The payouts for our state are similar. The payout schedule is geared toward paying as many spots as possible in each division. For example, last year's State tournament here paid 1,136 spots in the handicap singles division. 1st place won $1,200, 2nd place won $600, 3rd/4th was a tie, each getting $572, then 5th/6th place was a tie each getting $537.50...all the way down to 1,136th place getting $18.00 (22 people tied for 1,136th place, each getting $18.00. the same as the $18.00 each of the 26 people received that were tied for 1,110th place.)
I guess they just want people to feel like they are getting something back for making the effort to participate.