I reckon humans are a very competitive species whether it is playing tiddly-winks, F1 racing or photo comps. People just like competing at what they think they are good at.
As a teenager in the late '70s I entered a photo comp for a local life-style magazine as I reckoned I had a chance with it being limited circulation (pre-internet hence limited entries) and vertical format and blank space for title etc, I can't remember what the prizes were apart from getting your image on the cover, but as a runner-up I got a book (Kodak-'How to take better photographs' !
), so I know there were prizes and it was free entry and you got your slide back.
That was the only comp I've ever entered but I still remember the buzz I got when I saw my name listed in the runners-up in the magazine; it would have been even better to be on the cover in the newsagents rack.
Being a runner-up definitely gave me the confidence to know I could take pictures but that in itself was enough that I've never really had the desire to enter another.
I wouldn't pay to enter a comp as I don't reckon I'm good enough to win so it would be wasted money, but there are plenty of competitive self-confident amateurs out there who would like the buzz of recognition, and if they've spent several thousand on equipment what is another £25? Especially if they can look at previous winning entries and see their shots are equally good.
As amateurs they are not looking to sell any of their images so giving up the rights is not a big deal. Makes it difficult for Pros though when I can enter any photo comp in the world with a couple of clicks on my keyboard.
Nowadays I don't know what comps are out there, but photo-mags used to offer thousands of £s worth of prizes and if you couldn't compete in those there were still smaller publications with photo comps, whether local interest, Farmers' weekly or railway modellers' monthly.
Sorry for the rambling post: I could go on for hours about human nature!