Jorge Hank Rhon, known as Hank, was taken into custody Saturday in a sweep that also netted 88 weapons and about 10,000 rounds of ammunition, The San Diego Union-Tribune reported.
The 55-year-old Hank was arrested at his residential compound that contains a soccer stadium and private exotic zoo.
Hank is a member of Mexico's former ruling Institutional Revolutionary Party and has faced decades of allegations of links to organized crime, which he consistently has denied.
The newspaper said while Hank mostly keeps a low public profile, several times a year he hosts benefits for the poor at his racetrack and offers scholarships to the underprivileged.
Hank has 19 children by three wives and a girlfriend, the report said.
Andrew Selee, director of the Mexico Institute of the Woodrow Wilson Center in Washington, said the Mexican government's decision to make such a high-profile arrest raised questions.
"It remains to be seen whether there is sufficient evidence now, or if this case will fall apart like so many others against politicians in Mexico," Selee said. "Yet the fact that they would even arrest him suggests that his power is waning and the government has become more determined to do something about his perceived immunity."