Continuity mistake: During the final of the arm-wrestling championship, Lincoln Hawk's nose is bleeding. Then it's not. Then it is. It goes back and forth.
Other mistake: Just before the first arm wrestling match against "Smasher, " Bull Hurley is seen in the doorway looking at Lincoln accept a match. A few seconds later Bull seems to appear into the doorway like he is showing himself for the first time.
Answer: Short answer is no, it's not illegal. For example, boxers are allowed to bet on themselves. There may be leagues or clubs that prohibit their players (and even staff) from any form of gambling, not just betting on themselves or their team. But it doesn't mean it's illegal. Some casinos or bookies may not take players' bets unless it's a straight bet to win, as opposed to a player betting he'll win in the 6th round.
Bishop73