This is a betting contract where two individuals bet on some future outcome. They must each deposit a stakeAmount and a betAmount. Once the outcome has occured, the individuals each report whether they won or lost the bet, iWin or iLose. If one reports a win and the other reports a loss, the winner receives both individuals' betAmount's as well as the winner's refunded stakeAmount. If both individuals report a loss, then they each get to withdraw all of their respective funds. If both players report a win, however, all funds are burned.
This is a situation akin to territorial behavior, where an individual will defend his or her property even if that fight is very costly to the individual. A potential attacker, taking this into consideration, will be less likely to try to take another individual's territory.
This was inspired by David D. Friedman's A Positive Account of Property Rights.