Wet T-shirt contests originated (and continue mostly in) places where public nudity - including bare breasts - is illegal. That doesn't just mean outside - many places don't allow places that sell liquor to have nudity, at the risk of the liquor license. A wet T-shirt allows boobs to be seen without actually being naked, and thus protected from prosecution under the law, or the loss of a license.
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Unless they’re exhibitionists
From your point of view as a woman I'm curious on your opinion.