Continuity mistake: During the final of the arm-wrestling championship, Lincoln Hawk's nose is bleeding. Then it's not. Then it is. It goes back and forth.
Other mistake: Just before the first arm wrestling match against "Smasher, " Bull Hurley is seen in the doorway looking at Lincoln accept a match. A few seconds later Bull seems to appear into the doorway like he is showing himself for the first time.
Answer: The announcer basically says during the final match that the winner here will win the tournament. Meaning it was double elimination up to the final match (or even the final four). I can't think of an example of a real life double elimination tournament with that structure. It feels made up for the movie to let Hawk lose once, but not have to do a 2nd finals match.
Bishop73