Meant to do this earlier but got busy organizing a hackathon ;) I think all parties involved should lower or at least get realistic expectations. That is sponsors, participants and organizers.
Can't recall the name of the person who said that, but hackathons are great for "sharpening your knives" and I would add - great to play with new tech and potentially meet folks you may want to collaborate with. As an organizer, I'm personally more concerned with how to do a better job at providing tech support and resources after the hackathon is over. Hackathons don't equal startups, let alone funding. And this is perfectly fine.