The Battle Square arena is a mini-game that you can play within Gold Saucer at several points during the game. The prizes change depending on how far along in the game you are and are detailed in the table below. The points in the game where the prizes change are as follows:
Winning the battles becomes much easier later on in the game after you’ve received the Highwind and you will need to obtain 
Omnislash and 
W-Summon Materia in order to complete some of the more difficult side quests.
You will need GP in order to register for battle. Wander over to Chocobo Square and either bet on races or race your own Chocobos (check out the Chocobo Racing and Breeding section for more information) in order to stockpile some GP.
Equipment: Equip Cloud’s Ultimate Weapon called 
Ultima Weapon (which can be obtained by defeating Ultimate Weapon (boss) - click on the link for more information) and your strongest armor. This will be either the 
Ziedrich or Mystile. Finally, equip a 
Ribbon in the accessory slot.
Materia: Make sure that Cloud has 9,999 HP and supplement him with 
HP Plus Materia if you need to in order to cap his HP. You do not want to have to rely on too much of your Materia (in case it ends up being disabled).
You will want the following Materia:
Double Cut Materia (ideally leveled up enough to have access to 4x Cut)
Restore Materia (for casting Cure3 and Regen)Counter Attack MateriaLong Range Attack Materia (for hitting flying enemies)Ultima Materia in case your weapon or regular attacks are not effectiveEnemy Skill Materia (back up attacks and you can use White Wind to cure negative status effects)Luck Plus Materia and Magic Plus Materia if you have roomUse Regen early on in the fight and keep it active for the duration of the battle. You can use items during the battle but you lose them permanently so try to avoid it if you can.
Press the 
Button when the reels are spinning to slow them down and have a better chance at picking a more beneficial handicap. The points you receive are based on the handicaps that you get. The handicaps that produce the highest BP rewards include:
Toad, Minimum, Break Magic, Seal Items and Break All Materia is the highest (10,000 points if you receive it on the last round)
The Tissues that you receive at the end of the battle have no purpose or use in the game.
Do not leave Battle Square before spending your points or you will lose them!
Use your points to purchase items from the vending machine before you leave. As mentioned above, you will want to purchase both Omnislash and W-Summon Materia for upcoming quests.
The Slash to End All Slashes
You will receive the The Slash to End All Slashes Trophy once you teach Cloud his Level 4 Limit Break, Omnislash, using the Omnislash item listed above. Check out the Learning New Limit Breaks section for more information on how to teach your characters their strongest Limit Breaks.
Once you have obtained Omnislash and taught it to him you can participate in the “Special Battles” at Battle Square. The prizes that you can spend your points on do not change, however, you automatically receive a 
Final Attack Materia for successfully surviving all 8 rounds of battles.
Final Attack Materia is critical for some of the more difficult fights in the game (including Emerald Weapon and Ruby Weapon). You can pair Final Attack Materia with Revive Materia or 
Phoenix Materia to automatically revive your party members if they are knocked out during a battle.
