Psionics and divine magic do not destroy the land (I mean their effects can but the energy to use the effects don’t). Most people don’t know about preservers and think all arcane magic is defiling.
To use arcane magic in the middle of an arena is suicide. You would have to roll a nat 1 on psionic mimicry or somatic concealment to have a chance of getting away with it since there are so many eyes on you.
If a player tries I would suggest the other combatants in the arena focus them. Also in a few rounds several much higher level guards should pour in to kill the character. If for some reason that isn’t enough there are high level templars or even the SK watching.
Basically if they do it, they either better roll perfectly, have a psionic power allowing them to teleport far away, or they die.