Following the advice of a woman they meet on the road, Kino and Hermes head to a country reputed to be a peaceful and wondrous place. From the outside, the country appears to be just that, but as they enter the country's outer walls, Kino and Hermes discover that the truth is somewhat different. As a visitor, Kino is automatically entered into the country's battle tournament. If she refuses, she will be expected to stay and become a second-class citizen, forced to live in an underground sewage town and be a servant for the upper class.
As Kino questions them, the guards reveal a little more about the nature of the contest. Fighters go one-on-one in the arena, battling it out with any weapons they can carry until only one is left alive. The only way for a loser to survive (and be deported) is to have their opponent accept their surrender.
With her options limited, Kino has no choice but to agree to enter the tournament. The guards immediately laugh at the idea of such a 'little boy' fighting in the tournament, so Kino gives them a quick overview of her prowess, speedily drawing her gun and shooting the helmets off the guards.
Leading Kino and Hermes across the run-down, thief infested town, one of the guards takes them to the coliseum, where all the tournament battles take place. As Kino waits for her fight, Hermes questions her decision to get mixed up in all this, but Kino tells him not to worry. All she needs to do is make her first opponent accept her surrender for the two of them to be deported. Then, Kino and Hermes can be on their way.
Soon, the guard arrives to take Kino to the arena for her battle, and as they make their way there, Kino questions him about the origin of this contest. The guard explains that it all began seven years ago, when a new king came to power. Many people flocked to the country to follow the king's hedonistic ways and live in luxury in this beautiful land. Now, that luxury is reserved for those who can win the contest and gain the top prize of being granted first citizenship. Now, people still come to compete in the tournament, but a few, like Kino, still stumble into it accidentally. In particular, the guard recalls a recent incident in which a husband and wife both ended up coming to this country and competing in the tournament. They ended up facing each other in the first round- the wife surrendered and was deported, but the husband was killed in the next round.
Returning from her match, Kino has a surprise for Hermes- instead of losing as planned, she actually went ahead and won the match! As Hermes wonders what Kino is planning, the guards ask that all the remaining players assemble to receive further instructions. Only sixteen players remain, and the following day's matches will whittle that down to the final four. The final day will see the conclusion of the tournament, with the winner earning not only first-citizenship, but the chance to name a new law for this country.
After the remaining players scope out the competition, one of the guards leads Kino to her room- a former jail cell. Before she retires for the night, Kino asks the guard to show her his home in one of the second-sewage towns, and he happily obliges, eager for the chance to get home early and see his family.
The sewage town is indeed a run down place, with people living as best they can with what little space and resources they have. After embracing his waiting children and sending them home ahead of him, the guard laments the fact that they will never get to live above ground- the fate of second citizens is merely to the upper As Kino looks around, an older man in the street explains how the country has fallen into ruin since the current king came to power.
Joining them, another voice takes up the story- a young man accompanied by a dog, one of the other remaining fighters in the contest. The man reveals that the current king came to power by murdering his father, and then went on to exile anyone that he thought could pose a threat to his continued rule- even his two children. No one knows where they went, and rumors even suggest that he had them killed.
The next day, the battles begin again. Whilst the king watches from above, down in the arena, Kino faces her next opponent- a professional assassin. Before the match begins, Kino asks her opponent if he came to this place specifically to compete, and whether he is ready to surrender, but he refuses to respond to either question. When the match begins, the assassin attacks with a flurry of throwing knives, but Kino is just barely faster than he is, and dodges every one. Shooting back, she manages to hit her opponent a few times, but his metal armor protects him from any lasting damage.
With his knife attacks ineffective, the assassin pulls his next weapon- a spiked boomerang. As he throws it at her, Kino is able to dodge, but almost gets caught on its return flight. Catching it, the assassin throws again and Kino is forced to leap over the boomerang in order to avoid it. Landing, she shoots down his next array of throwing knives, before making a run for her opponent, the boomerang right behind her. Ducking as the boomerang returns, Kino lets it fly right over her, and into the assassin. And, whilst he moves to stop it tearing through his stomach, Kino manages to get behind him and press the muzzle of her gun to his chin.
Kino once again asks her opponent to surrender, but he is not quite ready to give up. He explains that, having been born to a low-family, he was forced into the life of an assassin, given no choice but to become the cold-hearted killer that the upper wanted him to be. Such is his determination to become first that he attempts to break free and launch one final attack, but when Kino knocks his weapon out of his hand, he has no choice but to surrender.
Moving on to the quarter finals, Kino finds herself pitted against 'The Colonel'. Once again, she asks her opponent to surrender before the beginning of the match, but he refuses to do so. As the match begins, Kino tries to disable the colonel by shooting his hand, only to discover that it is made of metal! Shotgun at the ready, the colonel begins shooting back, and Kino has no choice but to head for cover.
After firing a few rounds, the colonel tosses his gun aside, but this is far from being an act of surrender. For, as Kino steps into the open, the colonel primes a flamethrower, and begins blasting fire across the arena. Kino once again has to head for cover, hiding behind the rock formations in the arena. As she runs from rock to rock, however, she manages to get a clear shot at the flamethrower's fuel hose. As she takes the shot, the hose ruptures, spraying fuel everywhere. Now, if the colonel reignites the flamethrower, he will end up incinerating himself as well.
With his primary weapon out of commission, Kino expects the colonel to surrender, but he refuses to do so. He came to the arena in order to find a worthy opponent, and now that he has found someone capable of defeating him, he is ready to die. Seeing that his is adamant, Kino walks towards him with her gun raised, but instead of shooting at him, she engages the safety, and uses it to knock him out.
By the end of the day, all of the quarter finals are finished, and the final four players have been decided- Kino, Shizu (the young man she met at the sewage town), Miss Rose, and 'Sixshooter'. The next day will see the conclusion of the tournament, starting with the semi-final matches- Kino vs. the woman, and the young man vs. the sharpshooter.
That night, as Kino rests in her room, Hermes reminds her of a past encounter with a married couple on the road, and how the next time they met, they only saw the woman by herself- the same woman who recommended this country to them. Although she knows that they must have been the couple that were forced to fight each other in the tournament, Kino remains outwardly casual about it, merely bidding Hermes goodnight. Expressing her true feelings will have to wait until she enters the arena…