Your problem is that you are oversimplifying punishment into revenge, while simultaneously looking at too small a picture in terms of prevention.
Punishment can be used as a tool for revenge... but it can also be a tool to either deter people from committing an offense (which is a form of prevention) or remove a repeat offender's ability to commit the offense (which is yet another form of prevention).
Even if a punishment obviously can never prevent the particular offense that it was issued for it still aims to prevent other offenses of the same kind.
If hypothetically the punishment for a certain offense was so gruesome and horrifying that nobody would ever commit the offense after the first person has eben punished, then that punishment would prevent literally all future offenses of that type; except the one it was issued for.
It's also noteworthy that in this example a naive look at statistics would reveal that the punishment failed to prevent 100% of offenses... since there has only been one offense committed. You are in essence using the same naive approach here. You are looking at the offenses that have not been prevented and simply claim they should be prevented. You are not looking at how many offenses the system may have prevented because... well, because they never happened thanks to the system.
Now, that's not me saying Riot's system is hugely effective (there is a reason why they're currently focussing on the honour system). But you can't really say that it is ineffective either, because it's not possible to keep track of all the prevented offenses.
What you can do, though, is compare the current system to the times before Riot had a properly working system to punish people... and I can tell you with absolute confidence that it was worse. And while it's not the best system out there, Riot's punishments definitely do prevent some portion of offenses.