I realize that in most games, losing is painful to some degree and winning is pleasurable to some degree. But in games like this, it seems that more pain is generated for the losers than pleasure for the winners. It seems like playing is a net losing proposition.
I feel similarly about bets where the prize is not an exchange of value but rather that the loser has to perform an embarrassing or painful act. While this may cause some pleasure for some types of winners, it seems like the net effect is negative.
As to lose/lose bets, one advantage is minimal cost. If I bet someone £1 then sure I might win a pound, but I also might lose a pound. If I bet someone an embarrassing act, I'm not risking any money. (Not just the case with money, but the point is that for the winner of the bet to get a net gain it means the loser has a tangible loss, whereas doing something embarrassing you aren't really losing anything.)
(As one might imagine, this is the kind of game that grows even better over time.)