I thought of 16 teams:
Grey Havens, The Shire, Bree, Rivendell, Moria, Mirkwood, Lorien, Fangorn, Rohan, Dunland, Gondor, Mordor, Umbar, Harad, Rhun, Isengard plus Lake Town and Erebor as one team.
Any creature living within those areas can play for their team. No magic, murder or weapons...