It would work like this . . .
As a combatant---an indivual or party leader---I could put up some amount of coins and challenge any other individual or party leader from either nation into a Colisseum battle. If the challenge is accepted, the opponent puts up the same amount of coins and we are transported into the Colisseum as spectators to await our turn to fight.
As a spectator, I can enter the Colisseum and place bets on any upcoming battle up until it starts. I should be able to see a list of the upcoming battles and who is on each team.
Battles take place in sequence. When it's a particular teams turn to battle, they are transported to the combat floor, given 30 sec to prep, and then combat begins. Spectators can only watch and cannot enter the combat area. When you die, you are dead. You cannot respawn to rejoin the battle. First side with all combatants dead is the loser. There should be a time limit on the outcome of a battle, maybe 10 minutes, in the event of stalemates.
Winning combatants receive their own money back plus the money that was put up by the opposition. (So basically doubles the money you risked.)
Winning bets are paid out of the betting pool based on each individual's percent contribution to the winning team's betting pool. Combatants should be allowed to place bets on their own matches in addition to the money they put up for the match initially.
Rankings could be maintained to make it much more interesting. Perhaps the top 3 Colisseum leaders could get a special symbol similar to the NPS symbol, or some other benefits.
I believe something like this would be a wildly popular enhancement to the current PvP system. It takes the PvP challenge system to a new level, and offers players the chance to make money (and settle scores) at the same time.
I'm a software engineer with some game design experience, so I realize it would take some work to be sure that the system was fair and not subject to abuse, but I believe it's doable and that the basic idea is sound. Any KO developers out there listening?
Comments on the idea?