In a small town called Carp, New York, all the graduated high school seniors have a chance to play a risky game called Panic and win $50,000. Carp is a miserable place. Alcoholism and drug addiction are common among the adult population, and the whole town is filled with a sense of desperation and need.
Every year, the day after graduation is Opening Jump, when the Panic players jump off a 40-foot-high ridge into a lake after nightfall. For the rest of the summer, they will undergo a half-dozen difficult challenges until there is only one winner. The winner takes the prize money pooled together by the entire high school, which is enough to pay their way out of town or to enter the college of their choice. There are always two secret judges who create the challenges and award points, but aside from the Opening Jump, none of the participants know what challenges will be presented.
Dodge Mason is known as a wimp. No one would expect him to win the game, but he has an emotional edge over the other competitors. His older sister, Dayna, is paralyzed from a Panic accident she suffered two years earlier. Dodge wants to win and avenge his sister.
Luke Hanrahan tampered with Dayna’s car before a race, which led to her car crash and subsequent paralysis, and Luke’s younger brother, Ray, is playing Panic this year. Dodge doesn’t really want the prize money, but he wants to win so he’ll be in a position to kill Ray and make it look like an accident.
The prize money this year is $67,000, larger than ever, but even that wouldn’t have been enough to tempt Heather Nill to join Panic. But when Heather’s boyfriend leaves her for a cooler girl, she feels like maybe joining Panic could make her seem cool, also. Heather’s popular friend Nat joins Panic, even though she is afraid of everything, but their guy-friend Bishop insists that both girls should drop out of such a dangerous game.
The second challenge is walking a wooden plank stretched between two water towers, 50 feet off the ground. One boy nearly falls, and he accuses Ray of throwing something at him to make him fall. In the ensuing fight, Heather’s friend Nat is injured. Dodge arrives to help them. Heather can tell by Dodge’s attitude that he likes Nat. Heather strikes a deal with Nat to split the money 50-50, if either of them wins. Then Nat secretly goes to Dodge and offers him the same deal.
Heather gets a job helping a retiree named Anne. Anne is a pleasant woman with a small farm full of rescued animals, and even has two elderly tigers on her property. Heather prefers spending time on Anne’s quirky farm to hanging out at her own home with her alcoholic, chain-smoking mom and stepdad.
The next Panic challenge involves breaking and entering the well-guarded house of an alcoholic known as Trigger-Happy Jack. The players are supposed to steal any item from the house, with a bonus for stealing a special gun kept hidden in a desk. Dodge and Heather make it inside and are shot at by Jack, but escape by breaking a window and jumping through. A total of 10 players manage to steal items from Jack’s house. The police put up flyers the next day, announcing that players of Panic are subject to criminal prosecution.
The next challenge involves staying overnight in a haunted house. The winner will be the person who stays inside the longest, but someone sets the old house on fire, trapping Dodge, Nat and Heather inside. Dodge helps Nat crawl out of a window to go get help. Heather ends up hospitalized from smoke inhalation.
When she wakes up, the police want a confession from her about Panic, since the game is getting more dangerous. A mentally unstable war veteran named Little Kelly was also hiding in the basement of the haunted house, and he died in the fire. When the secret Panic judges don’t issue any new challenges, it looks like they might call off the game. Dodge is so desperate for the game to continue, he goes to Ray’s house to ask for his help to keep Panic going.
Heather tells Bishop and Nat that she’s out of the game. She is appalled at the monstrosity of Panic and spends the next few days working on Anne’s farm and baby-sitting her 12-year-old sister, Lily. Then Heather comes home from work to find her sister locked outside of the house, freezing cold from the rain.
When Heather enters the house, she finds her mom and stepdad doing cocaine. She fights with her mom, and then discovers her mom has stolen all of Heather's money. Heather takes their meager belongings and runs away with Lily, stealing her mom’s car and parking it on the street. Because she and her sister are now homeless, she decides to rejoin Panic to get the prize money.
Dodge and Ray start kidnapping players and terrifying them by locking them in car trucks or handcuffing them and dunking them in swimming pools. Their intention is to force the secret judges to reissue official Panic challenges. Their ploy works.
The next challenge is crossing a busy six-lane highway while blindfolded. Dodge passes the challenge easily, but as he gets closer to his goal of winning Panic and killing Ray in the car race known as the Joust, Dodge learns that Dayna has a possibility of healing from her paralysis.
Dodge has hated the Hanrahan brothers for so long, he can only seek revenge for Dayna’s injury, not join in her hope for recovery. Dodge finds out that Heather’s and Nat’s friend Bishop is a judge, but Bishop is consumed with guilt because he’s endangering Heather, who he secretly loves.
The police find Heather driving her mom’s car. She and Lily are sent to live with Anne for a few days.
The players get individual challenges, and Heather’s is Russian roulette, but Dodge removes the bullet first. Nat fails her individual challenge of staying for 10 seconds in the pen with the two tigers, which are on Anne’s property. The next morning, Heather finds that the padlock hasn’t been refastened, and the tigers have escaped. Heather is wild with grief over the loss of the tigers. Bishop confesses to her that he is a judge of the game and he was the one who came up with the challenge idea. Out of guilt, he turns himself in to the police.
One of the escaped tigers is found and shot to death. Anne loved the tigers, so Heather is afraid that Anne will kick her and Lily out of her home for this crime of negligence, but Anne forgives Heather.
Heather, Ray and Dodge are the only remaining players. Dodge is ready for the Joust, the final event. He agrees with Bishop to safely eliminate Heather from the game. Then he plans to switch cars with Ray, ensuring that Ray will end up driving a car full of homemade napalm.
Nat knows that Dodge plans to kill Ray, so she and Luke tie Dodge to a chair in Nat’s basement. That way, Heather will face Ray in Joust instead of Dodge. Heather doesn’t know about the napalm, so she takes Dodge’s car to Joust.
Heather’s engine catches fire. As her car hurtles toward the woods, she jumps out just before the explosion. In a moment of clarity, she sees the other escaped tiger standing in the road near her. She walks to the tiger and pets its head. She knows she is the winner of Panic since Ray swerved his car to avoid her.
The following October, Heather is happy. She split her prize money with Dodge and Nat, and is now dating Bishop, who comes home from college every weekend. Heather plans to start community college soon, and all four friends hang out at the beach together. Heather thinks about how hard times will come into her life again but that there will always be hope. She knows that she’ll always be able to find a way out of dark times, and she’ll never have to be afraid again.