I have been involved in these competitions.
First, some pay a nominal fee to cover expenses, while others pay nothing, figuring most architects will take the chance on a prize commission.
Second, I have seen entries stamped with all sorts of copyrights, etc., in an effort to keep the owner and/or other architects from using any ideas contained in their plan. When I submit such an entry, I simply tell the owner that win or lose, use what you want. Not sure if anyone ever signs a contract for competition (other than the Oly course, which had one) but I believe the good relationship and class gesture helps you somewhere down the line. For that matter, I would bet many holes out there will be found and similar by different architects.
Lastly, while this did get some press, I have no doubt Mr. K basically is looking for some inspired vision. This is his first non-ocean course. He may feel he needs all the inspiration he can get, and hopes that he is spurring good architects to greater things.