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4E DnD Arena General Rules

The Arena is divided into Seasons. Each Season lasts for a set number of player levels. For example, during the first Season, players started characters at 5th level and the Season was set to end at the end of the session where any player attains 9th level. At that point, awards are given out, the players are scrapped and new ones are generated for the next Season.
During each session, a group of four to six players goes up against a DM for a series of 3 or 4 encounters. The DM is randomly selected but can't be someone who has already DM'd one more time than any other player. This is so everyone gets a turn at it and doesn't get a turn at growing their characters.
At the start of the session, players randomly select a drafting order. In order, each player selects one character to use for the entire session. The next player must select a character that is not of the same type (defender, striker, controller, leader) as the previous selections. The selected characters will not change during the session, but will be the only character to reap the rewards of the session. Characters that do not participate still receive 65% of the experience gained, may trade equipment freely among characters between fights, and since gold is per player (not per character) there is no additional coin handed out to non-participating characters.
The encounters are determined by randomly rolling on the encounter spread table, which crosses that level of encounter off the list (until it refreshes). The list is a string that looks like this:
+3 . +2 . +2 . +1 . +1 . +1 . +0 . +0 . +0 . -1
These numbers are modified by the highest player's level to determine the encounter level for each encounter during a session. The encounter level is then referenced to the monster listings, where one of the encounter groups is randomly selected.
Note!: When the encounter spread (the above string) refreshes, those numbers continue to be "crossed off" the list, just until the end of that session. This is to prevent multiple +3 or -1 encounters.
Next initiative is rolled and the group determines a map. Each map has different small added rules that are included on the maps and terrain section. Some maps are half-sized and some are full sized. Each fold on the map is a potential starting area. Players and DM each randomly determine a section bounded by the folds and (in reverse initiative order) place their characters/monsters in the area. The only rule governing placement is that the characters cannot occupy the same starting area as the DM's encounter group. All creatures start on the surface they place on, even if they fly or burrow.
And then there's some fighting! During the battle, all information is public knowledge to all other players. Monster and character current hit points, daily and encounter powers used, monster abilities and damage, speeds, everything. It is recommended that prior to the first battle, various key points about monsters and players is given out / reiterated. All players and DMs should adhere strictly to the letter of the rules as presented in any 4E core book or supplement. If there is a dispute over the legality of an action, or a subjective action that can't be agreed upon (like acrobatic feats), then that action can't be performed.
While fighting, the DM can not routinely attack "downed" characters. These are characters who are at 0 or fewer hit points. At the end of each monster's turn, it may make a DC 20 Intelligence or Wisdom check. If it succeeds, it is visibly flagged to let characters know that it can attack downed characters until the end of its next turn. This gives the remaining players a chance to defend against a killing attack. A monster may still include downed characters in an area attack, as long as that attack includes at least one non-downed character. If all the characters are dying, then no checks are necessary and downed characters may be attacked freely.
After the battle (assuming the players win), characters are given exp equal to the value of the DM's encounter group. If a player died during the fight, a proportional amount is given. For example, if two of the five players died, only 60% would be given. Leveling occurs immediately (which will make the character tougher, but might also increase the next encounter's difficulty!) Also, characters are given gold, and magic items (and possibly potions) become available for purchase according to the magic item rules and loot table. These purchases are resolved prior to generating the next encounter. In between fights, characters may take as many short rests as they like, but not an extended rest.
Then another fight occurs following the above rules; a new encounter level is generated, a new map, although the player characters stay the same. Notably, characters will get an action point after this second fight, and the use of another magic item power is allowed, as per the rules. After that one, a third fight. After this one, the players decide by vote (with a DM tiebreaker) if a fourth fight is a good idea. The fourth is completely optional, and is based only on whether the players want it to happen for additional xp and treasures.
After the entire session, characters that participated are completely healed of all affilictions. Any character that has a crafting feat may use it once to generate an item. Characters that died are dead and can not be raised, even if another character possesses the appropriate ritual. Logs are created, non-participating characters are given their 65% xp, and the next session of arena is set!