It's a part of the 'game' with such contest. We know that the winner will have unrealistic and gambling behaviour. With his own money, pokemon would have never done that. It's more than sure. After with a demo account, it's also logical that such strategy is allowed finally too. The contest is a promotion tool for the broker to attract leads to its business. It's something 'normal' and 'logical' in term of business.
For traders competing, just take that as a competition again yourself and trade like it was your money.
Indeed, you can't win a demo contest doing that. It's true...but at least you have fun and learn.