When I joined up, I was told not to enter any tournaments. I had no intention to, and still don't---not why I'm here.
To the best of my knowledge, there is not and never was a ban on entering outside tournaments. I have many friends that came out of the Lexington gym, back when Master Sin taught there (even back at the Sports Center with Master Hiang) that fought in just about everyone that was within driving distance.
It might not have ever been encouraged for what ever reason, but we trained in the gym with Master Sin watching many nights for open matches.
I kind of agree with JP's take on it but we (Lex) have never worried if we were going to do good or bad, we just liked to fight.
"Pain heals, chicks dig scars..Glory lasts forever"......