The movie gives mixed messages about this. In the opening scene we see lots of media attention for the winner of a previous Battle Royale, suggesting that the BR Law is pretty widely known. However, when Kitano asks the students whether they'd heard of the Law, no one responds, and they seem genuinely shocked when he reveals to them what it entails.
There are various ways to explain this. It is possible that everyone knows about BR but the kids are too shy/bemused/upset to respond when Kitano asks them about it. It is also possible that the shot of the winner is the only thing people know about Battle Royale, and they are in the dark about what is really going on.
On the other hand, if BR is public and the media reports on it whenever it happens, it seems unlikely that everyone would simply let their kids go to school, or that no one would rebel against the government for its random cruelty. The opening scene, while a fantastic piece of atmospheric introduction and foreshadowing, also creates a plot hole. BR can only really exist if it is done entirely in secret.
The two survivors at the end of the movie are called terrorists wanted for murder because they killed Kitano.
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