The striker, currently on loan at Northampton Town, is one of two footballers alleged to have urinated into a glass before pouring it over a balcony.
The incident in question took place on day one of the festival, with MK Dons midfielder Samir Carruthers being the other player accused of the crude act.
Shrewsbury released a statement stating they would “fully investigate” the allegations.
“Shrewsbury Town Football Club have been made aware of an alleged incident involving player James Collins, currently on loan at Northampton Town, at Cheltenham Racecourse.
“Shrewsbury Town will fully investigate the alleged incident and no further comment will be made until the investigation processed has been finalised.”
Northampton Town have launched their own investigation into the incident. Collins joined the League Two side in January until the end of the season and has netted six goals in 12 games thus far.
The striker caused quite a stir in Scottish football when he joined Hibs for £200,000, a rare act of a non-Glasgow club paying a six-figure fee for a player.
Unfortunately for Hibs, he did not live up to the hype and was allowed to leave at the end of his first season.
THE SCOTSMAN ON SOCIAL MEDIA