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This is correct. It’s a category 1 penalty. It happens all the time and is part of the strategy of WKF-style kumite (which is what is at the Olympics). It’s important to note that you are allowed FOUR category 1 penalties before being disqualified, which means this guy had to have several other penalties before this one. Edit: this was a case of point elevation. See below. The impetus was (edit: STILL) on him to prevent another penalty (or an elevated penalty). He knew this, if he made it to the olympics. I see this ALL the time.
Considering the guy who got kicked was off the mat when the final outcome was called, that means the other guy was considered medically injured by a medical professional on the scene. Earlier in a tournament he would not be allowed to continue competing at all, even if he won this match by a technicality. The only time you’d “want” this is the very last match in a bracket.
Source: I’m a USA Karate Nationally Certified judge (the ones that send judges to the olympics) in both Kata and Kumite.
Edit: adding here because the conversation started to veer. You can elevate a penalty beyond an increment of 1. The referee can’t do it unilaterally, though. You need cause (like blood on the mat or a concussion, or a clear intent to injure the other opponent negligently by trying to gouge eyes or kick throats etc) AND the corner judges (there are 4) need to agree and support the elevation by indicating support right then and there (no discussion) based on what THEY saw from their own corners. You can get DQed with just 1 or 2 penalties if both are elevated.