Rewards on iPhone Apps

Hi,

We want to create an in-app contest in which users pay to enter the contest and the winner gets a reward, let's say a Macy's gift card (or e-gift card). According to Apple app rules, users cannot purchase physical goods for virtual money. We're trying to figure out if 1. what we would like to provide is allowed by Apple, and 2. if not, what kind of rewards (physical or digital) are allowed? 3. does it make a difference if the users enter the competition for free or if they pay to enter?

Thanks in advance.