[KKbluff]

My city runs something VERY similiar to what you are talking about.

The points are used to keep track of the player standing.
End of the month tourneys will smaller prizes are offered to the top 10 or 20 depending.
From a business standpoint it keeps the players coming back and makes it more interesting for all.

They play in these tourneys is awful (since it is just for fun basically) MUCH worse than online.

Usually at the end of the season their are a regional tourney invites that players can goto if they are meet a certian point quota. These have bigger prizes and are played a little less poorly.

These tourneys are great for the bars to have (esp on slow days) because it brings in the people.

I have recently started my own version of this and am currently running weekly tourneys at on of the bars around Purdue. It has been doing VERY well and I plan on taking on another bar very soon.

Here is who the other bar pays to host their tournaments. nationwidepokertour.com

Also since these games are FREE (no buyin) and the prizes are GIVEN by the bar they can not be busted because it is not technically gambling.