I actually interpret it as follows:

win the $10K in a satellite, no tax consequence as you receive a buy-in to another event. Since you normally get buy-in chips (or a buy-in receipt, or cash), you buy-in and get a receipt for the tournament entry. Assuming you dont win, then you have 10K worth of receipts that you can use to offset other W2-G's.

If you do win, then the first 10K is offset, anything above 10K is taxable (assuming you get a W2-G. if you can talk them into paying you in chips, well... bonus...)