THE MISSISSIPPI LEGISLATURE

In response to citizens’ complaints, the PEER Committee reviewed the Mississippi Athletic Commission (MAC). PEER focused this review on the MAC’s methods of paying boxing officials, internal controls over ticket sales at boxing events, and licensing of event promoters and judges. PEER also reviewed the extent of the MAC’s jurisdiction and addressed selected operational issues that surfaced during the course of the review.

Background

Statutory Authority

MISS. CODE ANN. § 75-75-101 et seq. (1972) establishes the Athletic Commission and grants the commission full power and authority to regulate boxing, sparring and wrestling matches and exhibitions, “tough-man contests,” and kickboxing competitions held in Mississippi. Exceptions to the MAC’s jurisdiction are boxing, sparring, and wrestling matches in colleges, universities, or high schools, which are supervised by the governing bodies of such institutions.

MISS. CODE ANN. § 75-75-105 (1972) requires the commission to make and publish rules and regulations governing the athletic events under its jurisdiction; license promoters and event officials; collect a reasonable fee for each annual license or permit issued; revoke any license or permit when the public welfare requires it; and, collect a fee of six percent of the gross receipts of every athletic event under its jurisdiction. Under the MAC’s regulations, the commission selects the licensed officials (e.g., judges, referees) who participate in each event.

Commission Organization

The MAC is comprised of a chairman and two associate commissioners, appointed by the Governor to six-year staggered terms. The MAC uses both commission members and inspectors appointed by the commission to oversee athletic events under its jurisdiction. The chairman is the only full-time MAC staff person and the commission has no part-time staff.

Payments to Boxing Officials

State law does not authorize the Mississippi Athletic Commission to collect revenues from promoters to pay boxing officials. The MAC’s payment of cash to boxing officials at events held at Mississippi casinos provides opportunity for theft or misappropriation of funds. Finally, the MAC’s failure to report these cash payments to the proper authorities could have violated state and federal income reporting requirements and could make the commission liable for penalties.

Lack of Statutory Authority for Collection of Revenues from Boxing Promoters

According to the MAC’s rules and regulations, the MAC selects licensed individuals who serve as officials at boxing events and the event promoter provides the funds used to pay the officials. For boxing events held at casinos, the promoter writes a check covering the expense of officials made payable to the MAC. The MAC’s Chairman then cashes the check at the casino and pays each boxing official in cash.

From 1999 through 2002, for boxing events held at Mississippi casinos, the Athletic Commission collected revenues from boxing promoters for payment to boxing officials for overseeing events under the MAC’s jurisdiction. State law does not give the MAC the authority to collect revenues from event promoters to cover the expenses of event officials.

Payment of Boxing Officials in Cash

As noted above, for casino events, the MAC’s Chairman pays each boxing official in cash. The MAC’s regulations contain a schedule of fees covering boxing officials, with officials earning anywhere from $100 to $1,500 per event for services rendered. Although the MAC did not maintain records of amounts paid to officials, based on this schedule of fees, from January 1, 1999, through December 31, 2002, PEER calculated that the MAC paid at least forty-four boxing officials at least $187,400 in cash for overseeing boxing events held at Mississippi casinos.

The practice of cashing checks made payable to a state agency and then paying the agency’s obligations in cash provides opportunity for theft or misappropriation of funds. Because the MAC has handled relatively large amounts of cash (at least $187,400 over a four-year period), the risk of theft or misappropriation would be a significant one.

Failure to Report Cash Payments Could Have Violated Regulations Governing the Reporting of Income

The MAC has established a practice of requiring promoters to write a check payable to the MAC, which the MAC’s Chairman then cashes to pay boxing officials. While PEER sees no authority in state law for the MAC to collect this fee from promoters, the practice could result in the MAC becoming an employer of boxing officials for purposes of state and federal tax laws and regulations.

The Mississippi Athletic Commission’s failure to report to the Internal Revenue Service payments to boxing officials that exceeded $600 in a calendar year may have violated federal law and regulations, thus making the MAC potentially liable for at least $5,400 in penalties.

The Mississippi Athletic Commission’s failure to report to the State Tax Commission payments to boxing officials that exceeded $3,000 in a calendar year may have violated state tax regulations, thus making the MAC potentially liable for at least $750 in penalties.

Internal Controls Over On-Site Ticket Sales

The Mississippi Athletic Commission’s officials did not monitor ticket sales at an event attended by PEER staff in a manner that would ensure accuracy of the calculation of the MAC’s share of gross receipts.

MISS. CODE ANN. Section 75-75-105 (1972) authorizes the MAC to collect six percent of gross receipts from admission charges (i.e., ticket sales) to athletic events that it regulates. Adequate internal controls over ticket sales are necessary to ensure that the MAC is receiving the revenues from sales to which it is entitled. The sale of tickets, if properly monitored, provides a method of accounting for each individual admitted to an event and whether the proper amount is collected from each individual.

Because the casinos have internal controls in place over tickets sold prior to the event that can be verified relatively easily, the MAC should be primarily concerned about controls over sales of tickets at the door. During on-site ticket sales at one event observed by PEER, the MAC verified on-site ticket sales by only counting ticket stubs presented to the MAC after the boxing event. The MAC did not conduct a pre-sale inventory to determine the number of tickets available for sale at the event. The MAC’s procedure allowed the opportunity for a promoter or host facility to reduce the amount owed to the MAC by not turning in all of the ticket stubs.

Extent of Jurisdiction

The Mississippi Athletic Commission does not fulfill its statutorily mandated responsibilities to oversee tough-man contests and kickboxing events; however, it oversees boxing and wrestling events in Alabama and licenses physicians without the statutory authority to do so.

Failure to Fulfill Statutory Responsibility to Oversee Tough-Man Contests and Kickboxing

MISS. CODE ANN. §75-75-101 (1972) specifically states that “tough-man” contests and kickboxing competitions are subject to the jurisdiction of the MAC. However, the MAC does not license promoters, participants, judges, or referees of “tough-man contests” or kickboxing competitions. The MAC’s officials stated that such events were outside their area of expertise as well as outside the area of expertise of the commission’s licensed judges and referees and that additional training would be required in order for the MAC to begin licensing officials for these events.

Actions That Lack Statutory Authority

The MAC Oversees Athletic Events in Alabama, but Lacks Statutory Authority to Do So

According to the MAC’s officials, Alabama does not have a regulatory body to oversee boxing and wrestling events in the state and the Association of Boxing Commissions has asked the MAC to oversee such events in Alabama. Since January 1999, the MAC has provided personnel for twenty-three boxing events in Alabama. Although the actual expenses of the MAC’s deputy commissioners, judges, and referees are reimbursed by Alabama event promoters for overseeing boxing and wrestling events in Alabama, the MAC receives no compensation for the time and effort spent by the MAC’s management in organizing and coordinating the personnel required to oversee such events. Overseeing athletic events in Alabama is outside the course and scope of the commission’s statutory mandate. The MAC could be redirecting the resources it now devotes to overseeing Alabama events to overseeing the events it should be regulating in Mississippi, but has not.

The MAC Charges License Fees to Physicians Providing Medical Services at Athletic Events, but Lacks Statutory Authority to Do So

MISS. CODE ANN. §75-75-105 (1972) authorizes the MAC to license specified athletic event participants, a list which does not include physicians. However, the MAC collects license fees from the physicians that provide medical services at events. While a physician is an important part of the MAC’s official crew overseeing a boxing event by providing medical services in case a medical need arises, state law does not include authority for the MAC to require physicians to obtain a license from the commission before providing such services.

Operational Issues

The MAC does not have written, operationally defined criteria for issuing licenses to promoters, referees, and judges and does not file its rules and regulations with the Office of the Secretary of State as required by state law.

No Written Criteria for Issuance of Promoters’, Referees’, and Judges’ Licenses

When issuing promoters’, referees’, or judges’ licenses, the MAC does not have written, operational definitions of the standards for proper experience, or a written prohibition against having a license suspended from another state. The MAC’s chairman issues licenses based on his judgment and discretion concerning potential licensees’ capabilities.

Proper knowledge and experience in boxing and licensing persons in good standing with other states are imperative for referees to officiate a boxing match properly and for judges to render fair and impartial decisions. However, the lack of clear, written requirements for boxing officials could create the appearance of a lack of professionalism and impartiality by Mississippi referees and judges.

Failure to File Rules and Regulations with the Secretary of State

The MAC has adopted a set of rules and regulations governing the administration of athletic events under the jurisdiction of the commission. The state’s Administrative Procedures Act (MISS. CODE ANN. Section 25-43-1 et seq. [1972]) requires that agencies file certified copies of their administrative rules with the Secretary of State. As of April 7, 2003, the Secretary of State’s staff noted that no rules and regulations were on file for the Athletic Commission.

An agency that does not properly file its rules as set forth in state law may not use its rules as a basis for revoking a license or penalizing a person who fails to comply with the rules. Thus the MAC could face a legal challenge if it chose to revoke the license of or penalized a boxing official, which would greatly reduce the MAC’s effectiveness as a regulatory body.

Recommendations

1. The MAC should immediately cease its practice of paying boxing officials for events held at casinos (i.e., by cashing a check made payable to the commission and paying the officials in cash). Instead, the commission should require the promoters to pay boxing officials with individual checks, as is currently the practice at non-casino venues. Under this practice, the promoter would be responsible for filing all income reporting forms required by state and federal law and regulations.

   Also, the MAC should require all promoters of boxing events to provide a certified master payroll to the commission showing the names, services performed, and amounts paid for each individual paid by the promoter at each boxing event. The MAC should keep this information on file in order to provide an audit trail.

2. Because the MAC relies heavily on its share of ticket sales as a revenue source, the commission should take all reasonable measures to ensure it receives all revenue to which it is entitled, rather than depending on the host facility or promoter, who are not necessarily looking out for the best interest of the state, to provide admissions information. When conducting on-site ticket sales, the MAC should conduct a pre-sale ticket inventory and a post-sale ticket inventory to determine the number of tickets sold at the door on the day of the event. The MAC should use this figure, combined with the number of tickets sold prior to the event, to determine its share of ticket sales.

3. The MAC should comply with MISS. CODE ANN. § 75-75-101 (1972) and exercise its jurisdiction over “tough-man contests” and kickboxing events. The MAC should develop specific policies for the application for and issuance of licenses to participants in these events and document and maintain on file the reason(s) a request for a license to participate in a “tough-man contest” or kickboxing event is denied.

4. The MAC should develop the necessary training program for referees and judges to oversee “tough-man contests” and kickboxing events. The MAC should also document training sessions of referees and judges and issue certificates noting the successful completion of training for “tough-man contests” and kickboxing events.

5. Since the MAC has no statutory authority to do so, it should cease providing operational support for athletic events in Alabama.

6. The MAC should cease licensing and collecting license fees from physicians serving as event officials.

   The Legislature should amend MISS. CODE ANN. Section 75-75-105 (1972) to empower the MAC to select the physicians necessary to attend each athletic event under its jurisdiction.

7. The MAC should develop written policies specifying the experience level and financial resources required to obtain promoters’ licenses. The MAC should also document and maintain on file the reason(s) if a request for a particular promoter’s license is denied.

8. The MAC should develop written policies specifying the experience and training required to obtain referees’ and judges’ licenses. The MAC should also document training sessions of referees and judges and issue certificates noting the successful completion of training. The MAC should also document and maintain on file the reason(s) if a request for a particular referee’s or judge’s license is denied.

9. The Athletic Commission should comply with the provisions of the Administrative Procedures Act (MISS. CODE ANN. Section 25-43-1 et seq. [1972]) regarding the filing of administrative rules and regulations and the conduct of hearings on these rules. In the event that the commission is uncertain as to the proper procedure to follow respecting compliance with the Administrative Procedures Act, it should consult with the Secretary of State regarding the process the agency must follow to comply with the statute.