Yeah, this is a tough area and it's hard to know what the best approach is. I have a buddy whose dad played for Pittsburgh on a World Series baseball team. His dad was extremely competitve and could not stand to lose. Growing up my buddy said he never beat his dad at anything. Then, when he finally beat his dad at a game of basketball, his dad hauled off and punched him in the head
My friend went on to play college baseball (was on the team at AZ St. with Barry Bonds) and was drafted in the major leagues. My friend is well adjusted, is competitive, and is normal as can be. So, none of this seems to have effected him.
In my family I take the opposite approach and try just hard enough so that my two boys always have a chance to win. As they've gotten older they've gotten better so I suspect someday they'll be able to win outright without me letting up.
However, I've already started to notice that as my older boy takes up activities that I have no experience in, he's able to beat me all on his own. For example, he's great at video games and regularly schools me. Likewise, he does down hill skiing and is on the ski jumping team. I never skiied and took it up only so that I could accompany him. He regularly gives me grief that he can beat me to the bottom of the hill or go over jumps that I don't even attempt. So, these types of things are already exerting an equalizing factor.
But, in other areas that I have personal experience (like Wrestling, fantasy football, home repairs, etc.) I take a lot of time and care to help him learn and develop (while I'm whooping his butt

). As a side note, my boy recently won a fantasy football contest that I and many of his uncles and aunts were in. He picked his team all on his own and you should have seen his grin when he was announced as the winner.
Anyhow, I don't know if all this rambling makes any sense but I guess the one thing we can all agree upon is that it's probably not a good idea to punch your boy when he finally beats you

My buddy still talks about that one to this day.