Fight takes place in the Leaf Village, both bloodlusted. Gaara is Shippuden.
Jiraiya wins with little difficulty. Jiraiya has shown himself to be on a whole different level to most of the ninja currently shown and even Pein himself said that if he hadn't kept his 6 paths a secret then he too would've likely lost to Jiraiya.
Gaara's a great Kage but he can't compare to Jiraiya.