I've seen this twice in the last month. I don't know whether it's intended as a scam or whether these people think publication in their magazine is really worth enough on its own to constitute a "prize."
The trick is this. They host a contest with a decent first prize...the last one I saw was $150 for a flash fiction, which is a good prize.
Then they state that "runners-up" or "honorable mentions" will receive publication.
Thing is, they don't compensate the "honorable mentions". So, the magazine gets five or six hundred dollars worth of content for that $150 prize. Which in some cases they're recouping from entry fees.
Don't fall for it. It's not quite as bad as rights to publish all entries, but it's close. Always read contest rules carefully. It's not uncommon for them to hold hidden traps like this.