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In a sanctioned event, the law itself is suspended, the law is never broken, and courts are not involved. Sometimes, people just have a special license to do things that are ordinarily illegal. Think James Bond's license to kill.
For example: Ordinarily, if a prison warden puts a person to death by lethal injection, it is first degree murder. It is a killing, without a justification, there is plenty of premeditation, and no other mitigating factors. But, if the warden has a death warrant for the prisoner that is properly signed by a judge, or a jury foreperson or whoever, then he has a special license to kill the prisoner. The law sanctioned that killing. The state legislature proscribed death as the penalty for certain crimes, a person was tried and convicted, a death warrant was issued, upheld by appeals courts, and then the governor never called to exercise his ability to pardon or commute. Those collective legal sources combined to create a privelege in the prison warden to commit murder and get away with it.
Courts are rarely involved in sanctioned violence, because the legal defense is well known before a person is ever charged. If society has a problem with the death penalty, it generally doesn't take it out on the prison warden, but instead takes it out on the bad law, or its bad application: the legislature, the judge, jury, the prosecutor, and the governor.
Creating special licenses to break the law is first and foremost the legislature's prerogative. It stems from each state's broad power to legislate health, safety and morals under the Ninth Amendment. It is not ordinarily done by courts. In the Alaska Wrestling and Boxing commission example, the legislature created the wrestling and boxing commission, and gave it the power to license fights and fighting. No cases go to court, because the participants have a perfect defense, which is well known to the police and prosecutors. They don't wink at the license, or condone the behavior, (well they might. The police are usually pretty into MMA), but police or court approval of sanctioned fighting is irrelevant. Law enforcement just knows that convictions for assault or murder cannot be obtained against participants in a sanctioned sporting event, so they don't bother even trying.
So, the reason that people can hurt and be hurt in sports is that the legislature of each state allows it through a special license. The law is majority rule, greatest number of votes wins. This applies to football, as follows: If the majority of people don't care that professional football players are getting their brains smashed, then football will not be illegal. I can imagine that a representative who wanted to run for his state house on an anti-football platform would be tarred and feathered in most states.
Note that there is no inherent right for people to hurt each other by agreement. If it is licensed, or sanctioned, then it can happen, and it is otherwise illegal. A person can be easily convicted for assault, for a backyard MMA event, or even for a consensual sexual game because the activity was not expressly sanctioned by the state legislature. Wierd? Yeah. But that's a nuts and bolts of how it works.

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