Writers: treat writing contests the same way you’d treat new agents, publishers, or marketing/publicity firms. With caution. C’mon, you know the drill: trust, but verify. Often, verify before you even trust.
Some writing contests are reputable, honest, and offer great prizes and viable publicity for winners and finalists. Even entry-fee contests for various writing genres can be worthwhile, if they offer an industry-respected status, and the entry fees are reasonable and used toward covering the administration of the contest.
Some ‘contests’ are merely fishing expeditions set up by uninformed or possibly predatory publishers, to build a source of fast capital from entry fees and/or get the names of authors who might become clients.
It’s up to you to research your venues *before* you apply to them. Publishing is a party, and you don’t have to dance with everyone who asks! Ditch the beer goggles and the ‘They like me!’ squee, and focus on who’s asking, and what they can offer.