Wrestling is From the Sunnah! Shaykh al-Islaam Ibn Qayyim Al-Jawziyyah
From the book Al-Furoosiyyah (p.86 & 106-108),
abridged & translated by Abul-'Abbaas
In the Name of Allaah, the All-Merciful, may His Salaah and Salaam be upon His final Mesenger, to proceed:
Chapter - His Wrestling (sallallaahu 'alayhe wa sallam)
There is a report about his wrestling in the Sunan of Aboo Daawood, on the authority of Muhammad ibn 'Alee ibn Rukaanah, who said, "Verily Rukaanah wrestled the Prophet, and the Prophet (sallallaahu 'alayhe wa sallam) took him down."
And this hadeeth has a story surrounding it that we will now mention. Our Shaykh Abul-Hujjaaj Al-Haafith in his book Tah-theebul-Kaamil mentions that "Rukaanah ibn 'Abdi-Yazeed Al-Qurashee  was from those who accepted Islaam upon the conquering of Makkah. And he was the one who wrestled the Prophet (sallallaahu 'alayhe wa sallam), and the Prophet took him down twice or three times. That was before he accepted Islaam. It is said that this was without a doubt the reason he accepted Islaam. This hadeeth is the most firmly established report of the Prophet's (sallallahu 'alayhe wa sallam) wrestling, however, as for what has been mentioned about the Prophet (sallallaahu 'alayhe wa sallam) wrestling Aboo Jahl, that is baseless." 
Az-Zubayr bin Bakkaar said in his book An-Nasab, "Rukaanah ibn 'Abdi-Yazeed was the one who wrestled the Prophet (sallallaahu 'alayhe wa sallam) in Makkah before he embraced Islaam. He was from the strongest and harshest of the people. He said, 'If you can take me down, I will believe in you.' So the Prophet (sallallaahu 'alayhe wa sallam) wrestled him and took him down. He then proclaimed, 'I testify that you are a magician!" Later he accepted Islaam.'" 
Chapter - Wrestling With or Without Something at Stake
As for wrestling, then it is permissible with nothing at stake.  However, if there is something at stake, then the majority of the scholars prohibited it, like Maalik , Ahmad , and Ash-Shaafi'ee . Some Shaafi'ee scholars allowed it with something at stake , and this position is also found among the Hanafee scholars as well .
Important Points To Keep in Mind Regarding Wrestling
Shaykh Mash-hoor Hasan Salmaan
1 There is a slight difference in what was known to the Salaf as wrestling and what we now see in our times. Regarding this, Ash-Shaykh Al-Mutee'ee said, "Our Salaf recognized wrestling as a means of strengthening the body, involving skillful grappling movements, in an attempt to put one's opponent on the floor. Wrestling in our times has many forms: freestyle, Roman, Japanese, etc. Every style still holds to the principle of skillfully grappling the opponent and forcing him down, keeping him from regaining his stance." 
2 The wrestlers must cover their 'awrahs properly and not expose them. It is a condition for the wrestler's participation that he must properly cover his 'awrah, the area between his navel and his knees. This is something the Sharee'ah has specified. So the wrestlers of this time that dress in clothes that do not cover their 'awrahs modestly, this is surely from the evil, prohibited affairs.
3 The Muslims' participation in wrestling must not exceed the Sharee'ah's goal in allowing such activities. 
4 Injuries and physical harm must not be a common part of the wrestlers' participation. Regarding this, Al-'Allaamah Ad-Dardeer said, "The correctness of the intent makes it permissible by the Sharee'ah, so if the intention is not correct, then it must be considered falsehood and idle playing, the kind of activity the people of disobedience indulge in constantly. If it is like that, then it is surely not permissible. Especially when many times it involves injuries that are a direct result from blows suffered during participation in the sport..."
The evidences for the prohibition of physical harm are many and well known. As for the evidence regarding the correctness of the intent, we now look to the hadeeth:
"Every activity that does not contain the remembrance of Allaah is falsehood and heedlessness, except for a man doing four things: Walking between two purposeful goals, grooming his horse, playing with his family, or teaching someone to swim." 
In this hadeeth we see a clear dispraise of all types of idle talk and play, and then the Prophet (sallallaahu 'alayhe wa sallam) exempted four things from this prohibition. And if you contemplated these exceptions, you would find that each one assists you in fulfilling an obligation.
As for the rest of the idle activities that the people of falsehood indulge in from the many different forms of games, those that do not assist them in fulfilling any duties, then they are dangers to be warned against. 
5 The women are wrestling these days. No doubt, this can not be accomplished except by their 'awrahs being exposed, and by them going outside of the goals of the Sharee'ah, so therefore they must be prohibited from it. Watching women wrestle is also prohibited.
6 Some people are pitting themselves against animals in wrestling matches, like bulls for example in Spain, or they arrange matches between animals, like roosters. Know that wrestling is encouraged between men due to its helpfulness in strengthening the body in preparation for Jihaad in Allaah's Way. It is a severe deviation to try to include animals in this sphere, causing them harm, clearly contradicting the Sharee'ah's principle of kindness to animals.
[ And Allaah knows best. ]
This article was taken from BAKKAHnet (www.bakkah.net)
FOOTNOTES (by Mash-hoor Hasan unless otherwise noted)
 It was collected by Aboo Daawood (4/341), At-Tirmithee (4/247), Al-Bukhaaree in At-Taareekhul-Kabeer (1/82,221), Al-Haakim in Al-Mustadrak (3/452), Ibn Qaani' in his Mu'jam, as found in Tuhfatul-Ashraaf (3/174). At-Tirmithee said, "A strange hadeeth, its chain is not firm. We don't know anything about Abul-Hasan Al-Asqalaanee, nor Ibn Rukaanah." And Ibn Hibbaan said, "It is said that he wrestled the Prophet (sallallaahu 'alayhe wa sallam), but its chain has some controversy." (Ath-Thiqaat 3/130).
I say: The hadeeth has a witness that raises it to the level of hasan.
Translator's note: And this is the conclusion of Imaam Al-Albaanee also, who mentioned a mursal narration in Al-Bayhaqee (10/18) as the witnessing chain. See Irwaa'ul-Ghaleel (1503).
 His full name was Rukaanah ibn 'Abdi-Yazeed bin Haashim bin Al-Mutallab bin 'Abdi-Manaaf bin Qusay bin Kalaab bin Murrah bin Ka'b bin Lu'ay bin Ghaalib Al-Qurashee Al-Mutallabee.
 Ibn Hajr said, "As for what has been reported about the Prophet (sallallaahu 'alayhe wa sallam) wrestling Aboo Jahl, there is no basis for that. The hadeeth of Rukaanah is the most reliable of what has been related regarding the Prophet's (sallallaahu 'alayhe wa sallam) wrestling." See At-Talkheesul-Habeer (4/163).
 A similar report is found in Al-Bayhaqee's Dalaa'ilun-Nubuwwah (6/250) by way of Ibn Ishaaq, who narrated from his father. The report is mursal.
 Translator's note: Something at stake means a prize for the winner, a task the loser must undertake, etc. Obviously, gambling is not being referred to here.
 The proof for this is what has been presented in the previous section. Some of the scholars of Fiqh have mentioned the legislation of wrestling in the Religion, as well as the different kinds of sports that benefit and strengthen the body in preparation for Jihaad in Allaah's Way. For examples, look to At-Tamheed (14/88), Al-Mughnee (8/666),
Tabyeenul-Haqaa'iq (6/227), Al-Fataawaa Al-Hindiyyah (6/445), Mughnil-Muhtaaj (4/312), Al-Umm (4/148), and Hashiyatud-Daswaqee (2/210).
 See At-Tamheed (14/88) and Haashiyatud-Daswaqee (2/210).
 See Majmoo'ul-Fataawaa (32/227), Al-Mughnee (8/667-8), and Al-Insaaf (6/90).
 See Al-Umm (4/148), Al-Muhath-thib (1/414), and Mughnil-Muhtaaj (4/312).
 The Shaafi'ee scholars were known to allow it. See Rowdhatut-Taalibeen (10/351) and Al-Muhath-thib (1/414).
 See Haashiyah Ibni 'Aabideen (6/403). However some of the Hanafee scholars prohibited it. For examples, see Al-Bahrur-Raa'iq (8/554), Tabyeenul-Haqaa'iq (6/227), and Al-Fataawaa Al-Hindiyyah (6/445).
 Takmilatul-Majmoo' (15/141)
 Translator's note: And that goal is to "benefit and strengthen the body in preparation for Jihaad in Allaah's Way" as mentioned previously. So a wrestler who seeks fame, popularity, status, or wastes long periods of time, delaying prayer or neglecting other Islaamic duties has obviously gone outside of this goal.
 An authentic hadeeth, with varying but similar wordings, collected by Ahmad (4/144,146,148,222), Aboo Daawood (3/13), Ibn Maajah (2/940), Ad-Daarimee (2/204-205), Al-Haakim (2/95), Al-Bayhaqee (10/13,14,218), and many others.
 See Sharhus-Sunnah (10/383) and Tah-theeb Sunan Abee Daawood (3/371).