I just checked PAIR and as of March 5, 2011 it's with an examiner. Most recently, on June 12, it looks like the USPTO wants them to restrict the claims in the patent to a single independent and distinct invention; i.e., it doesn't look like they'll get their way with having their patent broadly cover all forms of reward.

The problem with paying rewards for prior art is that it discourages community collaboration, finding prior art is a mix of inspiration and perspiration and by incentivizing everyone to work alone it actually substantially decreases the chance of building a strong prior art case.