Have a reserve of inexpensive prizes at home that you can access instead or offer them the choice between spending a dollar on that nonsense or going to the dollar store and picking out an item of their choice.
Remind them about the buddy bucks machine at HEB.
Offer to take them to Chuck E Cheese where they can have the dollar equivalent of tokens.
Places to get better inexpensive prizes:
Target dollar section
Borders books bargain section/clearance
Candy sections of grocery stores.
Even Lakeshore learning has a few things under a dollar, but not really deals.