Book A Parade of Horribles — Matt Dinniman

As chaos and mass panic spread outside the dungeon in the wake of Faction Wars, Carl and Donut find themselves on the tenth floor, where they’re forced to compete in a surprisingly normal set of tasks.
Well, normal for the dungeon.
Races. Get from point A to point B, and don’t come in last. After each race, they pick an upgrade for their vehicle and the track gets more challenging.
It all seems a a little too simple.
Ignore those strange glitches that are occurring with increasing frequency. Don’t listen to those whispers about what’s happening on the mysterious eleventh floor, something the system AI calls A Parade of Horribles. Nobody, not even the showrunners, knows what that means. Just that the AI has ominously dubbed it “a coming-out party for the ages.”