Basically it's a zero sum game. Years ago we had .25, .50 .75 & 1 Dollar drafts. These date back at least 15 years.
The quarters version (.25) works like this...
8 posters draft 8 teams each, all unique, no repeats. If a #12 seed wins round one that poster gets 12x7 quarters, (so 84 quarters or $21) 12 being the team seed and 7 being the other 7 guys in the draft. Each round it's multiplied by the round #, so if that #12 seed wins again in round 2 that poster wins $42 on top of the $21 he won in round 1. A #1 seed wins $1.75 in round 1 and $3.50 in round 2. A #16 seed would win $28 in round 1 and $56 in round 2.
Those numbers above are for the quarters drafts, double them for the .50, triple for .75 and quadruple for the dollar drafts. They were abandoned a few years ago after someone went bad after a several hundred $ loss. I wish we still had them. I think just about everyone that's participated the past 5 years or so can be trusted but who am I?
ETA: You lose "x" amount of quarters when someone else's team wins. If Shuke's #12 seed wins in round 1 you lose 12 quarters, Shuke wins 84 quarters as you + 6 others all lose. Round 2 it doubles and so on, that's why it's zero sum.
You'll see folks rooting for favorites they didn't draft as that minimizes their loses. If you didn't draft #1 Duke or #13 Akron and they are playing in the Elite 8, you'd much rather lose .75 if Duke wins versus 9.75 if Akron wins.