A Newcastle Knights staff member is alleged to have made a racist remark toward a lower-grade player, with Newcastle looking to handle the allegation behind closed doors.
A complaint was made to the club that an indigenous player was told to "stop playing like a blackfella and get back to the structure", sparking an internal investigation into the alleged matter, according to The Newcastle Herald.
It is understood that the player that was insulted was not the one who raised the complaint to the Knights, who have not disclosed the names of those involved in the incident as they continue to investigate if the incident took place.
"I can confirm the process if there are any allegations of racial vilification," Knights chief executive Phil Gardner said told The Newcastle Herald.
"They will be handled very firmly by the club.
"The outcomes could lead to a range of sanctions, which could be suspension, fines or termination.
"Anyone found guilty would be dealt with on that basis, although it's very important that allegations aren't treated as truth or fact, because it could impact on those people in their future careers ... if it's not factual, it shouldn't be reported."
It is understood the staff member has apologised to the player.
The Knights are yet to make any further comments amid the investigation.
The claims come in the wake of Newcastle's handling of a recent on-field incident involving veteran forward David Klemmer and a senior trainer.
Klemmer has been stood down by the Knights following the incident, which took place over the weekend during Newcastle's Round 20 loss to Canterbury.