I was hearing on a local talk show that they had signed waivers before engaging in the contest. But in this case, the waivers won't hold up.
I researched waivers last year and found out what they can and cannot do. A waiver or release of liability is simply a legal document where you sign away your right to sue if you get injured. An example would be a waiver for participating in some sort of sporting event. A waiver should list the the types of hazards involved in the activity to be conducted. They also usually contain a clause which says "I realize that participating in this activity could result in serious injury or even death."
The reason this waiver won't hold up is because waivers protect people from accidents due to either freak events or simple negligence. Gross negligence, while it may be on a waiver, is never upheld by courts. So, for example, if you're playing football and break a leg during a tackle, that is covered by the waiver. It was just one of those things that can happen while playing football.
Now let's say you go out to a park and they mark out a field on their own and somebody busts a kneecap on a sprinkler head which was in the area. That could be considered simple negligence because the organizers didn't check the field ahead of time. A bonehead mistake, really. That is covered by waivers.
Now, let's say they set up a football field at the grand canyon so that one of the sidelines is right on the edge of a cliff. If somebody falls off, that's gross negligence because the hazard was obvious.
In the case of "Hold your Wee for a Wii", the question the prosecuting attorney will have to answer is "Was this simple or gross negligence". The defense will argue that people in general don't realize that drinking too much water can result in death. The prosecution will argue that the radio station was grossly negligent in not doing their homework as to the side effects of abnormally large water intake.
As a sidenote, the extent to which a waiver will hold up in court depends greatly on the state the waiver was written in. Some state do uphold waivers even up to cases of simple negligence. Other states do not uphold waivers because they consider waivers to be "against the public interest." Also note that while parents sign waivers for minors all the time, waivers signed for people under 18 are never upheld because neither minors nor their legal guardians are able to waive any rights of minors.
This reminds me of another news story I heard a coupe years ago. The prize was a year's supply of Vodka, or something to that effect. The contest was to see who could drink the most Vodka. Let's just say that they didn't have to worry about how much vodka the winner would drink after the contest was over.