Tiny Antigua and Barbuda have successfully challenged a U.S. ban on Internet gambling, diplomatic sources said Friday, dealing the United States another setback at the World Trade Organization.

A U.S. trade official, speaking on condition that she not be identified, confirmed that a WTO panel had issued a final report that was “largely unchanged” from its preliminary ruling against the U.S. ban one month ago.

“We intend to appeal and will argue vigorously that this deeply flawed panel report must be corrected by the (WTO) appellate body,” the trade official said, echoing comments made last month by U.S. Trade Representative Robert Zoellick.

The WTO panel determined that the United States’ ban on Internet, telephone and other remote gambling services violated its WTO commitments, diplomatic sources in Geneva said.

The United States argued the gambling restrictions were legal under WTO rules that allow countries to make exceptions for laws to protect public morals and public order.

The panel agreed the U.S. prohibitions were designed to achieve those ends, the diplomatic sources said.

But it faulted the United States for not pursuing good faith negotiations with Antigua that might have identified WTO-consistent alternatives to the ban, the sources said.