Waterhouse said he was stunned by the magnitude of the on-course move for the Peter Snowden-trained colt as Sepoy was backed to the exclusion of almost every runner.
"Sepoy is the most sensationally backed Golden Slipper winner for 10 years," Waterhouse said.
"I would estimate he has taken between $2 to $3 million out of the betting ring."
Official betting fluctuations showed Sepoy was backed from $3.40 to $2.60 before easing slightly to start a clear favourite at $2.80.
The result was never in doubt as Kerrin McEvoy gave his mount a perfect run before pouncing on the lead as soon as the field headed for home.
Modern day Golden Slipper day plunges are few and far between with the most memorable before Sepoy's success being Belle Du Jour's off-the-canvas win in 2000.
Sepoy dominated pre-post Golden Slipper betting from the outset, opening favourite at $8.50 in TAB Sportsbet's first markets in early February.
He continued to firm after his Blue Diamond Stakes triumph before drifting in the wake of his first defeat in the Todman Slipper Trial two weeks ago.
A TAB Sportsbet promotion on Friday offering $6 about Sepoy winning was snapped up by rank-and-file punters in less than a minute, costing the wagering agency $50,000.
More than $3.7 million was wagered nationally on win pools across the three Australian TABs on Saturday, a figure which was affected by the late scratching of second favourite Smart Missile.
Smart Missile, the only horse to have beaten Sepoy, was a $5 chance when he was withdrawn as the field was being loaded into the barriers.
