All you really need to have one is a place to have one. Of course you also need some dirt, water and people to wrestle, but those are details we can handle latter. As we said before, the most important thing you need for this type of party is a place to actually wrestle. This can be accomplished in one of two ways. Each have their own pros and cons.
Lets talk about an outdoor party first.
Obviously if this party is to be held outdoors then it would be best held during the summer. All you really need to do is get a flat area where you can create a mud puddle. This area does not have to be very large, a 10' x 10' area would do quite nicely. Be sure to mark off the area so the contestants will know just where the heck they are supposed to be. Make sure to prepare the area before hand so that you know you'll have mud.