I was checking the outcomes of January 2008 contest and I believed that in fact, a contest is a money making machine, mainly when the broker trades against you.

Check the snap shot below:



Well, see how beginning the 7th, all traders are below 100% gain.
Starting 10th, they are under 60% gain.

Assuming that the broker is trading gainst you.

Let us try to appraise the 'price' of the contest:

Considering the overall concept that more than 90% of traders get rid of money, and since there's 237 participant, 90% will signifies that more than 213 of these traders are losing money.

We can safely enough presume that we've got 200 traders which are losing money, and probably 50 of them have blown their account (We can see in the attachment which the previous ten have lost more than 99% of the account), so only 37 (or less) are winning money.

The prizes are:

1st $3,000.00
2nd $1,500.00
3rd $750.00
4th $500.00
5th $250.00
Complete: 6,000$

Per the rule, you need only 500$ on your live account to enter the contest. I believe the traders which is going to be in the up with more than 200% return in less than a month won't be risking more than this sum. And let us assume that the traders that have lost all their equilibrium have only risked 500$.

Hence the broker is going to need to pay (as they are trading the other hand) at the end of the contest:

To the first ten participants:
4.10*500 2.70*500 1.90*500 1.30*500 1.30*500 1.20*500 0.80*500 0.70*500 0.60*500 0.60*500 = ~20,000 $

For the 27 other supposed positive gain if considered at 30% gain:
27*0.3*500 = ~4,000 $

So the total 'cost' of the game is 6,000 20,000 4,000 = 30,000 $

Let us try to appraise the 'earnings' of the contest:

200 traders are losing money.
We see in the broker announcement which the past have lost more than 99% of the account. We may safely assume that 50 trader has lost more than 90%, and let us suppose that 150 has lost an average of 50%, we'd have an 'income' of:

50*500 150*250 = 25,000 37500 = 62,500 $

So the return from the contest would be something similar to:
62,500 - 30,000 = 32,500$ 500 disperse times all the trade done.

Of course that is only a simulation, but I have the impression which the broker is getting much more from that money making machine 'contest', as I attempted to place all my calculation on the safe side.

Well, as I noticed in the 6 months back printed statements, the amount of contestant is growing each month... Just extrapolate in couple months with 500, 1000 participants and more...