Waites has a brilliant record in Wolverhampton having won the tournament and twice been runner-up in the competition, and he could again go all the way if he can repeat his form from Sunday night.
Waites recorded a 103 average in a 5-1 victory over Dutchman Stompe and he will now meet Taylor in their final group game of the round robin stage of the event.
"Me and Phil Taylor on Tuesday should be good," Waites told Sky Sports. "I played him in the final here a few years ago and he taught me a lesson but if I can play my own game it should be a good one."
'The Power' is also relishing facing Waites after he beat former Lakeside champion Mark Webster 5-2 to make it two wins out of two so far.
"Scott Waites is a great player, he hasn't had the greatest of years but he does love it here, the crowd seems to raise his game and he doesn't want to lose here so it should be a great game," said Taylor.
Ted Hankey bounced back from a thumping on Saturday to beat Steve Beaton 5-3 - surviving a scare after watching a 3-0 lead slip away.
"I had to just get back to playing darts, not trying to control the game or the rhythm of it and just let the darts flow, and when I did that it was good enough to get the win," said Hankey. "Fair play to Steve he played well but I always felt I was just in control."
James Wade also looked in great touch as he beat Jan Dekker 5-1, while Mervyn King was pushed by young Arron Monk before eventually coming away with a 5-3 success.
Australian Simon Whitlock was embroiled in a real better with a fellow former World Championship finalists before he edged out Kevin Painter 5-4.
Flying Dutchman Michael van Gerwen continued his unstoppable form as he made it two wins from two with a 5-3 win over Robert Thornton.
Earlier in the day, Lakeside champion Christian Kist made a winning debut in the event while PDC world champion Adrian Lewis lost out to Tony O'Shea.
Dutch star Kist, who won the Lakeside Championship in January by defeating O'Shea, took only 11 minutes to see off home favourite Wayne Jones 5-1 in their opening group game at the £400,000 event.
The victory sets up his first-ever clash on Monday night with Holland's five-time world champion Raymond van Barneveld - who whitewashed Mark Walsh earlier on Sunday in a similarly impressive performance at the Wolves Civic.
"It was a great moment for me and it's fantastic to win," said Kist. "I was a little nervous for this game but I controlled it well.
"I'm confident and I feel good, and I hope I'll win my second game. It should be a great game - it will be the first time I've played Raymond and I'm looking forward to it."
Van Barneveld hit a 141 finish as he saw off last year's semi-finalist Walsh with a strong display, as he bids to erase the memory of a group stage exit 12 months ago.
"The 141 in checkout in the opening leg was a real confidence boost for me and I kicked on from there," said van Barneveld. "That was a really good win today and I'm looking forward to playing against Christian.
"I'd never even met him before today and I'm curious about playing him. There's so much talent in Holland and he's doing well."
PDC world champion Lewis was edged out 5-4 in his Group E opener against O'Shea, who took victory with a superb 12-dart finish in the deciding leg, hitting his fifth 180 of the match before taking out 86 on the bull.
Dutch debutant Wesley Harms, a Lakeside Championship semi-finalist in January, impressed on his first Grand Slam appearance with a 102 average in defeating former finalist Terry Jenkins 5-2.
Lewis now face a key three-time world champion John Part on Monday night as he bids to follow up last year's run to the semi-finals with further success in Wolverhampton - and he insists he can still go on to top Group E.
"I was pretty patchy and it's my own fault really because I missed two darts at double four to win it [in the penultimate leg] - but at the end of the day it's not the end of the tournament," said Lewis.
Part was also a 5-4 loser as he was edged out in a deciding leg by last year's runner-up Gary Anderson, who was sporting a garish new shirt but also averaged over 95 in a strong performance as he punished the Canadian for missing two match darts.
"I enjoy coming here and I've got good memories after my run to the final last year," said Anderson. "I'm a bit fortunate that John missed those two darts at double six and I had a few iffy doubles in the middle of the match, but it's a good win."
"I played good darts today and think I can improve in my next two matches," said Harms. "I didn't feel nervous, I'm enjoying my darts and playing well."
Brendan Dolan and Andy Hamilton both picked up 5-2 wins in their Group F openers, with Northern Ireland's Dolan seeing off Paul Nicholson and 2007 runner-up Hamilton overcoming Barrie Bates.