Gibbs, who arrived in Sri Lanka on Wednesday and was originally scheduled to join the commentary panel tweeted "Been an interesting day or two but so grateful to be head coach of Colombo Kings" following the developments.
"Mickey Arthur is a good commentator and he has been on this seat earlier also," a source involved with the LPL said.
Arthur was contracted with the Pakistan Cricket Board and has also done radio commentary in the past.
He will join a panel including Mike Haysman, Aamer Sohail, Darren Ganga, Roshan Abeysinghe, and Russel Arnold.
They will be part of a bio-secure bubble that does not include the players.
Arthur is currently in Kandy with the probable squad of players for the tour of South Africa.
After five days of intense training, the squad was given a day off today. Tomorrow they will play a two-day practice game organized at the Pallekele International Cricket Stadium.
Independent Television Network (ITN) has secured rights for the live telecast of the LPL matches in Sri Lanka. The matches will also telecast in other Asian countries including India and Pakistan.
Test captain Dimuth Karunaratne's boys have wished Dinesh Chandimal, who turned 32 on Wednesday.