Metro reports that the Champions League winners are prepared to make the club legend a free agent so he can find a new team, with Spanish outlet El Confidencial saying the Emirates is the player's most likely destination.
Football journalist Sergi Dominguez also recently tweeted about the likelihood of the goalkeeper leaving the Spanish capital:
Casillas has been used sparingly in La Liga in recent times but was present during the Galacticos' run in capturing the Champions League trophy last season.
The 33-year-old played 13 times in the competition, as per WhoScored.com, captaining the side to their La Decima triumph.
He also featured in Spain's first two World Cup games in Brazil, but after early elimination, it appears his international career might be over.
Ahead of the goalkeeping position, Arsenal have suffered a setback in their pursuit of a new central defender, with Manchester City's Matija Nastasic targeted by two of Italy's top clubs.
Simon Jones of the Daily Mail writes that the Premier League champions have received enquiries about the defender from Roma and Inter Milan as they prepare to sell him in order to make room for Eliaquim Mangala from Porto.
Jones says City would prefer the player to move away from England, further damaging Arsene Wenger's chances of capturing the Serbian international.
The Arsenal coach is in the market for a centre-back with the expectation that Thomas Vermaelen will leave the Gunners to join Manchester United, as per Jones.
At the top end of the pitch, it appears Arsenal's chase for Mario Balotelli might be over as new AC Milan boss Pippo Inzaghi looks set to keep the player.
Inzaghi has professed that he sees Balotelli as important to Milan, as per Hamish Mackay of the Daily Mail, and that he wants to work with him: "Balotelli is a very important player and belongs to Milan. I'll interact with him in the way I do with other players. I'll forget everything I've heard about him either in a good or a bad way because I want to get to know people to get the best out of them."
Jones says Wenger will challenge Manchester United for the player's signature because Real Madrid have turned down their offer for World Cup winner Khedira.
However, Arsenal have had success with one specific signing, reportedly capturing Barcelona academy product Georgios Spanoudakis.
Ashley Clements of the Daily Mail confirms that the 15-year-old German will arrive at the Emirates after deciding to join the Gunners' under-18 setup. The midfielder is compared to Cesc Fabregas and has an eye for a killer pass.
Wenger appears to be very busy in this transfer window, and his activity has been positive so far. Alexis Sanchez has joined the club, and if Wenger can add a defender and a midfielder to his ranks, they will be far stronger than last season.
Khedira is the perfect player for Wenger, and Arsenal should break the bank for him. The purchase of Casillas would also bring vital experience to Arsenal's defence, but there are valid questions about the goalkeeper's age and ability to cope in the Premier League.
But on a free transfer, he would be a shrewd addition. He is an individual who knows how to win trophies, and that could rub off on the Gunners' young contingent.