Ontario will start offering online gambling in 2012, with the Ontario Lottery and Gaming Corp. promising a secure environment that will protect young people and problem gamblers.

"OLG needs to be current and to keep in tune with the changing needs of our customers," OLG chair Paul Godfrey told a news conference on Tuesday.

Finance Minister Dwight Duncan said the move was meant to ensure "the competitiveness of OLG going forward."

"We know that we're losing about $400 million per year to offshore websites," Duncan said.

Godfrey added: "If we're going to retain Ontarians' money in Ontario, we've got to start doing it now."

In the 2010 budget, documents showed that OLG revenue dropped by $83 million, mainly due to lower revenue from slot machines.

The returns from the online gambling expansion will be modest, Duncan admitted. Government officials have estimated Ontario will make about $100 million per year within five years of startup. Last year, the OLG generated $1.7 billion in revenue for the province.

Robert Murray, manager of the problem gambling project at the Centre for Addiction and Mental Health in Toronto, said while online gamblers represent only a small portion -- about 2.1 per cent -- of total gamblers, the Internet is one of the fastest-growing methods of gambling.

Murray said he is concerned that more people will want to try online gambling if they know it is government-sanctioned.

"The trick is to balance the need to generate revenue with the social consequences that this expansion of gambling may result in," Murray told CTV News Channel Tuesday afternoon. "There's going to be a social impact here because people are going to have a variety of different ways of now accessing gambling…and this is going to bring gambling in your home."

Duncan said there will be safeguards to ensure responsible gambling.

"Although Ontario is following many other jurisdictions, we feel that by the time OLG launches its site, it will benefit from best practices and policies in use worldwide," he said.

British Columbia launched an online casino last month -- PlayNow.com. Quebec is expected to soon follow. The Atlantic Lottery Corp. offers five interactive games through its website, including Hold'em Poker.

The U.S. is expected to end its Internet gambling ban this fall.

Godfrey said Ontarians currently gambling online are doing so in unlicensed, unregulated environments.

Ontario's online gaming channel will be safe and secure, he said.

There will be strong age-verification procedures to keep underage gamblers from playing, Godfrey said.

"It will implement the gold standard in responsible gaming controls and tools," he said. "Best-in-class security will be utilized to ensure the safety and security of customers' accounts and personal information."

B.C.'s website is having problems. The financial information of some players was compromised, and the B.C. Lottery Corp. had to take PlayNow.com offline and it remains unavailable at this time.

Ontario NDP Leader Andrea Horwath called OLG's move "a big mistake."

"If the government really wanted to show some leadership here, they would be working with the federal government to figure out how we can prevent online gambling in Canada and in Ontario," Horwath told reporters.

Godfrey said players won't be able to participate on the Ontario website anonymously.

"This provides a controlled gaming environment," he said. "It allows us to identify each player, allow for play limits and warning flags around extensive play."

If necessary, free treatment services will be made available, he said.

With a report from CTV Toronto's Naomi Parness