The Sun on Sunday published a video showing the alleged incident, which is believed to have taken place in July.
Vardy, 28, apologised for a "regrettable error in judgement" in a statement on Sunday and Leicester boss Claudio Ranieri said on Thursday the striker would not be sacked.
"Jamie apologised to everyone, it was a mistake. The relationship is ok. We go on and forward," Ranieri told reporters.
"It's not my matter, but he won't be (sacked)."
Vardy, who made his England debut in June, scored the opening goal in Leicester's 4-2 Premier League win over Sunderland last weekend.
"Having established a full account of the incident in question and taken into consideration Jamie's prompt apology, the club has issued the player with a substantial fine and prescribed a programme of diversity awareness training," Leicester said in a statement on the club's website.
"Jamie has been reminded of his responsibilities to the club, his profession and the Leicester community. The fine will be donated to local charities."
Leicester sacked three players in June after they took part in a racist sex tape filmed on the club's end-of-season tour of Thailand.
Tom Hopper, Adam Smith and James Pearson -- the son of the club's former manager Nigel -- had their contracts terminated following an internal investigation.
(Reporting By Michael Hann; Editing by Ian Chadband)
Share
