The Ruling on Prizes in Competitions Between Groups

Question:
Honorable Shaykh, sometimes a group of young men will set up a wager where if the second group wins, it is from one side only, not from two sides. Is this permissible?

Answer:
We do not know what these are regarding the matter of prizes and competitions. We do not know what the subject of the competition is. If the subject of the competition is something in which the Messenger of Allah (peace and blessings be upon him) granted a dispensation, such as a sword, a shoe, or a horse, or what some scholars have included with that from the issues of Islamic jurisprudence, such as a competition in religious knowledge, then there is nothing wrong with that. Because this is an encouragement of jihad and an encouragement to learn knowledge, and a motivation for it.
As for if the competition is in matters other than these, it is not permissible to take compensation for it, because it is gambling (maysir) and taking money by an unlawful means, from the wagers and contests for which it is not permissible to take compensation or a prize, whether for playing football, or for worldly matters, or for a race on foot. Or a race on foot, or by swimming, or by wrestling. It is not permissible to take compensation for these matters. And even if it is a prize, a race on foot is permissible, because it strengthens the body.
A sports competition, if it does not occupy one from prayer and does not involve exposing the private parts, is permissible because it strengthens the bodies, but it is not permissible to take compensation for it. It is not permissible to take compensation or prizes for it. Yes.