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Ontario Lottery and Gaming Corporation President and CEO Rod Phillips, right, and OLG Chair, Paul Godfrey speak to reporters and members of the editorial board at The Globe and Mail in Toronto on March 11, 2013.

Peter Power/Peter Power/The Globe and Mail

The top executive of Ontario's lottery corporation has resigned, raising new questions about plans to overhaul the province's gambling operations.

The Ontario Lottery and Gaming Corp. announced on Wednesday that Rod Phillips has stepped down as chief executive officer after 2 1/2 years at the helm.

Mr. Phillips was hired in June, 2011, to execute a sweeping modernization of the OLG, which had promised to raise an additional $1.3-billion annually for the province by building more casinos and privatizing lottery operations.

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While the strategy was endorsed by the previous Liberal government under Dalton McGuinty, Premier Kathleen Wynne has charted a decidedly different course from her predecessor.

Mr. Phillips did not return messages from The Globe and Mail on Wednesday. A source close to him said he was frustrated with government inactivity on the OLG.

"He's a guy that wants challenges," said the source, who asked not to be named.

Mr. Phillips left before the OLG found a successor – Tom Marinelli, a senior executive, has been appointed interim CEO. Mr. Phillips also left before the OLG hands out bonus pay for the fiscal year ending March 31, 2014.

Tony Bitonti, a spokesman for the OLG, said Mr. Phillips will not receive a bonus for the most recent fiscal year because he will not be "actively employed" when bonuses are awarded later this year. Mr. Phillips was paid $672,989 in 2012, including $297,989 in bonus pay, ranking him the province's 12th highest-paid public-sector employee.

Mr. Phillips said in a statement that he is leaving for a "leadership position" in the private sector– he did not identify the organization.

"I am confident that OLG is well-positioned to modernize the lottery and gaming industry and to achieve great success in the years to come," he said in the statement.

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Another source familiar with his decision said the ability to participate in politics – something he couldn't do while heading a Crown agency – factored into his decision. The source suggested Mr. Phillips would likely support John Tory, for whom he has worked in the past, should the former Progressive Conservative leader contest Toronto's mayoralty race.

Unlike his close friend Paul Godfrey, the former OLG chairman who clashed publicly with Ms. Wynne until she fired him last May, Mr. Phillips worked well with her and complied with her mandate for the corporation, said two Liberal sources. This involved dialling back the aggressive modernization plans, and incorporating the horse racing sector into the OLG.

Mr. Godfrey's firing left the multibillion-dollar agency in disarray. The entire board of directors followed him out the door last May.

There were also questions at the time about Mr. Phillips's future at the OLG given how closely he worked with Mr. Godfrey. But government officials said at the time that they had full confidence in Mr. Phillips.

In a statement, Philip Olsson, Mr. Godfrey's successor, lauded Mr. Phillips work at the agency.

"Under his watch OLG has achieved its highest level of public confidence," he said.

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With a report from Adam Radwanski

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