I think people are putting too much expectation on the KCBS's role in a BBQ contest. They are there to run the judging, and insure a contest is run according to their rules.
If they got in the business of guaranteeing the prize funds, then I think there would be a lot more organizers defaulting on payments to teams, because they know that the KCBS would be on the hook for the prize money. Where would the KCBS look then to get the prize money? It would have to come out of their operating funds. People say, "Sue the organizer!" Well if the organizer doesn't have the money, it will be costly in legal fees, and a long time trying to collect a judgment from someone who doesn't have the money.
Many people suggested that the KCBS receives the money from the organizer, and pays out the prize money. KCBS would then have to build the infrastructure to do that at the contest. Handing that much cash at contest is probably not a practicable solution. If the cash disappeared, that would be a huge risk, and one that KCBS's insurance/bonding company would not want to cover.
Another suggestion has been to put the funds "in escrow." With who? How does the money come out of escrow? Who's bank account would the funds be placed in? There would be fees associated with doing this. If the contest organized has overextended themselves and written checks to over draw the account, then when the funds that were placed in escrow were put back in, the money would go to who ever was presenting their check first at the bank.
Really, the only scenario that I can come up with to is to create an independent third party accounting and payment company that would pay out the prize money for the BBQ contest organizers. This company would receive the funds in advance and let the sanctioning body know if the funds were not received timely in order to cancel the contest. They would mail/EFT the payments to the teams, and do the year end 1099 reporting.
Now the decision to be made is are the costs associated with doing all of this to ensure the payment of the prize pool to the teams is economically worth it? I don't have the numbers on how many contests totally default on prize pool payments, but I think it is relatively small.
In the end, we need to think about how to balance protecting the teams with the costs associated with doing that. I've tried to think of other creative ways to "insure" payments to the teams, but I cannot come up with other viable options that would not cost more than the prize pools that were defaulted on.
I feel bad for the teams that have not been paid, and I hope they are able to collect their rightful winnings soon.