The first literary reference to malla-yuddha itself lies in the Mahabharata, an ancient Indian epic dating from the 5th century BC (although the original copy likely dated back as early as 9th century BC). However, wrestling in general in South Asia, and likely a form malla-yuddha itself, is linked back to at least the 3rd millennium BC. Badang, a legendary Malay folk hero of oral tradition, is said to have practiced malla-yuddha, though the period in which his legend is set is unspecified.
Before the Muslim conquest of India between the 12th and 16th centuries AD, malla-yuddha was enjoyed among all classes, from kings to peasants. Opposing kings would sometimes pit royal wrestlers against each other in lieu of war and other conflicts. Even kings themselves would occasionally engage in matches.
Royalty and nobility would host public tournaments within palace courtyards throughout thus period, often offering a large monetary prize to the winner. These tournaments brought in both casual and professional competitors from the surrounding areas. Sometimes the rich would hire professional wrestlers in an attempt to draw in more of a crowd. These events were highly celebrated and featured performances from other arts as well.
Though there were many casual wrestlers, the spectator sport was dominated primarily by professional wrestlers. These athletes devoted their lives to malla-yuddha, often living in an institution called an akhara and training under the supervision a guru. They were to follow a strict training regime and abstain from alcohol and sexual contact to keep their bodies pure and optimally primed for their profession. Sometimes royalty or nobility would serve as patrons for one or several wrestlers, funding their lifestyle and careers.
The sport’s popularity faded out throughout most of South Asia by the 16th century, though it still persisted in some areas to the south.
Source: https://healthandfitnesshistory.com/ancient-sports/malla-yuddha/

Source of photo: https://healthandfitnesshistory.com/images/terracotta-sculpture-indian-wrestlers-d/