The loser drafts next season with no rankings, no cheat sheet, no ADP data, and no phone, from pure memory, while everyone else uses everything. Their picks are announced with extra ceremony. A punishment that directly increases their odds of repeating it, which is the design.
Budget note: this one costs nothing but dignity, which makes it a strong pick for leagues that would rather spend the pot on the champion than on the loser's downfall.
Seen in the wild: fantasyleaguelottery.com