What is the ruling on one who organizes a competition and stipulates that each contestant must pay a sum of money, then uses that money to buy prizes and keeps the remainder for himself?

This act is considered consuming people's wealth unjustly and is unanimously prohibited gambling (al-maysir (definition)). It refers to any transaction that fluctuates between loss and gain, where the transacting party does not know whether they will be a loser or a winner. It is considered one of the major sins. Thus, a contestant paying a dinar to participate is gambling, because they paid it hoping to win or lose what they paid. Giving a portion of the money to the winners does not change the prohibition of this arrangement.