This is highly possible. But I think this fall under esports betting. The current setup for e-sport betting is that people bet on a tournament match just like sports betting. So if you wanted to participate in this kind of gambling you need to register yourself in tournament and bet for yourself when a sportsbook take your fight for betting.
This is actually possible but it will not be upto standard, it is possible for a casino to have a tournament for multiplayer but I doubt if it will come close to like having the features of Moral Kombat in reality, remember that Playstations are designed purposely with dedicated graphics to load that kind of features, if a casino want to try that kind of features, the web may take forever to load up the game.
This has been taken care of by the sportsbook, so we might see casinos getting this just like sports betting. But I do think that it is possible for a casino to consider this kind of play but they need to study the profitability of this kind of game but Casino isn't in rush because as we know esports betting is already around.
The amount and time to do this kind of game wouldn't work for Casinos not to talk of the amount they will spend and the little amount they will generate and is not as if everyone would be interested, if anyone is interested to play this kind of game, it has multiplayer options, one can bet upon themselves and not necessary you must go to a casino.