Grad students (at least the ones smart enough to know if you're not offered a part-time job or stipend, you're considered a marginal student) got paid, about what minor league players used to get paid. Like baseball players, they do it for "love," otherwise they'd get a MBA or law degree (where you have to pay your way b/c the payoff is higher and more predictable than a Ph.D.).
Tournaments are characterized by numerous entrants but only a few "winners."
They tend to dominate fields where if paid a good salary, the demand for positions would swamp the available slots - if people could play baseball or guitar and be assured they'd get paid the same as a corporate lawyer, no one could go to law school. Why be miserable in an office when you can hang out in a bar all evening and make the same money?
Exploitation is a meaningless word without context. Are you talking in terms of a Marxist (all value is labor value), neoclassical economist (monopsony buyer of labor forcing wages below market rates), social justice warrior (any wage below what I deem acceptable is exploitation), etc. It's not like minor league players are forced to play baseball, there are alternative jobs they could quit and take anytime (maybe less so in the DR).