We run youth no tap tournaments all the time, the kids always have fun. We give away gift cards and
iPods etc, or trophies.
One benefit of bowling no tap is it makes you less inhibited on a strike shot. Instead of feeling like you have to place the ball directly in the pocket, all you have to do is hit the pocket and you will usually get 9, this opens up the mind and loosens the swing.
That is how I won the PBA Senior Manassass open pro am two years ago, I knew all I had to do was throw the ball between the first and second arrow and I will end up with a 9 count, I didn't care if I threw a strike or not which really loosened my swing up. Where I usually bowl at I have to hit a specific board to strike, it was nice having 3 on either side.
I don't think it was sanctioned, but it was registered with the USBC because of the scholarship money given to the youth winners.