If a player disconnects intentionally, he will be dropped from the race and appear as “DNF” on the race result screen, and he gets a loss (read what DNF stands for here).
However, if there is a temporary disruption anywhere between you and the other player, Nitro Nation will let both racers finish their runs. If the connection is reestablished within a short amount of time, the server will accept both races and award the win to the fastest player.
Disconnecting is not a viable cheating mechanic because every race is simulated and verified by the server before the results are announced. However, there’s no way to prevent some losers from quitting races they can’t handle ;)