Using items before the fight means weapon/armour coatings. I think you're intended to use poison since the duelists have a lot of health and can heal themselves.
A Watsonian explanation for the switch would be that Arwin needs a way to win the card game, either because he's bound by rule 0 and needs to win the Perika 'fairly' or because the money magic doesn't work without a way for both parties to win.
The Doylist reason is of course because Aura needs to be able to get just enough Perika to save everyone and finish the festival without dipping into lewds or burning stats if she does everything right, and another stealth segment fits the game better than forcing players to win a blackjack minigame.
Since Aura ends up using the collar anyway, the best time for stat liquification is during the Pokémon battle:
