IRL... you generally have a trusted third party that will collect the entry fee, pay the rewards, and make sure everyone is playing by the same rules. There are numerous examples of this, UFC, EliteXC, the Boxing Commission, etc. This isn't an easy problem to solve IC in PS. I don't know you from Adam, Eve, or anyone else. I also have no way of getting anything resolved if someone misrepresents themselves, or has q300 weapons and maxed out skill for their weapon, when I only have half their skill and npc grade weapons. The way PS is set up, that would be a slaughter, even if we both had the exact same stats.
If a GM is identified as the ringmaster (for lack of a better way of putting it), then my character will automatically assume that the event has some credibility. The GM could be running things on behalf of the Octarch or something. However, a player running the event, could claim that status, but couldn't back it up. Also, being IC, I would not give them the time of day.
In order for the original purpose to be accomplished, I think this would need to be a GM event. That is my opinion, take it or leave it.