The online bookmaker initially made Juventus the favourites to sign Higuain after he revealed his intention to leave the Bernabeu this summer, but the Gunners have consistently attracted the majority of support over the last few days.
Any deal would likely see Arsenal break their transfer record, which currently stands at around £15m for their acquisition of Andrei Arshavin, with Madrid expected to want around £30m.
Sky Bet Football Trader Chris Spicer said: "The intensity of the betting and speculation suggesting Higuain is some way towards agreeing a deal has forced us to suspend betting on his next club.
"However, it remains to be seen whether Arsenal have the deal done or have just submitted a bid, as there will surely be competition for his services, with Juventus also backed to land the Argentina striker."
Higuain left River Plate in 2007 to join Real and has scored more than 100 goals in his time in Spain.