Private prisons are correctional facilities run by for-profit companies that contract with federal, state, or local governments to house incarcerated people in exchange for a daily rate per inmate. As of 2022, about 90,873 people were held in private prisons across 27 states and the federal system, roughly 8% of the combined state and federal prison population. The companies earn more when more beds are filled and keep whatever is left after operating costs, which shapes almost every other feature of how these facilities function.
The Business Model
A private operator signs a contract with a government agency to house inmates at a set per-diem rate. The Federal Bureau of Prisons reported that privately operated institutions cost about $93 per inmate per day in fiscal year 2022.1Bureau of Prisons (BOP). Federal Prison System Per Capita Costs FY 2022 Summary State contracts have historically run at similar structures, with adjusted rates roughly between $38 and $58 per day depending on the state and security level.2Office of Justice Programs. Survey of Private Prison Rates by State
Under those contracts, the private operator handles the day-to-day work: housing, security, food service, and basic healthcare. Profit is the gap between what the government pays and what the facility actually spends. That gap widens when the company runs leaner staffing, pays lower wages, or cuts training hours.
Two companies dominate the market: CoreCivic and The GEO Group. GEO Group alone reported $2.6 billion in total revenue for 2025 and projected $2.9 to $3.1 billion for 2026.3The GEO Group. The GEO Group Reports Fourth Quarter and Full Year 2025 Results Both are publicly traded, with shareholders expecting returns.
Occupancy Guarantees
One of the most consequential features of these contracts is the occupancy guarantee, sometimes called a lockup quota or bed guarantee. It requires the government to keep a certain share of beds filled or pay for the empty ones anyway. A review of 62 contracts found that 65% contained such a clause, typically requiring between 80% and 100% occupancy. The most common threshold was 90%, and some jurisdictions committed to 95% or higher.
The effect is practical. When sentencing reforms or declining crime shrink the prison population, the government still pays for beds it does not need. The company gets predictable revenue regardless of whether public safety actually calls for that level of confinement.
Who Ends Up in Private Facilities
Private prisons don’t take everyone. Most contracts specify minimum and medium security populations. Inmates with serious mental health conditions, high-violence histories, or complex medical needs usually stay in government-run facilities. That selection matters for any cost comparison: private prisons look cheaper partly because they house a less expensive population.
The share of a state’s prison population held in private facilities varies widely, from zero in roughly half the states to nearly half in a few. Some states have banned private prisons outright. Others have expanded their use, particularly for immigration-related detention.
Immigration Detention Is the Largest Growth Area
Criminal incarceration draws most of the attention, but immigration detention has become the fastest-growing segment of the industry. An estimated 90% of people in Immigration and Customs Enforcement custody are held in privately operated facilities.
The legal context is different. Immigration detention is classified as civil rather than criminal confinement, which means the constitutional protections that apply inside criminal prisons don’t automatically extend to detainees. ICE detention standards are not codified into law. They are negotiated individually in each contract, so conditions vary widely from one facility to the next. Where criminal prisons must comply with federal laws governing sexual violence prevention, religious access, and disability accommodations, ICE facilities often operate under weaker guidelines that are harder to enforce.
The financial incentive is identical to a criminal prison contract. The oversight is substantially weaker.
How Private and Public Prisons Compare
Staffing and Turnover
Public correctional facilities employ civil service staff with standardized pay, pensions, and training requirements. Private facilities hire their own employees at wages and benefits the company sets. A federal study found that private prisons averaged 6.7 inmates per correctional officer, compared with 5.6 in public facilities. Total staff-to-inmate ratios showed a similar gap: 3.7 to 1 in private facilities versus 3.1 to 1 in public ones.4United States Courts. Private and Public Sector Prisons – A Comparison of Select Characteristics
Turnover is more striking. The same study found a 43% annual correctional officer turnover rate at private prisons, nearly three times the 15% rate at public facilities. About 71% of departing private prison staff resigned, compared with 63% at public ones. Fewer than 1% of private prison staff left through retirement, versus 15% in the public sector.4United States Courts. Private and Public Sector Prisons – A Comparison of Select Characteristics
Safety and Recidivism
A study using National Inmate Survey data found that people in private jails perceived the facilities as less safe than public ones. They reported more gang activity, more theft, and a widespread sense that the facility was understaffed. Respondents in private jails were also less likely to say officers intervened quickly to end fights.5Office of Justice Programs. Privatized Jails: Comparing Individuals Safety in Private and Public Jails
On recidivism, a Minnesota study compared matched groups of 1,766 inmates released from private and public facilities between 2007 and 2009. Across all 20 statistical models, people who had served time in private prisons showed a higher risk of reoffending, with the difference reaching statistical significance in 8 of them.6Office of Justice Programs. Effects of Private Prison Confinement on Offender Recidivism: Evidence From Minnesota Earlier GAO research found no clear quality advantage either way when comparing private and public operations.7United States General Accounting Office. GGD-96-158 Private and Public Prisons: Studies Comparing Operational Costs and/or Quality of Service
Phone Calls, Commissary, and Other Revenue
The per-diem rate isn’t the only money moving through a private prison. Phone service, commissary sales, and money transfer fees generate additional revenue, and phone providers have historically paid commissions back to the facility in exchange for exclusive contracts. The Martha Wright-Reed Just and Reasonable Communications Act, signed into law in January 2023, directed the FCC to set rate caps on both interstate and intrastate calls from correctional facilities.
As of April 6, 2026, the FCC’s interim rate caps limit audio calls to $0.09 per minute in prisons. Jails with fewer than 50 inmates face a cap of $0.17 per minute, while large jails are capped at $0.08. Providers may add up to $0.02 per minute to cover facility costs.8Federal Register. Incarcerated Peoples Communication Services; Implementation of the Martha Wright-Reed Act; Rates for Interstate Inmate Calling Services Those caps are a significant reduction from pre-regulation rates.
Oversight and Suing a Private Prison
Oversight of private prisons runs mainly through the contract. State corrections departments or the Federal Bureau of Prisons monitor compliance through inspections and audits.9Office of Justice Programs. Governments Management of Private Prisons Private prisons are generally exempt from the Freedom of Information Act, so the companies themselves are not directly subject to FOIA disclosure. FOIA requests about federal inmates in private facilities go to the Bureau of Prisons instead.10Department of Justice. HR 1889 Private Prison Information Act of 2007 The Civil Rights of Institutionalized Persons Act, which authorizes the Department of Justice to investigate conditions in correctional facilities, defines covered institutions as those owned, operated, or managed by a state or its subdivisions and carves out certain privately owned facilities.11Office of the Law Revision Counsel. 42 U.S. Code 1997e – Suits by Prisoners
Inmates can sue under 42 U.S.C. ยง 1983, the federal civil rights statute allowing damages when someone acting under government authority violates constitutional rights.12Office of the Law Revision Counsel. 42 USC 1983 – Civil Action for Deprivation of Rights The rules work differently depending on who the defendant is. In Richardson v. McKnight (1997), the Supreme Court held that employees of private prison companies cannot invoke qualified immunity against Section 1983 suits, a shield that public correctional officers can use unless they violated clearly established rights.13Justia Law. Richardson v McKnight, 521 U.S. 399 (1997)
For federal prisoners, though, Minneci v. Pollard (2012) ruled that inmates in private prisons cannot bring constitutional claims directly under the Bivens doctrine. They must pursue state tort remedies for injuries like inadequate medical care instead.14Justia Law. Minneci v Pollard, 565 U.S. 118 (2012) State tort claims carry different procedural hurdles and damage limits than federal constitutional claims. Private prison guards lack qualified immunity, but inmates suing them may be stuck with weaker legal remedies.
Federal Policy Keeps Flipping
In January 2021, President Biden signed Executive Order 14006, directing the Department of Justice to stop renewing contracts with privately operated criminal detention facilities. The Bureau of Prisons eventually closed all of its for-profit prison contracts, and as of March 2026 the BOP reported zero federal inmates in privately managed facilities.15Bureau of Prisons (BOP). Population Statistics
On January 20, 2025, President Trump revoked Executive Order 14006 as part of a broad rescission of prior executive actions, restoring the DOJ’s authority to contract with private prison operators.16The White House. Initial Rescissions of Harmful Executive Orders and Actions Whether the BOP will re-enter those contracts remains to be seen, but the legal authority is back in place.
Neither administration’s executive order covered ICE detention. Immigration detention has stayed privately operated throughout both policy swings, which is why private prison companies have oriented more of their business toward immigration enforcement. GEO Group’s projected revenue increase for 2026 tracks that shift.3The GEO Group. The GEO Group Reports Fourth Quarter and Full Year 2025 Results
Political Spending
Private prison companies are active political participants. CoreCivic spent nearly $2 million on federal lobbying in 2025, up from $1.8 million the year before. GEO Group spent about $1.4 million lobbying federal lawmakers on issues including appropriations and immigration enforcement. Both companies contributed $500,000 to President Trump’s 2025 inauguration. The spending is legal and publicly disclosed. It also reflects an industry whose revenue depends on how many people are incarcerated and detained.