Master of the Arena is a Side Quest in The Witcher 3.

This level 14 quest is available in Spikeroog. Go to the battle arena in the northwest of the isle and talk to the warriors on the walkway to learn about the ghost of a defeated warrior who is haunting the arena. (Make sure to talk to them first to get a bigger reward -- don't defeat the ghost yet.)

This ghost, Ulle the Unlucky, is doomed to always lose. Face him and beat him to learn about his plight. Then meditate for 24 hours to see him return and face him again.

To beat him, you have to actually lose. Don't worry, you don't have to die. Either keep blocking him attacks -- or just let him hurt you until you're almost dead and the end sequence of the quest will be triggered.

Once he curse is broken, head back to the masters of the arena. They will promise to share a portion of their winnings with you.

It'll take time, though. You can either let the quest sit while you explore more or just do some fast-traveling or meditating to pass time. It's easy to know whether enough time has passed as the quest marker will appear on the map again.

Go back to the warriors to get paid and the quest will be marked complete.