At least seven players in the French league were placed under formal arrest, a source close to the investigation told AFP without specifying the players concerned.
A police source said eight players for Montpellier, including Karabatic and his brother Luka, two players for Paris Saint-Germain formerly with Montpellier, a member of staff for Montpellier and a player's girlfriend had been detained for questioning in the probe.
Five of the Montpellier players, including Nikola Karabatic, Tunisian Wissem Hmam, Frenchman Mickael Robin, and Slovenians Dragan Gajic and Primoz Prost, were put into police cars and driven away in a convoy, an AFP journalist at the scene said.
The team's physiotherapist, Yann Montiege, also left with police.
The convoy was later seen arriving at the offices of the interior ministry's racing and gaming division in the Paris suburb of Nanterre.
The players were questioned in their dressing rooms at the Pierre de Coubertin stadium in Paris immediately following a match between Montpellier and Paris Saint-Germain, a source close to the players said.
An AFP journalist at the stadium earlier saw plain-clothes police showing badges to guards to enter the stadium.
Three people were detained for questioning in Montpellier on Sunday on suspicion of placing illegal bets, a source close to investigation said.
Karabatic, 28, is considered one of the greatest players of the game and won gold medals with the French team at this year's London Olympics and the 2008 Games in Beijing.
The French professional handball scene was thrown into turmoil Wednesday after an investigation was ramped up into giants Montpellier over alleged match-fixing and illegal betting.
The south coast club has dominated French handball for the last 15 years, and officials were quick to protest the innocence of their players.
Suspicions were raised over a match that Montpellier lost 31-28 to Cesson-Sevigne on May 12. At the time, Montpellier were assured of a 13th league title in 15 seasons while the Breton club sat in eighth position.
Betting firm La Francaise des Jeux (FDJ) at the time reported abnormal betting patterns up to five times greater than expected and suspended bets during the match.
Large bets reportedly came in at half-time on a loss for Montpellier, for whom the Karabatic brothers, Mladen Bojinovic, Vid Kavticnik and Samuel Honrubia were not playing because of injury.
France 3 television reported that police had discovered that wives or girlfriends of players and club members had placed bets in three betting shops in the Paris region, the western region of Brittany, and around Montpellier.