The man said he had gambled away the money and his failure to pay back has now sparked discussions on the country's talk shows about the intricacies of his financial situation.
A Japanese man given $360,000 in Covid-19 aid by mistake has been arrested after saying he gambled away the money online.
The man is now in custody after being arrested "on suspicion of violating computer fraud laws", an officer at the police department of western Japan's Yamaguchi region said on Thursday.
Local authorities have become increasingly desperate to get their money back from the 24-year-old, who has said he will return the cash "even if it's going to be bit by bit".
The blunder by authorities in the remote town of Abu and the man's failure to pay them back has sparked outrage in Japan, with talk shows discussing the intricacies of his financial situation.
He was transferred the 46.3-million-yen lump sum in error last month by officials who were organising cash handouts for low-income residents affected by the pandemic.
After visits, calls and letters failed to convince the man to repay the money, authorities filed a lawsuit last week in an attempt to get it back.
One man has spent more than $300,000 of Covid relief funds meant for 463 low-income households in Japan's town of Abu, losing it in online gambling after local authorities wired him the wrong amount. His lawyer says he is too broke to return the money pic.twitter.com/4PBLnzVO1w— TRT World (@trtworld) May 18, 2022
'Step towards the truth'
The man told police he had spent the illicit windfall at online casinos, and is suspected of moving some of the money to a different account even though he was aware of the mistake.
Abu mayor Norihiko Hanada told reporters that the arrest marks "a step towards the truth".
"I don't believe outright (that he used it all), and I think it's possible (there's money) somewhere," he said.
Hanada's staff are exhausted from angry calls and e-mails from the public, he added.