Former India test bowler Shanthakumaran Sreesanth and two other local cricketers were arrested last week on suspicion of taking money to concede a fixed number of runs and police have intensified investigations to discover the extent of the scandal.
Gurunath Meiyappan, son-in-law of Indian cricket board (BCCI) president N Srinivasan, was arrested late on Friday after being quizzed for hours by Mumbai Police probing illegal betting on the Twenty20 league.
"We have gone through questioning him in detail and after due deliberation, we've come to the conclusion that there is evidence of his involvement in this offence that we are investigating..." joint commissioner of Mumbai Police Himanshu Roy told reporters on Friday.
"... therefore he has been placed under arrest and will be produced in court within 24 hours as per the law."
Local media claimed Meiyappan was chief executive of the Chennai Super Kings but India Cements, the company that owns the franchise, said he was merely a member of team management.
Sreesanth has denied any role in spot-fixing.
India's film industry also got mixed up in the controversy when Mumbai Police arrested Bollywood actor Vindu Dara Singh on Tuesday for alleged links to a bookmaker.
The International Cricket Council (ICC) withdrew elite panel umpire Asad Rauf of Pakistan, who officiates in IPL, from next month's Champions Trophy on Thursday following media reports he was under investigation by Mumbai Police.
Legal sports betting in India is confined to horse racing.