

If you defeat him, you get back the Striker and he'll join the party.

You may want to save right before each wager and reload that save if you lose. Either way, you don't get back the item you wagered. If your character wins, you get a different item.

The fight is automated you can't control your character, so just make sure to give them your best equipment beforehand. Wager an item, then pick a character in your party to fight one-on-one. In the World of Ruin, you can visit the Dragon's Neck Coliseum and bet items to get new equipment.
