Most prisons are operated by government agencies. However, some private companies have seen the potential for profit in owning and operating private prison facilities under contract to local governments.

In the United States, private prisons are paid a per-prisoner, per-day rate by the contracting government agency. Private prison executive claim that when governments contract with private prisons, the taxpayers save money, but this claim has never been proven.

The private prison industry is controversial. To provide prison services and make a profit, the private prisons find programs to cut. These can include medical programs, training programs for correctional officers, food quality, and so on. Many have argued that the cuts in these programs are inhumane. Some have correlated the rise in prison violence, escapes and both prisoner and guard deaths in private prisons to a lack of adequate training for the correctional officers.

The private prison industry counter-argues that excessive regulations and government inefficiency are to blame for the massive costs of public prisons, and that private entities can provide the same services at a lower cost. In some isolated cases this has been true. However, the private prison industry in America has neither been profitable nor safe.

One major private prison company is Corrections Corporation of America. Wackenhut Corrections Corporation (which briefly operated as WWC) is now named GEO Group.