Would I bet $1M that a dowser would fail? I'd have to think about it. It's extremely unlikely that he'd succeed, but I suppose it's vaguely possible that there's something in physics that we don't understand that could cause me to lose the bet.
In this case, would I bet $1M that the guy needs food and water to survive? In a heartbeat. I can't imagine JREF feeling threatened by the possibility of success and having to weasel out of it. That's especially true given the fact that they do run all sorts of tests on other far more likely phenomena (like dowsing and psychics). The notion that they're not afraid of a dowser but they're terrified that this nutbar is a perpetual motion machine who just might beat them seems ludicrous to me.
It's also pretty easy to see that Randi (and probably lots of the JREF staff) are abrasive people who may heap scorn on you before the test is done. I don't think that's how I would run things, but it's hardly evidence that they're rigging the game. So, given the choice between the notion that they're just arrogant and sometimes rude and the possibility that they're genuinely afraid that one particular nutcase has an ace in the hole, I know which one seems more likely.
I suppose the third possibility is that they were afraid that the guy would go into testing and die on their watch. That would make me a little bit nervous in their position. If the guy is sufficiently crazy, they have a choice between getting flak for ending the test "early" or getting flack for letting a crazy person die.