Concerns over his long-term fitness may be another reason why the club are unwilling to offer him a lengthy extension. The 254-game veteran also carried an Achilles injury throughout the year.
Newcastle coach Nathan Brown is prepared to take a gamble however, as he looks to cover the loss of injured fellow Kiwi test No 9 Slade Griffin, who is facing up to 12 months out recovering from his fourth season-ending knee injury.
"Issac is open to moving back over here and with Slade's [Griffin] situation, we are certainly looking to strengthen our hooking depth," Brown told the Newcastle Herald.
Brown spent time in camp with the All Blacks last week and while in Wellington took the opportunity to meet with Luke and his agent Bruce Sharrock.
There were suggestions earlier this week that Luke was close to putting pen to paper with the Knights, but Sharrock explained it wasn't a done deal.
The Newcastle Herald also report the issue of the club having an option in their favour for the second year of Luke's proposed contract is partly behind the delay.
"Things have progressed but I wouldn't say [signing with Newcastle] is imminent that's for sure," said Sharrock.
"There's a fair bit of water still to go under the bridge."
Meanwhile, the Knights are also in discussions to poach Lino as they search for a new five-eighth to partner halfback Mitchell Pearce.
Lino enjoyed his best season since debuting in 2015, making eight appearances for the Warriors as a replacement for first-choice halves Shaun Johnson and Blake Green.
The Samoan international will struggle to usurp either player next year and is considering joining Newcastle in search of a better opportunity.
Green is locked in at the Warriors until the end of 2020 while Johnson's current deal expires at the end of next season.
There are no guarantees Lino would be any better off at the Knights however.
Brown is also considering whether to move young gun Kalyn Ponga to five-eighth next year, with the versatile Connor Watson another contender for the No 6 role.
"We are talking to [Newcastle] but we still haven't agreed to terms," explained Lino's agent Stan Martin.
"It's really about him trying to get him an opportunity as the Warriors won't sign him beyond 2019.
"He's no worse off than if he stayed here. The only difference is here is [coach] Stephen Kearney knows him, and trusts him, but they're still not prepared to offer him a contract for 2010, which I'm surprised with.
"I thought he went well enough this year to get a one-year extension with Shaun Johnson coming off (contract) next year."
The Warriors are also moving to secure hard-running front-rower Bunty Afoa long term, and are prepared to extend him for at least another three years after his current contract expires at the end of next season.
