It might... if you're a moron.
Recently I shot some images at a Color Me Rad event in Toronto. Once I told people this they freaked and brought to my attention a few blogs that talked about it destroying their brand new gear. Many of these blogs were on lens rental company websites who refused to rent lenses for these events. That's their prerogative of course.
These articles draw your attention the the dust that infiltrated every crevice in the lens which required them to be cleaned from the interior. My first major critique of these articles is they noted that the photographers were not close up in the action. I'm going to have to call objection on that your honour. The photos I saw repeatedly used an 8-16mm lens as an example of gear that got ruined. That is an extremely wide lens so unless someone was going for nothing but sweeping landscape shots they were clearly right in the middle of the action to get good shots from that lens.
The common sense alarms should go off for any photographer when they hear powder being thrown around in the air. As well seeing the images that already exist for previous events you should know what you are getting into. Just prepare appropriately!
So my experience was just fine. I put a cheap rain cover over my camera, used a 70-300mm zoom lens, stood far away and up wind. I was still able to get great shots from far away by using a zoom lens. The other suggestion I would make is not to shoot in the main gathering area/finish line. It can be tempting because you can get a lot of dramatic shots there but that's where you put your gear at risk.
If you plan carefully, take basic precautions and use common sense, you and your gear will be just fine. The best part is you will get some great photos. Everyone is super energetic, they look great, and people gravitate toward photographers with all of their enthusiasm.
Here are some of my shots from the day.
