What it looks like to me is the $5 to play in the tournament is to be donated directly to BrainKing (Fencer) - where then Fencer will let Gothic know the persons ID. (So Gothic does not see any of the money himself)

Then as an extra bonus, if 100 people donate, he will put up the money himself to the winners. (But you are correct that he will probable get the $1,000 himself) :-)

The previously BIGGEST Prize tournament, Gothic's $250 Prize tournament is still moving along.