You are misrepresenting internal hackathons. They are merely X days provided by the company where your regular duties are no longer your priority. Instead you

You are misrepresenting internal hackathons. They are merely X days provided by the company where your regular duties are no longer your priority. Instead you are encouraged to learn and/or create. Some may work more hours. Some may work the normal hours. That's it. If it imposes restrictions on what can be worked on and limits creativity and doesn't put learning first, it's really not a hackathon.