Mind Flayer Entertainment.
Although they are overused the drow still seem a good option. I like the idea of illithid even more though. I could just see them using their mind powers on their champions in the arena and the mind games that would go on amongst them come game day.
A race with some sort of structure needs to be in charge and with enough fear/punch to keep the gladiators/slaves repressed.
But you have the problem of level. hmmmmm.
How about illithids run the show (and take the profits), but they have orc (or even a few orog) flunkies like a brutal enforcement squad - they guard the money, slaves, competitors, force the monsters into the ring, even a few fight in the ring for the illithids enjoyment. I picture orcs as being easily manipulated and quite easy to use mind control powers upon. Nice heavies for the few illithid houses.
But I also love the previous ideas of using kobolds, so throw them in too as another servitor race. These little critters are scampering everywhere doing little chores for their masters. I can see them getting in the way all over the coleseum: removing bodies & parts, devising and opperating the traps of the arena, running messages for their overseer illithids, feeding them, even selling food in the public arena "displacer-beast ears, osquip noses, roasted kou-toa stakes" (but no boiled illithid calamari of course).
Wow, you have a cool concept here. Underdark coleseum...something to consider.
(evil DM laugh - like doc Evil's of course)
Love to hear what you go with here.
Cheers, Connors