What was the source of magic used in Grand Magic Games in Fairy Tail?
The source of magic power is not explicitly exposed. It is highly unlikely that the source of the magic power was some wizard. If it was a wizard, he must have been an extremely powerful one, one who could easily create phonies that could easily rival an S-class wizard. Having that kind of power is absolutely monstrous. But there was no such presence in the whole city. The city and the palace almost completely got obliterated by Rogue and the dragons and it was all left to the competitor wizards to save the city. The king himself came to request them to save the people. If there was some such wizard who had that kind of power, he should have been with the king and would have joined the battle. No such thing happened.

From all that, the only logical conclusion is that all that magic power is coming from the Eclipse Gate itself. The Eclipse Gate can hold magic power that rivals that of the Etherion. That much magic is simply too much to imagine. Providing a small amount of that power to the magic games each year wouldn't make much of a difference in the immense reservoir of magic.