Police Lieutenant General Phan Van Vinh, 62, will be held for four months for investigation under the charge of "abusing power in performance of official duties", the ministry said in a statement.
The top officer was known for leading investigations in major criminal cases in Vietnam during his tenure as chief of the ministry's General Department of Police from 2011 until his retirement in April 2017.
He is suspected of links to a betting network accused of "using the internet to commit acts of appropriating property, organising gambling, gambling, illegally trading bills and money laundering" in Phu Tho and other provinces, the statement said.
Vinh is the second senior police official to be detained over the online gambling ring, which state media said was part of an international network involving millions of dollars.
Last month Police Major General Nguyen Thanh Hoa, an officer in charge of fighting high-tech crimes, was arrested and is now under investigation for "organising gambling" in the same operation.
Both Hoa and Vinh have been stripped of their police titles by President Tran Dai Quang.
Gambling is considered a social vice in Vietnam, with most betting illegal for locals.
The government announced last year it would allow some locals to bet in casinos on a trial basis, and also loosened the rules on sports betting.
The arrests come amid an aggressive anti-corruption crackdown under a conservative leadership in office since 2016, targeting senior officials, bankers and businessmen.
Observers say the current campaign is unprecedented in its scope and scale -- and appears motivated by political infighting.
Transparency International ranks Vietnam as one of the most corrupt countries in Southeast Asia, with graft seeping across various sectors, from health and education to land management.
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