Premier Kathleen Wynne, Paul Godfrey had different visions

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Paul Godfrey is putting the blame for his messy ouster as chairman of Ontario's lottery corporation squarely at Premier Kathleen Wynne's feet, saying he would have participated in a "seamless transition" if she had only talked to him.

A prominent Progressive Conservative hand-picked by the previous finance minister to overhaul the embattled Ontario Lottery and Gaming Corp., Mr. Godfrey was at odds with Ms. Wynne over several key issues, including plans for a downtown Toronto casino. With his firing Thursday, he leaves a multibillion-dollar Crown agency in disarray. The entire board of directors followed him out the door – the second time in four years the OLG board has collapsed.

Mr. Godfrey said the board's chaotic end could have been avoided had the Premier advised him she wanted a new chairperson at the OLG. He learned his days were numbered at the lottery agency in Monday's Globe and Mail, which reported the government had compiled a short list of candidates to replace him.

"She should have called me and basically said, 'You know what? I'd like to pick my own person. You're somebody else's choice,' " Mr. Godfrey said Friday in an interview with The Globe. "I would have said, 'You know, madam Premier, go to it and we'll co-operate to have a seamless transition.' "

Mr. Godfrey's departure two years before his tenure was scheduled to end in 2015 has created enormous upheaval for the OLG, with the Premier and Finance Minister Charles Sousa sending mixed signals on their vision for the province's gambling strategy. The OLG had projected it could raise an additional $1.3-billion in annual revenue for the government by building more casinos, cancelling the slots-at-racetrack funding program and privatizing lottery operations.

But the OLG's expansion and privatization plans, which were endorsed by the McGuinty government, have sparked heated debates over casinos in Toronto and other parts of the province. In rural Ontario, the Liberals faced a political backlash for scrapping slot-revenue sharing deals with the horse-racing industry.

In recent months, the Wynne government has undone several aspects of the OLG's gambling strategy, including nixing a plan to give Toronto more money than other municipalities to host a downtown casino.

Ms. Wynne was ultimately willing to forgo the additional revenue a Toronto casino would have brought to the government because she did not want to antagonize the rest of the province, government sources said. She was also never sold on the idea of a downtown casino.

Mr. Godfrey, however, continued to believe Toronto deserved a special deal on hosting fees, even after Ms. Wynne ordered him to come up with a single formula for the entire province, the sources said. The OLG tried to suggest a formula that would have given Toronto a $100-million annual take, but the government rebuffed the Crown agency.

On Friday, the province and the OLG announced a new, equitable hosting-fee formula that will offer more money to all municipalities with casinos. For Toronto, though, the change would mean less cash than first promised – $53.7-million annually – but council is unlikely to approve one now.

The mayors of Windsor and Niagara Falls welcomed the new deal, which is expected to deliver an extra $6-million annually to Windsor and as much as $15-million more to Niagara Falls, which is home to two casinos.

"We did not support any kind of sweetheart deal [for Toronto]," Niagara Falls Mayor Jim Diodati said. "We have been asking for a fair and equitable arrangement for a long time. We're happy that this has finally come to fruition."

Mr. Sousa was not available Friday to speak about Mr. Godfrey's ouster because of commitments in his riding, said his press secretary, Susie Heath. Peter Wallace, secretary of the cabinet, has been appointed interim chairman of the OLG. The government has also asked three deputy ministers and an assistant deputy minister to serve as interim board members.

Ms. Heath said the government is moving forward with the OLG's modernization strategy and Rod Phillips is staying on as president and CEO of the lottery agency.

"The Minister has full confidence in Mr. Phillips' leadership," Ms. Heath wrote in an e-mail.

However, Mr. Godfrey, who is CEO of newspaper chain Postmedia Network Inc., is casting doubt on whether the Ontario government will stick with the OLG's gambling-expansion plans.

During a private meeting Thursday, Mr. Godfrey said Mr. Sousa – a friend – asked him how he would like to handle his departure. Mr. Godfrey said he made it clear that if Ms. Wynne wanted him gone, she had to fire him.

Mr. Godfrey wanted to hear directly from Ms. Wynne the reasons for his dismissal and telephoned her after his meeting with Mr. Sousa. In a 90-second call, he said the Premier told him, "We're going in a different direction. You know [that] you and I have a different concept for casinos."