The only "contest" that is regulated by law is legally called a "Sweepstake". A sweepstake is quite clearly defined as "free entries into drawings of chance". http://en.wikipedia.org/wiki/Sweepstakes

Comparing a design contest to a sweepstake is incorrect. They are not the same thing.

And links to sites with a clear, stated, and extreme bias doesn't help you convince me "design contests are bad". It only drives home the points "designers -think- design contests are bad".

Welcome to the free market.