After completing Arena: Round One, wait a while for the Arena to be reset, and then speak with Arnie, and he'll let you know the next fight is against a bunch of mutants. Accept the fight, head ...

After speaking to Arnie downstairs in Rostok during The Freedom Colosseum, he'll direct you to hand in your weapons to Wheezer. Head out of the room and down the next flight of stairs to find Wheezer.