Rule 11 is an odd rule. Last Gasp seems to be using some old boilerplate rules for contests entered by mailing physical art into them. Returning entries would cost them a bunch (though, that same exact cost is being born by contestants to send things in). However, as rule 1 says all entries must be submitted digitally I'm not sure why rule 11 is there.
Rule 9 would seem to be the key rule governing IP:
(9) By entering this Contest, each contestant consents to the use of his/her name, and/or artwork in any merchandise, advertisements, educational materials or publicity carried out or produced by Last Gasp and its advertising and promotional agencies without further notice or compensation. Last Gasp can publish or decline to publish, or use or decline to use, any submitted artwork at Last Gasp's sole discretion. In turn, the contestant still retains the rights to use and publish their artwork.
Rule 9 is where contestants give Last Gasp the right to use their work without compensation even if they don't win any of the prizes.
But don't worry, nothing nefarious going on here.
The last sentence Last Gasp says that contestants retain the right to use their own work, but that right is phrased as "In turn," and possibly contingent on Last Gasp declining to use the submission. The contract is ambiguous at best on whether artists retain any rights if Last Gasp does use their entry.
I'm not trying to say that Last Gasp are evil corporatists, but neither can I see the contest as utterly without any promotional benefit to Last Gasp. How different this contest is from others is a matter of degrees rather than a fundamental one.