'Bully Boy' had won the last three Players Championship tournaments, winning 21 games in a row.
On Wednesday, Smith reached the last 32 with victories over Nathan Girvan (6-4) and Lukas Wenig (6-1), extending his unbeaten streak to 23 matches.
In the third round of Players Championship 17 Simon Whitlock was too strong, 6-2, so Smith can forget about a fourth consecutive floor title.