It is somewhat akin to spec work within the design field[1], in that only the top performers make money and everyone else goes home empty handed despite their hours of work. However, I've noticed that most of the near-winners tend to open source and share their solutions on GitHub, so one could argue that it helps the community (unlike say 99 designs, on which non winning entries are basically worthless).
There are usually prizes, sometimes quite large. But some have accused them of making the industry worse by not hiring actual data scientists and outsourcing their work to people who are willing to do it pretty much for fun, and not all the prizes are enough to make up for the time and effort put into these competitions.
I sort of agree, but it's kind of ironic considering this is the field automating everyone else's jobs