Former Monterrey Mayor Adalberto Madero was arrested over the weekend in connection with the investigation of irregularities at the Casino Royale, where 52 people died in an arson attack in August, the federal Attorney General's Office said.
The politician was arrested on Sunday and taken to the medium-security prison in Apodaca, a city in the Monterrey metropolitan area, spokesmen for the Nuevo Leon state Attorney General's Office told Efe.
Madero was a member of the National Action Party, or PAN, while in office, but he was later expelled from the party for alleged corruption.
He was succeeded by Fernando Larrazabal, who also belongs to the conservative PAN.
Madero allegedly authorized the municipal permits for the Casino Royale even though the gaming establishment was not in compliance with Government Secretariat regulations.
The secretariat is the government agency that regulates gaming establishments in Mexico.
Los Zetas cartel gunmen torched the Casino Royale on Aug. 25 because the gaming establishment's owner reportedly refused to pay protection money in an extortion racket the gang was running.
The gunmen told the people inside the casino to get out before setting fire to the building.
The majority of the 52 victims died from smoke inhalation, with only seven burning to death.
The fire exits were closed and the casino lacked fire retardant materials, allowing the fire to spread quickly, officials said.
The attack on the gambling establishment unearthed a web of corruption involving officials and casino owners.
Owners of some Nuevo Leon casinos have complained that they are subjected to extortion by organized crime elements and also by officials, who threaten to shutter their establishments if payments are not made.
Manuel Jonas Larrazabal, the brother of Monterrey's mayor, was arrested on Sept. 1 by the Nuevo Leon AG's office after several videos were posted on the Reforma newspaper's Web site showing him receiving cash during visits to casinos.
His defense attorney said the money was payment for the sale of "cheeses and mescal (a distilled alcoholic beverage)" from the southern state of Oaxaca to people linked to casinos in Monterrey.
One of the videos was dated Aug. 19, just six days before the torching of the Casino Royale.
Reports came out after the attack that the casino lacked an operating license, officials did nothing to close it despite the lack of basic safety systems and judges allowed the gaming establishment to continue in business.
President Felipe Calderon ordered an extensive investigation of Mexico's casinos in the wake of the fire in Monterrey.
Many of the country's casinos operate in an irregular manner, with some staying open for business due to controversial court orders.