I won an Android phone and made my first app using my prize. The article should discus how prizes in hackathons serve a promotional benefit.
You're right, there are many people (including you) who benefit greatly from prizes. But I'm more concerned about the mindset of attendees (i.e. those that "play only to win"). It's also worth noting that prize-winners are definitely in the minority, numerically speaking. Nonetheless, good point and thanks for the feedback!