Gothic/Scatty

Scatty is the arena master. Find him by heading east along the lower level of the camp. To get his vote, you must defeat Kirgo or challenge Kharim.

You only get one shot at both. Beating isn't easy, your strength plus weapon damage has to exceed 45. If you do this after you've already leveled up several times and invested plenty of skill points into strength, you have a shot.

And then there's.

You have two options here: the easy way and the hard way. Once you've challenged him drop your Ore on the ground (so he can't steal it from you) and then go into the arena. It shouldn't take him more than a couple of blows to fell you. He'll then check your body for Ore and leave you alone.
 * Let him beat you

You'll need lots of strength, a great weapon, the best armor has and probably even spell scrolls if you hope to beat him. It's also possible to soften him up outside the ring. Hit him and when he starts hurting you run away and come back. It takes a while for him to heal, and in this time you can challenge him and finish him off. While beating Kharim is indeed a valid option, his stats (in particular his armor) make it clear you're not really supposed to beat him. He'll most probably take you down in 1-3 hits. And if he does, you won't get a rematch. You can challenge the fighters only once. Good thing you don't have to beat him, really..
 * Beat him

Regardless of whether or not you beat Kharim, Scatty is impressed that you had the courage to fight Kharim at all, plus he hates Kharim because he's from the New Camp.