It wasn't the losers who were getting a sexual thrill. Just like straight men, there are some gay men who get a sexual thrill from physical domination of others.
Sometimes you will see news stories about boys on sports teams being subjected to sexual "hazing" by others on the same team. It is not "hazing", but rather a kind of rape, where the dominant boy gets a thrill from performing a sex act on another boy using a foreign object. Unfortunately, these kinds of boys are sometimes attracted to wrestling.
Not surprisingly, a lot of men like this end up in prison, where they can often indulge in this kind of behavior.
Sounds like good motivation for the loser to try harder. I sure don't remember anyone, in all my school years, ever being intimidated by a queer.