Danowat,
The idea in general, give or take a few modifications is sound. I would imagine that this would have to happen in a league environment and instead of money being the prize, make it something brought with the money.
However with the sheer amount of leagues avaliable to people, most will choose to sign-up for a free league than a pay to enter league. Therefore I think personally you will struggle to attract enough "customers".
Also like Shotglass said you would have to look at the legal side of things.