This could reduce gang fights, maybe
Because gang disputes are evil, when you remove a chunk of the evil the interests would reduce. So if you legalize gang fights, maybe create a special area like special economic tax free territories we have now, and then you inform to the gangs that you knew were in a tension with each other, you'd reduce the chances of that happening. Maybe an increase for non deadly fights, but deadly gang battles should be able to be reduced just by the act of legalizing and organizing it. Because they were fueled by evil. If they wanted to do it without supervision anyway, then I don't know, but still my point if you organized it and legalized it, they should be less likely to want to do it. Such event should add nuances to the way of the gangs and eventually reduce the chances of "traditional" practices.