When you send one of your heros (or a team) to an arena contract and he defeats another one, he earns skill points. Skill points give a hero more chances to win in a next battle (the more skill points your hero has, the less points he will get if he wins). Arena contract will randomly chose opponents, so any hero has a chance to win and earn skill points. Defeated player will pay indemnity or you will own his card (or cards). You will have an opportunity to increase chances of your hero by applying abilities card before going to arena.