjunct merchandise and services for sale) and the Pinnacle Book Achievement Awards ($90, over 40 categories; the current entry deadline is March 16, with winners announced in "late March," which wouldn't seem to allow much time for judging).
(A side effect of such faux contests: the opportunity they afford vanity and otherwise dubious publishers to present a gloss of legitimacy or to make an extra buck.)
Unpublished Manuscript Contest Moneymakers
Another kind of contest with a hidden moneymaking agenda is conducted by fee-charging publishers. These contests focus on unpublished authors, and since entry fees are small or nonexistent, and prizes often involve a promise of fee-free publication, they can seem very attractive. Beware, though: the contest may be mostly, or partly, a way for the publisher to gather a pool of potential paying customers.
For instance, the Deep River Books Writer's Contest, the 2011-2012 results of which were just announced. Deep River Books (formerly VMI Publishing) is a "partner publisher" that requires authors to buy a minimum of 1,000 books. This year's winners received non-fee contracts; other entrants were recognized for various degrees of merit. They were also solicited for publication.
I wanted to be the first to Congratulate you! Your manuscript received “Honorable Mention” in the 2011-12 Deep River Books Writer’s Contest. And while you did not win first place, “Honorable Mention” is a significant achievement when you consider there were over 400 contest entries. You are to be applauded for what you have accomplished.
As you know, Deep River Books is a full-service partner publisher. Our goal is to publish the best manuscripts from new authors, and we certainly feel yours could fit into that category. Due to the high score your manuscript achieved by our judges, I would like to send your manuscript through our regular editorial review process for possible publishing by Deep River Books.
If your book were to be selected by our editorial review board, we would make it a “Feature Title” which includes media coverage and an invitation to be a featured author signing books at our booth during next year's International Christian Retail Show where over 10,000 people, including many bookstore owners/buyers attend. It would also be a featured title at the Deep River Books website.
And because of the “Honorable Mention” status in the contest, we plan to offer you a $500 discount off our standard partnership program as an added incentive, if your book is selected by our in-house editorial team for publication.
This letter (which concludes by assuring the recipient that their manuscript was "a joy to read") sounds personalized, but it's not. Other contest entrants received identical solicitations. I can't help thinking of the "free contests" conducted by vanity anthology companies, where just about everyone who enters is declared a semi-finalist and offered publication, along with the chance to buy the anthology in which their work appears.
So even if a fee-charging publisher's contest sounds attractive, be aware that it may have a hidden agenda, and that entering may make you a target for a sales pitch.