It's very disappointing that you have to win a fight in arena to gain any xp. I think even the losers should get a point or two of xp just for fighting. It would take longer to level a pet sure, but at least it's actually gaining something for the time spent fighting.

It may happen that a pet just has too bad genetics or was poorly trained to win on the arena. Not all pets are good enough for such fights. Getting beaten doesn't give any strength, speed or special abilities. It results only in wounds, pain and a growing fear to be beaten again. A good keeper has to maintain their stock and carefully plan the breedings and training to make sure that all of their pets are competitve enough to win on the arena.