Television footage showed a number of Betis followers aiming monkey chants at defender Paulao after he was sent off shortly before half-time in a match Sevilla went on to win 4-0.
Writing on Twitter on Tuesday, Blatter said: "Sickened to learn of 'fans' racially abusing a Real Betis player. I condemn their actions, which were seen on TV/online by millions."
FIFA has been under pressure to come down hard on racism in recent years and Blatter reiterated his organisation's resolve to implement tougher sanctions while also calling on organisations at national levels to do more to assist in the fight.
"FIFA's members approved a resolution at Congress in May to tackle discrimination. It's time for tougher sanctions," he continued.
"I will say again: It's a nonsense to fight racism with fines. This has to be tackled by ALL competition organisers."
Blatter also posted a link to comments he made on combating racism when attending the Football Association's 150th anniversary celebrations last month.
"FIFA has to show zero tolerance to any form of discrimination," he said at the time.
"If we do not apply this approach, then we have failed.
"We cannot be the police all around the world. But FIFA will intervene in our competitions. Football has a pyramid structure. We have Confederations and member associations.
"This has to also be tackled by organisers of other competitions."