To unlock Gate Rally Mode, you need to accumulate one win in Smack Attack Mode. If you've played, then you know this is not easy. An easier way to accumulate the one win you need is to plug in three additional controllers and play on the space level. The three uncontrolled opponents will always spawn on the upper ring around the level. This leaves them wide open for you to kill, but they're ignored by the CPU controlled players. You should be able to rack up enough points to win by killing these sitting ducks.