Arena district in the Imperial City or perhaps somewhere else in Cyrodil. Players could place gold bets (or even armor) and Guilds could organise arena teams. Even individual gladiator lonewolfs can break legs and crush skulls in the arena. No other game is more suited for having this feature then TESO. It could be like in Oblivion with citizens watching the game.
I personally would be totally pumped for this... how about you?

It would be fun.
I'd also like to duel people from my faction to the death (even though I probably never would)