I personally would love to watch it. I already think we should go back to hanging Pedophiles, rapists and killers, so to do it this way means there is a way to gamble on it, which is even better. Throw in some crazy fame seeking volunteers and we have ourselves a show.
We could do a three minor offense strikes and your out system aswell. If a person gets caught stealing three times, they obviously aren't going to learn, throw them in the pit.
The problem then is crime would go down, so we wouldn't be able to sustain the amount of fighters, at which point the corporation would end up framing people to get a steady stream of people, and the population would not care, as long as we had something to watch.