Praise be to Allah.
Holding such competitions is something good, if the aim is to encourage children to memorize the Book of Allah from an early age. There is nothing wrong with encouraging them by offering prizes and gifts, and you will have a reward from Allah. This has to do with cooperating in righteousness and piety, as Allah says (interpretation of the meaning):
“… Help you one another in Al-Birr and Al-taqwa (virtue, righteousness and piety)…” [al-Maa;idah 5:2]
And Allah knows best.
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