Added 5 minutes later
As a reward, you'll get some lousy loot that you won't even need anyway, since you've already taken care of everyone with your gear (and which not every character can collect in terms of role-playing), and a little money, which you won't be able to buy anything with for the same reason.
In general, if I were running tournaments, I would only have an entry fee, without the chance of dying or losing your loot. And the characters would fight in their own gear, or in standard gear for their skills.