"Even if you win, including that in a query letter is akin to telling an agent you won Miss Snark's 25 word contest to finish the news story. Cute, fun, and useless in terms of demonstrating your ability to write a full length novel."
Is this always the case? I am a poet and a novelist (sigh, one no market, the other an impossible market. . .) and at least for poetry, one of the only ways to get published is to win a juried contest. I currently have a book length poetry manuscript entered in one such (very well regarded) small press contest. Should hell freeze over or lightning strike and I actually either make finalist or win, wouldn't that credit strengthen my query letters for my novels?
Poetry contests are an entirely different category. Contests are almost the only way to get noticed by presses. That's cause very few (approaching infinite zero probably) agents handle poetry.
Of course poetry contest scandals were quite the topic this year. Google "Foetry" and see what you get!
And make sure the contest is sponsored by a reputable college or press. There are several places where "you're a winner" is a form letter with an invoice.
Good luck in the contest.