I do think you have to be careful assuming that because someone scored a 38 at one level that they are ready for the next. Moving 7 to 8, 8 to 9, and 9 to 10 all have big jumps. Some kids are terrified of flipping a vault, others of releases on high bar. I know kids that did not want to move up, and stayed 8s their entire career doing quite well, because they had no desire to do the bigger level skills but wanted to stay with the JO program. In addition, unless you have been in the meetings with those parents, you do not know what the story is. Maybe the kid has a back tumbling block that they want to work through while at a lower level before expecting big skills.
I am not saying that sandbagging never happens. I would not say that. I woudl say that most gyms probably have a plan in place that may differ from another gym's plan. And that is ok. And they may be L7 training L9, and that is ok. Odds are a year or half a year of 8 is planned in there, but that is their journey. We have a kid going 6 to 8 on our team next year.
I think I have just heard the term sandbagging used with my son, and other gymnasts, where there is a plan in place that might be different from expected. The outside world expected my son to do L6 that one year, and L9 the 2nd year, adn when he didn't, we were accused of holding him back so he could win. And it could not have been further from the truth. So, I just think, without firm evidence that a gym is saying "we are going to keep you at Level X because we want to win" you have to be careful about calling them out.