It works both ways, don't you think? If you're letting off the accused due to lack of concrete evidence, it may encourage further such incidents whereby any player can make a racist slur to a fellow professional in isolation, knowing that without concrete proof he stands to win.
I don't necessarily believe any legal action or steps can completely eradicate this issue. It will act as a deterrent for a period, but human temper/nature is such that there will always be such cases, even if done quietly. Change starts from Self-sensitizing, education, and awareness on the subject.
Firstly, did he call him South American in retaliation? Is inflicting harm when provoked/or acting in defense considered as grave as the primary offense? The more learned ones will 've to fill me on this.
Still, i would say being called by the colour of your skin condescendingly is more offensive than using a more generic(if i can call that) term in a similar tone.
For eg: Someone insulting me by my skin colour/religion i practise (both of which very personal) is way more offensive than being called a S. Asian. I don't consider them equal for it to deserve equal punishment.
He needs to tougghen up 
