The easiest way to make the arena style track is to download the templates (24k) I made.  You may also get them at around on the net.  He's got a few other goodies there of his own too.

To use the templates, just extract the models and art from summit1.pod for the arena.bin template and from the snake.pod/torture pit for the arena2.bin template.  The arena is already set up at dead center 128x128 of the grid.  You will find a duplicate of the track textures located in the top right hand corner of the grid should you need them.  Everything is clearly laid out and easy to work with.  Now, just make your track.

On the other hand, if you still need to know more about what's happening, or if you want to build from scratch, it will be useful to know a few extra notes.

The arena.bin and the arena2.bin are not visible in Traxx. But insert it and in models properties set the bin to no collide and you can drive on the track area instead of up on the ceiling.  Don't worry, everything will be visible from inside the track. When you do the no collide thing you will need to set object barriers around the edge of the arena area in order to prevent the trucks from wandering off. Not an easy task when you can't see the arena.bin. But a bit of common sense math and you can figure it all out. The templates already have this done for you.

Tip :  if you use the templates be very careful not to move the arena.bin.
 

To make the arena really work, you should create custom textures.  There is not really enough room in the arena to rely on stock textures.  You will find that you are limited to about five layout choices, and none of them are particularly inviting.  So, click here for some notes on creating custom textures for the arena track.

Last notes.

- Inside the arena area, under the current configuration, transparent bins do not work very well. In the places that you are supposed to be able to see though, there is this blue feedback kind of light. Objects like the standard start light/gate thing, checkpoint banners with see through sections, and the helicopter propellers all show this blueness (amber at dusk). I just had a bugger of a time repainting banners so they wouldn't do this. I haven't tried anything obvious like trees and stuff but I'm assuming it will be the same. 

- It doesn't make a difference whether a backdrop is set or not. 

- Lastly, the news is that Guitar Bill says that the next version of Traxx will support the arena situation properly.  So, hopefully, the job will become a little easier.  But now that the templates are available, there is no real problem anyway.

I hope this helps.  Good luck.