The PVP arena is a location that is unlocked by maxing 3 or more track gags and having at least 80 Laff. Any gags used here are automatically restocked at the end of a match. This building is a Colosseum with red and blue flags for 2v2 or 4v4 battles. For 1v1 battles, the flags can be a random color.
If a toon loses all their Laff in this arena, they will not become sad and their gags will be kept, and they will also be fully healed. Lure or trap gags are unusable, otherwise they could be abused, by stunning their opponents every time they get a chance to battle. You can also only see the gags your team is using, otherwise they will know your strategy and take advantage of it. Team chat is also usable and a new feature to advertise this, but not outside the Colosseum or in 1v1 battles.
The Colosseum can be visited by talking to an NPC in any playground except Goofy Speedway or Acorn Acres. The NPC is a new NPC class called Knight. If you have the requirements, you need to speak to her. If you don't, you can try as much as you can. However, If you try too many times at once and don't have the requirements, you may not interact with her for 30 minutes. After you pass once, you are free to use her as much as you want.
There is a practice mode, where you can fight Cogs, labeled as Bots instead. You can do this by yourself, or with friends. Practicing will not give you experience for any gags you used, nor can they be used for quests. These cogs will also use gags chosen at random, since if they used their cog attacks, they would be pretty unfair and OP. They still can only use their inventory.