Badlani, who had reportedly gone to Europe after his name cropped up in the betting racket, was taken into custody on his return, they said.
Police are now questioning Badlani as he could be a major link between the bookies in India and Pakistan.
On Saturday, Mumbai cops got the custody of Delhi-based bookie Ashwin Agarwal alias Tinku Delhi in the betting case.
A local court had remanded him in crime branch's custody till June 6 after it said that they wanted to find out whether Tinku had links with T20 League players other than Ajit Chandila.
Tinku placed bets using a mobile number registered in the name of one Kothari and the crime branch wanted to trace this person, public prosecutor Wajid Sheikh had said.
The court had also extended the police custody of Pune-based bookies Dinesh Sharma and Kishore Pablani till June 6. Prosecutor Sheikh said police wanted information from them about co-accused Badlani to which defence lawyers had said that he was abroad and his family had informed police that he would be returning to India on June 3.
So far, Mumbai Police have arrested 13 persons in connection with the T20 League betting racket.