In 1930, Secretary of State Edward J. Flynn appointed Phelan to a seat on the athletic commission. He succeeded George E. Brower, who had been appointed Kings County District Attorney. Phelan had been supported for the position by New York City Mayor Jimmy Walker and Tammany Hall leader John F. Curry and was chosen over the John H. McCooey-backed David F. Soden. In 1930, the commission voted 2 to 1 to recognize Max Schmeling as world heavyweight champion, with Phelan and James Farley voting in favor of recognizing Schmeling. The third commission member, William Muldoon believed that the fight between Schmeling and Jack Sharkey should have been ruled a no contest instead of a disqualification victory for Schmeling and opposed recognizing him as champion. In 1933, Phelan was tasked with investigating the death of Ernie Schaaf, who died following a bout with Primo Carnera. Phelan's inquiry found that no violations of the state's boxing rules and regulations had occurred in the Carnera–Schaaf fight and that "it would have been highly improbable to detect" the illness (meningitis) that killed Schaaf during the pre-fight medical examination.
