The province has scratched a high-stakes scheme to sell off Ontario’s $3.8-billion-a-year lottery business because the prize wasn’t big enough.

But Ontario Lottery and Gaming Corporation, which made the surprise announcement Friday that privatizing the lotto is off the table, will continue with “modernization” that should see players buying tickets on smartphones.

The news came shortly after Premier Kathleen Wynne released the mandate letters for her ministers Friday outlining their “to do” lists leading up to the spring 2018 election.

Wynne’s written directive to Finance Minister Charles Sousa implored him to oversee the “modernization of Ontario’s gaming marketplace to provide more choice and convenience for customers while maintaining a strong commitment to social responsibility.”

After she met with reporters to discuss the mandate letters, OLG revealed it was cancelling the international request for proposals for the lotto business “in favour of a revised modernization approach.”

As first disclosed by the Star in 2014, the Liberal government hoped to reap a cash windfall by selling off the lottery franchise, which includes Lotto 6/49 and numerous other games.

Industry insiders estimated OLG could make up to 25 per cent more money off the lottery by boosting online and smartphone ticket sales and expanding its customer base to a younger demographic.

Rogers Communications, the Ontario Teachers’ Pension Plan — which owns Camelot Group, one of the world’s biggest operators with lotteries in the U.K., Ireland, and several American states — and GTEH-Scientific Games, a joint U.S.-Italian conglomerate, were the only qualified bidders in the auction.

But interest soon began to wane with Rogers abandoning its first lottery venture and it became apparent there wouldn’t be the bonanza Queen’s Park had been anticipating.

Instead, the government-owned gambling agency will pursue its own strategy for smartphone and online sales to attract millennials who don’t play the lotto. The province believes that will eventually earn an additional $900 million in annual revenue.

“After a period of due diligence and consultation with globally experienced proponents, OLG has determined that the selection of a single service provider would not provide sufficient value for the province,” OLG said.

In a statement, Stephen Rigby, OLG’s president and chief executive officer, said “in order to unlock the full potential of the business, our approach to lottery modernization is evolving.”

“Under a revised approach, we will seek to enhance our capabilities in technology and innovation through partnerships with the private sector,” said Rigby.

“Our research reveals there is untapped revenue potential in the market. We are now adjusting our approach and remain committed to providing increased revenue to the province.”

The Liberals insist the change will not hinder eliminating the deficit in the 2017-18 budget.

“Your specific priorities include delivering on the balanced budget plan,” Wynne told Sousa in her letter.

With the government under fire for skyrocketing hydro rates — even in the wake of plans to reduce electricity bills with a rebate of the 8 per cent provincial tax — Energy Minister Glenn Thibeault has been directed to be an “active listener” as he updates the province’s long-term energy plan before the next election.

The plan, which will outline how Ontario generates and procures electricity, must have a “continued focus on energy affordability for homes and businesses,” Wynne wrote to him.

Thibeault is also under orders to have ready for next year a four-year, free overnight program for electric vehicle charging for residential customers, and to continue with the controversial Hydro One privatization.

Also in the mandate letters:

A promised program to provide free energy audits of homes for sale, resulting in an energy rating prospective buyers can check, does not have to be ready until 2019.

Attorney General Yasir Naqvi has been ordered to lead Ontario’s approach to Ottawa’s legalization of recreational marijuana next year. Naqvi must work the on “a regulatory framework that focuses on the promotion of public health and safety, including road safety, the protection of young people and high risk users and harm reduction.”

Labour Minister Kevin Flynn has been given a deadline of spring 2018 to come up with recommendations to close the wage gap between men and women.

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Environment and Climate Change Minister Glen Murray will continue to move forward with Ontario’s cap-and-trade market in conjunction with Quebec and California. The first carbon auction is to be held next March.

Funding for small or rural retirement homes that would not otherwise be able to afford installation of sprinkler systems will be available by 2019.

Continue to explore high speed rail for southern Ontario, paving the way for an environmental assessment process in 2017.

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