WidelyGrinning Short stories can definitely win a contract (in fact, I've seen them encourage it before, especially for new authors). It's just less likely because of profit reasons (e.g. if you have a 30 chapter novel, it's difficult to decide when is a good idea to lock it? They encourage locking chapters at 60-100. Will readers be willing to start unlocking chapters at chapter 5? And how much could you profit from only getting 25 chapters unlocked?), so it's not even WN, but rather the authors that decide to keep writing & making it longer for profit.
If the novel is popular enough & shows plenty of readership/following despite being short, then WN will likely still be interested in offering a contract. Nevertheless, because of the site structure/format, method of profit, and general audience interests, most novels end up being long.
What WN is also interested w/ short stories is that they don't usually end up being dropped. So that solves one of the main complaints people have about investing a billion coins in something yet having the author ending up with dropping the novel.
TL;DR: short novels can definitely win contracts. There's pros and cons in offering a contract to short stories though, but long novels have those as well.