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Not right now, but the arcade mode will be added in this month I think.
It's Pay 2 Win, as you're going to either buy characters or not play.
It's not pay-to-win. You can master Jago as the sole character in the game. You don't have to buy upgrades or anything... generally pay-to-win denotes a game that makes you pay for advantages. Killer Instinct doesn't make you pay for advantages, just options.
I didn't get Jago I got Saberwulf free. Its like a demo for free. You have to pay for the full game.
PSN: Mokmuud live gamertag: Fumokmuud NNID: Mokmuud 3DS FC: 3222-6547-9539