Firstly there is the fact that the fics written by generally more well known authors get more exposure (via the fan base) and more general readership. Of course, people are encouraged to read all entries...but seriously when there are over a dozen categories with half a dozen fics for each, not everyone is going to bother. So people vote for what they know and trust. It's human. But it also makes the entire competition look like a popularity contest at times.
Even nominations when decided by popular vote can really limit fic selections. Perhaps it's a method of quality control - still, just because hundreds of people like a fic doesn't necessarily mean it's good.
Another thing is most fanfiction award competitions don't really pay much attention to fandom...quirks. In the HP fandom, a large number of people (not all, but many) are shippers. They may not be interested in reading fics of other pairings. Again, it's human. But when we have awards with nominations of fics with various different pairings, gen or rare pairing fics may be at a disadvantage in this case.
I wish there'd be fanfiction award contests that are similar to icon challenges - a theme is decided, fics are submitted and posted *anonymously* for public reading, readers offer feedback and vote for the best and titles/banners are awarded to the winners. Categories/themes could cater to the quirks in the fandom (e.g. divided by shipping as well as genre for instance) and it would mean new fic as well as awards.
This could work for both new and old authors/artists; those who want a challenge as well as recognition for their fanworks.
Yes, this is me rambling.