The overall idea of a "Carnival Prison" not the whole pit fighting with people who use their own blood as a weapon.
How long do you think something like that could hold a party's interests? The idea kinda popped into my head as I was reading one of the Drizzt books (though it doesn't actually feature Drizzt at all so far) that takes place in Luskan, where they have the "Prisoner's Carnival" which is essentially just a carousel of random tortures.
So, what if this city has something similar. Criminal punishments are common entertainment and are exceedingly cruel and ludicrous. Often bloody. Say the party are all criminals or accused criminals who find themselves in this prison and forced to race through deadly obstacle courses, killer arenas, and games of soccer where the ball is set to explode at random intervals.
How long do you think interest could be kept up before the constant barrage of traps and gimmick encounters wore thin? Good enough of a premise for a oneshot? A couple of sessions? Maybe even a whole campaign if the party bands together and tries to either escape or win their freedom by surviving a sort of sick game show?
Or would the mechanics just not work properly? I was thinking something like implementing Haunts as just more advanced traps. Slamming portal Haunt plus a descending ceiling/crushing wall trap, haunted manacles shoot from all over the place and try to trip/bind the players as they navigate through a room filled with gouts of fire and poisonous arrows. That kinda thing.
Sounds kind of like Xcrawl.