I've heard that all contests and competitions that have prize money are haram.
The Prophet (Sallallahu Alaihi wa Sallam) said: No contest is allowed except in swordplay or horse or camel racing.
Even though the Prophet(S.A.W) explicitly said that, it's kind of ridicules to my mind that good competitions are not allowed.
Now my problem is that I've participated in a lot of contests, both online and offline; and I want to know the permissibility of such contests. (whether or not cash/gift is involved)
1. Free to enter online contests
These require no money to enter (Hence they can't be considered as a lottery/raffle). They range from contests of luck (not entirely, since most sweepstakes enable contestants of higher social interaction etc to have a higher probability of winning) to contests of skill. What about these two? (contests of luck and contests of skill).
2. Contests (of skill) that require a small registration fee
These variants have very little resemblance to raffles. Unlike raffles, these don't work as "pure chance". So it's clearly not gambling. eg. Technical Fests, Inter-College events, Developer conferences etc. Personally, I think these competitions can be beneficial in developing one's skills (since the competition is usually strong) even if nothing is won.
Citing a fatwa from the same source,
Giving prizes willingly from a participant in the competitions are also allowed but collecting the contribution from the participants to grant the prize to a winner is not allowed.
I could argue that some of these technical fest events simply collect a small registration fee in the form of donation. The prizes are often directly from the sponsors of the events, etc. Would it be halaal then?