The firearms, including three revolvers and 11 rounds of ammunition were recovered from Ashok Kumar Sahu of Routpeta Sahi, Aska Road in the town during the raid in his house, said SP (Berhampur) Sarthak Sarangi.
Besides the firearms, cash around Rs 5.35 lakh was also seized from Sahu's house, the SP said.
"We are trying to arrest other members of the racket and to recover more number of firearms," Sarangi said, adding that, during the investigation, the police found that the arms syndicate was being funded by the gambling dens and liquor traders in the town.
The accused, Sahu (37) was a gambler and he also provided the money to the gamblers at the gambling point with high interest.