Smith, who lost to Luke Littler in the World Series of Darts Finals in Amsterdam on Sunday, was defeated 6-3 by his Welsh opponent Clayton.
Clayton jumped to an early three-leg lead in Budapest, firing off four 180s and averaging 94.17 as Smith faced a first-round exit despite a brief comeback.
Next up for Clayton is top seed and defending champion Dave Chisnall. Peter Wright narrowly defeated Joe Cullen in a deciding leg, while Raymond van Barneveld advanced with a 6-3 win over Ritchie Edhouse; he’ll take on Ross Smith on Saturday.
The annual £600,000 tournament will be held at the Mattioli Arena in Leicester from October 7-13, featuring 32 of the world’s best players vying for the prestigious title, previously won by Luke Humphries.
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Humphries, who claimed his first TV ranking title last year by defeating Gerwyn Price, will return to defend his title. Six-time champion Michael van Gerwen is also set to compete, and teenage sensation Luke Littler will make his double-start debut in the East Midlands.
In a change from last year’s format, the semi-finals on October 12 will be best of nine sets, with the final on October 13 played over the best of 11 sets.
