WOWP- If there's a wizard contest why are there levels?

I know asking this is kinda stupid, but it doesn't make sense.
In Wizards of Waverly Place the movie it says that there's a wizard
contest for who gets to be the family wizard.
In the new series Alex and Justin are taken back down to level 1 while
Max is on level 3. This means that Max is probably going to be the
family wizard, unless Alex or Justin can catch up to him.
How does this work?
I mean, if there's a wizard contest, why would they need to catch up
to Max to be in with a shot?