If you drop a pencil from chest height so it lands on its eraser, it will bounce and do a few somersaults before landing. This suggests some fun indoor sporting events, such as:
High Jump - the goal is to drop the pencil on one side of a raised bar and have the pencil leap over the bar and land
on the other side;
Long Jump - the goal is to achieve the greatest horizontal distance away from the original drop point;
Free Style - Various props are put around the floor; Judges award scores of between 1.325 and 4.725 (standard range for Pencil Gymnastics) depending on what interesting things the pencil does and how flippy or bouncy it is.
In all cases, control is the key; as dropping the pencil from a higher height will provide greater speed and potential scores, but will also make it more difficult to control the angle of impact.
EQUIPMENT
While standard #2 pencils will work, serious participants will want to develop "Modded" or "Pimped Out" pencils which have angled/shaved erasers, adjustable nobs on the side for "spin" ability, or which are decorated to look like little people.