Hmph. "Not a Real American", my ass, where's the respect for the man who's been carrying all of their sorry asses through that intergalactic death tournament?
Anywho, I bet those gods didn't rewind the whole timeline, just sent him back in time. Which is kinda weird, but with their capabilities, why not?
Also, the purpose for the tournament seems not to be to see who'll win, but to create strong entities. Thus, spending some energy to toss a golden egg back in time to incubate properly makes sense to them.