Margarito was suspended for at least a year after an illegal, plaster-like substance was found in his hand wraps before a January 2009 bout against Shane Mosley at Staples Center in Los Angeles. Margarito's hands were rewrapped and he lost the WBA title fight.
The state athletic commission voted 5-1 to deny Margarito a license after a 5½-hour hearing Wednesday in Los Angeles, where Margarito testified that he knew nothing about the illegal wraps and blamed his trainer Javier Capetillo, whom he fired. Capetillo was also suspended.
"There is a concept in business that you can delegate authority but not responsibility," Commissioner Steve Alexander said near the end of the hearing. "I hope that the message that goes out here is that the commission operates fairly, openly and transparently.
"Public protection is at the heart and soul of this commission," Alexander said. "Period."
Promotional company Top Rank has been hoping to pair Margarito against Pacquiao on Nov. 13, either in Las Vegas or at Cowboys Stadium near Dallas. But his application to fight in Nevada last month was tabled pending a decision in California, and it's unclear whether the commission in Texas is willing to grant Margarito a license.
Decisions handed down by one state athletic commission are often upheld by others, although they are under no obligation to do so. The ruling also does not apply outside the U.S.
Top Rank chief Bob Arum was not available to comment on the decision. A spokesman for the company referred questions to attorney Daniel Petrocelli, who is representing Margarito.
"You're not dealing with someone who is a so-called repeat offender," Petrocelli told The Associated Press. "You're dealing with someone who was found guilty for the first time.
"Prior to the events of last year, Mr. Margarito had fought 42 fights, including 15 title bouts, and prior to last year he had a spotless disciplinary record, he was never accused of cheating," Petrocelli added. "He had an exemplary reputation in the boxing world."
Petrocelli said Top Rank and Margarito plan to discuss his options on Thursday.
Margarito could have fought in Mexico, where he now lives, during the yearlong period that his licensed was revoked. Instead, he chose to honor the California commission's decision and stay out of the ring in hopes that it would curry favor when he applied for a license.
He finally returned on May 8, about 16 months after his fight against Mosley, and moved up to junior middleweight to win a decision over Roberto Garcia in Aguascalientes, Mexico.
"I am here to make an apology not only to the commission, but to the entire world for not knowing what was in those wrappings," Margarito said during the hearing Wednesday, speaking in Spanish through a translator. "I think that anything that is placed in the wrap that isn't legal is cheating, and is an unfair advantage."
State attorney Karen Chappelle disputed that Margarito wasn't aware of the illegal wraps.
"A boxer like Mr. Margarito makes his living with his fists," Chappelle said. "He knows what is in the wrappings that go on his fists.
"Think about what would have happened if those illegal handwraps had not been discovered before he stepped into the ring with Shane Mosley that night," Chappelle said. "Mosley could have been presented with a danger of severe magnitude."
Margarito said that he wouldn't have knowingly jeopardized his ability to earn a living by using illegal hand wraps, and pointed out that he is responsible for his wife, her family and numerous other relatives who rely on his income from fighting.
"All I'm saying is I did not know what was in these wraps. I'm being completely honest with all of you and with all the boxing people," Margarito said. "That's why I broke my relationship with Capetillo, which was hard, but it's what had to be done."
It apparently wasn't enough for the commission.
"The best-case scenario is that Mr. Margarito didn't know that this was being done to his gloves, but should have known," Commissioner Eugene Hernandez said. "The worst-case scenario is he didn't know and he didn't want to know."