While it is certain we will not be seeing Stallone in Creed III, there is currently no further explanation as to why provided by the inside source.
Stallone previously reprised his legendary role of Rocky Balboa as a mentor for Adonis "Donnie" Creed (Michael B. Jordan). Michael B. Jordan is also directing the third film, which is scheduled to premiere November 23, 2022. This is Jordan's first time in the director's seat.
The first Creed, released in 2015, earned Stallone a Golden Globe win and an Academy Award nomination for Best Performance by an Actor in a Supporting Role.
However, Stallone's absence in the upcoming film does not mean we won't be seeing more of him or Rocky soon. He recently announced a completed director's cut of Rocky IV. He also recently shared ideas of a Rocky prequel TV series to Instagram.