They used too, seasons one and two were all real competitions as far as I can tell. in10sity is real, but they are invitational competitions made only for filming, and Energy is real, but has the same case with in10sity. Believe, a recent favorite, seems to be the only legitimate competition they stil go to. Sheer Talent is another real one, but it is a rather small competition.
It seems that they have cut Starpower, Starbound, and 'normal' Energy and in10sity, along with iHollywood and Hollywood Vibe from their competitions.
Different editor in 2015:
In general, the unfilmed competitions seem "real" enough in recent years (excluding Sheer Talent):