The team's decision Tuesday comes after a smiling Ryan was caught gesturing by a cell phone camera at the competition in Sunrise, Fla., on Saturday night.
Ryan apologized the next day, calling his actions "stupid and inappropriate." General manager Mike Tannenbaum had said the organization was disappointed and would address the matter internally.
The coach also could be fined by the NFL under its personal conduct policy.
Ryan led the Jets to the AFC championship game in his first year as an NFL head coach.