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COLUMN: The Law in Real Life: Feds Tax Reality Show Winnings but Otherwise Do Not Regulate Survivor and Other Competitive Shows

16 years ago
by Linda Holmes, J.D.

COLUMN: The Law in Real Life

Feds Tax Reality Show Winnings but Otherwise Do Not Regulate Survivor and Other Competitive Shows


In the nearly eight years since Richard Hatch became the first winner of Survivor, he has done a variety of things. He appeared on Late Night with David Letterman and The Howard Stern Show; he was on Hollywood Squares and Entertainment Tonight. He appeared on Survivor again in 2004 for an “all star” edition, only to be sent home less than halfway through the season.

And in 2006, he was convicted of tax evasion and sentenced to more than four years in prison, which he is currently serving. The U.S. Supreme Court declined to hear his appeal just last week, so he is scheduled to remain in prison until October of next year.

Hatch’s brand of tax evasion was more blatant than most: He simply never reported the $1 million in taxable income that nearly 58 million people saw him win in August 2000. Other income was at issue as well — some rent on a property and money he earned as a radio host after his big win. But what made the case so fascinating, what caused heads to shake across the country, was that he apparently thought the IRS wouldn’t notice if he never said a word about what may well have been the single best-publicized receipt of taxable income the entire year.

From a gossip perspective, Hatch’s defense was delectable, and his appeals have rested primarily on the trial judge’s refusal to allow him to present it to the jury. In short, Hatch claimed that he had caught a crew member sneaking food to contestants during his winning season and that in return for his agreement not to make this “cheating” into a scandal, the producers had agreed to pay the taxes on his winnings if he won.

For anyone who has given the slightest thought to tax liability, this makes no sense. Certainly, the producers could have agreed to give him hush money — an amount calculated to be, after taxes were paid on it, adequate to cover his tax liability for the winnings. But that would have nothing to do with whether he had to report the income. The notion that he believed that Survivor producers had the authority to relieve him of the obligation to report income to the IRS strains credibility to the point where it calls out for an expression stronger than “strains credibility.”

Are Reality Shows Governed by “Quiz Show” Laws?

Interestingly, Hatch’s claims also brush up against a popular legal question about reality shows: Do the laws passed in the aftermath of the old “quiz show” scandals hold producers to strict requirements that they run everything in a way everyone would agree is on the level? Are there such tight rules that people could go to jail for sneaking food to contestants or otherwise messing with the game?

This very question was raised in the earliest well-known case of Survivor landing in court: First-season contestant and attorney Stacey Stillman sued the show’s producer, Mark Burnett, claiming that the show was rigged against her. Stillman claimed that in order to save a more interesting contestant from elimination, Burnett tried to persuade her tribe to vote against her — which it did. In her complaint, Stillman accused the producers of violating federal laws passed after the quiz-show scandals that prohibit producers from fixing the outcome.

Whether those laws, found in the U.S. Code under the heading, “Prohibited practices in contests of knowledge, skill, or chance,” even apply to Survivor at all is a question that’s never been answered. They refer repeatedly to a “contest of intellectual knowledge” (which Survivor certainly is not) or a “contest of chance” (which Survivor certainly is not) or a “contest of intellectual skill.”

So the entire question comes down to whether Survivor is presented as a “purported bona fide contest of … intellectual skill.” Honestly, if you were to poll 1,000 Survivor viewers, it would be surprising to find even 10 who would say Survivor is intended to identify the player with the greatest intellectual skill.

But if Survivor is a contest of intellectual skill, then the show is prohibited from taking certain steps to rig the outcome. The rules are so clearly written to handle game shows, however, that they tend to speak of offering a particular contestant “secret assistance.” The rule would be easy to apply in the traditional quiz-show setting where contestants are handed answers in advance, but would a Survivor producer who conducted an interview in a way that led a contestant to think differently about his vote be offering someone “secret assistance”? Producers ask contestants probing questions to provoke interesting interview footage all the time; can anyone be expected to regulate whether the questions asked might be too aggressive in one direction or too reinforcing in another?

Competitive Reality Shows, Not Contestants, Can Play by Their Own Rules

There is always talk of FCC regulations, which require contests to be conducted in accordance with how they’re advertised, but those generally apply to contests run by FCC licensees (radio and TV stations) rather than shows broadcast by networks. Furthermore, in a development that raised eyebrows among some viewers, the FCC apparently responded to some complaints in the summer of 2007 claiming that producers were overlooking “cheating” on Big Brother 8 by stating that it appeared not to be a “game show” but a “for entertainment only” show, in which outcomes are at least partially predetermined. There are reports that the FCC has said something similar about American Idol.

In the end, it doesn’t look like either the FCC or the Justice Department has much interest in diving into the world of reality television to determine whether everyone is being treated fairly. If a true fix was ever evident — an entire season of a show revealed as a sham, with secret meetings ahead of time during which a predetermined winner was selected — then the quiz-show laws might be invoked. But it’s unlikely that any federal regulator is going to step up to become the arbiter of whether a clandestine Snickers bar affected the game’s outcome.

It appears that the federal government wants no part of reality television, with the exception, of course, of the IRS. As Richard Hatch has learned, that agency wants its part and will come get it if you don’t offer it voluntarily.

Linda Holmes is a freelance writer in Washington, D.C. She previously practiced law in Minnesota, specializing in employment law and legislative drafting.

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