This study explores digital innovation contests as a pedagogical tool within a Design-Based Learning (DBL) framework in higher education. Through an empirical investigation of four university courses involving 220 students and 25 industry partners, the study examines how innovation contests foster applied problem-solving, industry collaboration, and student motivation. Findings indicate that while contests align with DBL principles, their competitive nature introduces new pedagogical dynamics, requiring adaptations in learning design and assessment. The study contributes to both DBL and digital innovation contest research, demonstrating how structured contest-based learning can bridge the gap between theory and professional practice.