A lot of it is money being given to state employees so they can act as inspectors at events, and getting them to events.
Private sector workers who take the role of inspector earn something like $30 an hour. Nevada gives $75 (if I recall correctly) an event to inspectors, no matter how long the inspector works at the event.
But if a state employee does it, they get either the hourly pay of their primary job or the normal inspector rate, whichever is higher. And it's essentially as if it's overtime from their current job, so plus another fifty percent. And it starts the moment they leave the door, so sitting in traffic costs the state money, and traveling from Sacramento to LA costs them a lot of money. And they get travel expenses and meals paid for.
Well it's still in-state travel though how expensive could it be? I'm not sure how much they charge from the promoters per event or annually, but surely one guy travelling in-state and staying in a hotel overnight has to be a drop in the ocean compared to the kind of money it takes to host the full event. Unless the system is being abused for frivolous travel expenses of course.
And whatever the financial problems, I don't see why they can't just raise their licensing fees and make it back from the promoters. If the expenses are truly legit and they would happen in every state, then the promoters would obviously just pay the price that comes with having a legitimate sporting event.