Cygnus X-3 was observed with the VLA at 21 cm wavelength during the outburst of 1982 October. A high-sensitivity spectrum of the galactic absorption was obtained, which shows absorption lines at higher negative velocities than shown by previous spectra. A conservative interpretation of this spectrum gives a lower limit for the distance to Cyg X-3 of 11.6 kpc × (π0/10 kpc), where π0 is the solar distance from the galactic center. The absorption spectrum is consistent with Cyg X-3 being extragalactic.
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John M. Dickey (1983) studied this question.