Vargas was stopped in the 11th round in front of a sell-out crowd in Las Vegas two weeks ago.

The fight generated a live gate of $8.9m (�5.7m), the seventh-highest in state history, and pay-per-view sales generated about $46m (�29.5m).

But the Nevada Athletic Commission is set to file a formal complaint against Vargas next week.

Nevada Athletic Commission executive director Marc Ratner confirmed that a post-fight urine analysis came back positive for stanozolol.

Vargas said he was upset with the test results and wrote a two-page letter to Ratner defending himself.

"I did not knowingly take any prohibited substance, much less a steroid," Vargas wrote.

Vargas said he had taken nutritional supplements before the bout.

"I took what I was given and did not think to question, because I relied upon and trusted those around me.

"I know that steroids were banned and that there would be testing. The others responsible in my camp knew the same. I am upset beyond words that a positive test has been received."

Vargas asked that a second sample be tested to eliminate any chance of laboratory error.

"This is a very sad situation for me. I trained hard and the bout was a big one for me. While I lost, I thought I lost with honor. Now someone's stupidity threatens to take even that away from me."

Luther Mack, chairman of the Nevada Athletic Commission, said Vargas would be dealt with harshly.

"It's a mockery to think that he thought he could pull this off in the state of Nevada, to think he could get away with this," said Mack.

"It's the biggest insult ever. It was a great fight in front of a packed house and to have this happen, boy, I'll tell you I'm disgusted."

Once the complaint is filed, Vargas will have 30 days to respond.

Stanozolol is the substance which cost sprinter Ben Johnson his 1988 Olympic gold medal.