This whole situation actually seems to expose holes in the IPG. While according to the technical wording in the IPG on USC: Major the judge handled the situation initially correctly, there is no differentiation between what could be considered “lighter” forms of harassment vs sexual harassment. But because the comment was meant to be derogatory in nature it could be considered having malicious intent and thus require the upgrade. What the judges should have avoided was using the just a joke excuse, as this is specifically cited in the IPG as an example of a player not being remorseful of their actions.
That said, even if the judges calls were correct by IPG standards, the TO has a responsibility to manage player behavior and should have stepped in. Failure to take action in any sexual harassment case not only reflects poorly from a PR perspective on the TO, but could put them in a legally compromising situation (and depending on location could put the venue in a legally compromising situation). This is poor business management.
If the victim of harassment in this case had been underage, or biologically female or both would the judges and TO have acted any differently? If the answer is yes, then they made a mistake in how they handled the events. If not, we still need to re-examine the IPG and Tournament Organizer rules and policies to clarify some of these areas.