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Kentucky Derby bettor, IRS big winners

Viewers of the NBC broadcast of the Kentucky Derby got to see the excitement of Glen Fullerton as Super Saver won the iconic horse race.

136th Running of the Kentucky Derby
OK, we were forced to watch the stocky Houstonian jumping up and down since he was part of a Derby-related contest sponsored by Churchill Downs in conjunction with NBC's financial news cable channel CNBC.

Or, as Richard Sandomir noted in The Rail:

"NBC's first reaction shot after [jockey Calvin] Borel guided Super Saver (pictured at left) to victory? Glenn Fullerton, who won the sweepstakes that let him put down a $100,000 bet on Super Saver. He might have been the happiest person on the track, save for the trainer Todd Pletcher, who won his first Derby after an 0-for-24 streak. Pletcher watched from somewhere inside the track but NBC had a taped reaction shot of him and should have cut to him before it cut to a contest winner. But Pletcher is a low-key personality, and Fullerton — a short, stout fellow jumping for joy — gave NBC all the emotion you’d expect of someone who had just won $900,000."

What about the IRS? I wish NBC had also had a camera at IRS headquarters; OK, at a Derby party full of the agency's employees. I suspect those folks were almost as thrilled as Fullerton since the day's other big winner was Uncle Sam.

All you tax-wise readers already know that gambling proceeds are taxable.

In this case, Churchill Downs didn't have to withhold federal tax upfront. That's required only when the winnings minus the wager exceed $5,000 AND the winnings are at least 300 times the wager. Fullerton wasn't that lucky!

But I suspect tracks, casinos and other such venues offer the withholding option to big winners.

Regardless, there's no way, thanks to all the publicity, that Fullerton could try to pull a Richard Hatch and not give the IRS its due.

I wish, though, that NBC, which spent most of the hours leading up to post time on a variety of canned features only tangentially related to the horse race itself, had opted to have a CNBC talking head on hand after the race.

That business channel commentator then could have told viewers, or interviewed a tax expert about, the tax implications of the big winnings.

And now you know why I'm not a television programmer!

What about the amount bet? The discussion also could have covered just how the $100,000 that Fullerton bet on the race figures into things.

The of contest material says the Derby Dream Bet winner gets, among other things, "A free $100,000 win wager on a horse in the 136th Kentucky Derby."

Does that amount also count as income for Fullerton? Could the tax man argue that Fullerton constructively received it? Or did he not ever have any type of ownership of the money that he bet on Super Saver? 

Should it be included for tax purposes as part of the prize package's overall value?

And speaking of that, there's no question that Fullerton will owe tax on the value of the trip to and lodging and amenities in Louisville that were part of his grand prize.

OK, tax geeks, your thoughts, please, on Fullerton's ultimate Kentucky Derby tax liability.

I do know that Fullerton has at least one thing working in his tax favor. Being a Texan, he doesn't have to worry about a state income tax on his winnings.

Another Texas winner: Saturday's Kentucky Derby produced another windfall for another Texan.

Austin resident Eric Samuelson drove down to Retama Park just northeast of San Antonio and bought a $1 superfecta ticket. He won $101,284.

In Samuelson's case, the federal withholding requirement kicked in. He took home a check for around $75,000.

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In the rules for the sweepstakes it lists the approximate retail value of the prize as $5,000 plus the amount paid by Churchill downs in taxes if the bet doesn't win, or the amount won if the bet does win. So if he hadn't won, would he have to pay taxes on the amount that Churchill Downs had to pay in taxes on the losing bet?

Jim Tourville

I don't gamble so it came as a surprise to me about how it's taxed. I bet the IRS was hopping up and down like you said!

football kits

The winnings should amke up for it.

Rex Allen

Hard to have too much sympathy, he won a pail full of money.


The IRS thresholds regarding gambling winnings are for payors and are for REPORTING guidance for race tracks, casinos, etc. Only amounts other the thresholds are required to be reported to the IRS via 1099 forms. But all gambling winnings, regardless of how much or little, are taxable income, as are the values of prizes. The IRS trusts all lucky winners to let the tax agency know about their jackpots and pay taxes on the money.


super saver only paid $18 on a $2 wager so why would he have to pay taxes on the winnings.i thought it would only be taxable if it pays $300 to a $1 wager despite the money being wagered.if a person had 500 $200 win tickets one would pay nothing in taxes on the tickets.

Jeffrey A Day

I would say he owes taxes on the 100,000 as a contest winner. Then had he lost he would have had gambling loss of $100,000 on schedula A. He had complete control on which horse he wagered. They would have been considered two seperate events.

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