Let the servers hold 8 people. So you can have the choices
1) To have a 1v1
2) To have a 2v2
3) To have a 3v3
4) To have a 4v4
And also to have a 1v1 Tournament mode. Like when one match is beginning the other 8-16 (i think there could be a possibilty of 16 but 8 will only hold 4 matches, keeping the battles fast and leveling up faster.) But the other non active players will sit and watch the battle in the spectating area of the arena and if they want they can bet on either gamertag instead of having teams in a 1v1 arena it should say that you can bet on (said gamertag.)