History of Private Prisons: From Convict Lease to Today

The history of private prisons in the United States runs from antebellum labor contracts through the brutal convict lease system that followed the Civil War, a mid-twentieth-century pause, and the rise of a modern for-profit corrections industry beginning in the 1980s that today holds tens of thousands of people, most of them in immigration detention. Race, profit, and sentencing policy shaped every phase.

Antebellum Labor Contracts

Selling convict labor to private interests was already common in northern states decades before the Civil War. In the typical arrangement, the state kept physical custody of prisoners while contracting their labor to private manufacturers who ran operations inside the prison walls.¹ Illinois went further, leasing its entire prison population, labor and management alike, to a single contractor named Samuel A. Buckmaster for twenty years.

Southern states followed a similar path. Louisiana privatized its penitentiary in 1844, nine years after it opened, and the firm McHatton, Pratt, and Ward put inmates to work manufacturing cheap clothing for enslaved people.² Texas opened its first penitentiary around the same time, and within five years it had become the state’s largest factory and a primary supplier of textiles west of the Mississippi.

The scale was not small. A federal labor study covering 1885 and 1886 found that prisoners across the country produced goods valued at nearly $29 million. Eighty-five percent of that production happened outside the South, which cuts against any assumption that forced penal labor was a purely Southern institution.¹

The Convict Lease System After the Civil War

After the war, prison privatization took a much deadlier form. The Thirteenth Amendment, ratified in 1865, abolished slavery and involuntary servitude “except as a punishment for crime whereof the party shall have been duly convicted.”³ Southern legislatures moved quickly to exploit that exception. They passed Black Codes criminalizing offenses such as vagrancy, loitering, breaking curfew, and lacking proof of employment, designed to funnel formerly enslaved Black people into the criminal justice system.⁴ For the first time in U.S. history, state penal systems held more Black prisoners than white.

Under the convict lease system, states, counties, and local governments leased prisoners to private railroads, mines, plantations, and lumber operations. Prisoners received no pay. Conditions were often lethal. Annual mortality rates in Southern lease camps ranged from 16 to 25 percent.² In Louisiana alone, roughly 3,000 convicts died between 1870 and 1901 under the lease of a single operator, Samuel Lawrence James. Nathan Bedford Forrest at one point held control of all of Mississippi’s convicts, and U.S. Steel used thousands of prisoners in its coal mines.

Georgia in Practice

Georgia’s experience shows how the system worked on the ground. On May 11, 1868, the provisional governor awarded the state’s first convict lease to William A. Fort of the Georgia and Alabama Railroad, who received 100 African American prisoners for one year for $2,500. Sixteen of those prisoners died during the year.⁵ By the mid-1870s, the state was generating more than $35,000 annually from convict labor, and an 1876 law formalized twenty-year leases with three companies paying a combined $500,000. Reports to the governor documented prisoners being overworked, brutally whipped, and killed despite nominal humane-treatment requirements.

How the System Ended

The lease system generated enormous revenue. Between 1880 and 1904, Alabama’s lease profits accounted for ten percent of the state’s total budget.² Opposition grew nonetheless. Organized labor and manufacturers who could not compete with coerced prison labor pressured states to abolish the practice. In Georgia, Governor Hoke Smith signed legislation outlawing convict leasing in 1908, replacing it with chain gangs that persisted until the 1940s.⁵ Across the South, the system faded during the Great Depression and was largely finished by World War II.⁴ By 1910, most states had already prohibited the hiring out of prison labor to private interests and the sale of prison-made goods on the open market.¹

The Modern Industry Emerges in the 1980s

For most of the twentieth century, running prisons was a government function. That changed in the 1980s. The Reagan administration’s War on Drugs, mandatory minimum sentencing, and more frequent use of life sentences pushed the U.S. prison population into an unprecedented surge.⁶ Over the following decades, the national prison population would grow by more than 400 percent.⁷

In 1983, Thomas Beasley, Doctor R. Crants, and T. Don Hutto founded the Corrections Corporation of America, now known as CoreCivic, as the first modern private corrections company. One of its founders described the business philosophy plainly: “You just sell it like you were selling cars, or real estate, or hamburgers.”⁸ In 1984, CCA opened its first facility in Houston, a motel hastily remodeled to hold immigration detainees. The company went public in 1986, arguing that its facility designs and electronic surveillance let it run larger prisons with less staff than the public sector could.

The Wackenhut Corrections Corporation, later renamed the GEO Group, was established in 1984 as a division of the Wackenhut Corporation, led by George C. Zoley. It won its first federal contract in 1987 for the Aurora Processing Center and went public on the NASDAQ in 1994.⁹ Management and Training Corporation, the third-largest operator, was incorporated in 1980 and later moved into corrections after initially running U.S. Department of Labor Job Corps contracts.¹⁰

The 1990s Boom and ALEC’s Model Legislation

The 1990s were the industry’s growth decade, and the American Legislative Exchange Council, a nonprofit that brings together state legislators and corporate members to draft model legislation, played a central role. CCA and the GEO Group’s predecessor were prominent ALEC backers, and a CCA official served as co-chair of ALEC’s Criminal Justice Task Force, which drafted the model bills state legislatures introduced.¹¹ CCA paid $2,000 annually for a seat on that task force, on top of general membership dues ranging from $5,000 to $50,000.

The key model bills were truth-in-sentencing laws requiring inmates to serve most or all of their time without parole, three-strikes laws mandating 25 years to life for repeat offenders, and mandatory minimum sentences. By 1995, the truth-in-sentencing model had been enacted in 25 states.¹² ALEC eventually claimed its truth-in-sentencing and three-strikes bills had been enacted in at least half the states.¹¹ These laws contributed to a growth of roughly half a million inmates in the U.S. prison population during the 1990s, which created demand for more private prison beds.

The pipeline was visible in individual states. In Pennsylvania, after ALEC unveiled a ten-point legislative agenda in January 1994, a special session in 1995 approved 30 crime bills, many based on ALEC models. Pennsylvania’s corrections budget grew 1,200 percent over two decades. In Florida, CCA and the GEO Group employed more than 30 lobbyists. Nationally, the industry employed 303 lobbyists across 37 states as of 2017.¹³

The numbers show what followed. Between 1990 and 2000, the total number of prisoners under federal or state jurisdiction nearly doubled, from 771,243 to 1,381,892. The incarceration rate per 100,000 residents rose from 292 to 478. States added more than 528,000 prison beds. By the end of 2000, privately operated facilities housed 87,369 inmates, 5.8 percent of state inmates and 10.7 percent of federal inmates, across 264 facilities.¹⁴ Some states became heavily dependent on the industry: New Mexico held 40 percent of its inmates in private facilities, Alaska 33 percent, and Oklahoma 30 percent.

Prison Companies as Real Estate

As the industry grew, its leading companies pursued financial structures that blurred the line between corrections and real estate. In 1997, CCA formed Prison Realty Trust, a real estate investment trust that raised over $400 million in an initial public offering to purchase nine CCA facilities.¹⁵ The experiment collapsed by 2000 after speculative construction projects prevented the company from meeting its dividend obligations. The stock dropped below $1, and the company eventually settled shareholder lawsuits for roughly $104 million.

Both companies tried again more than a decade later. GEO Group converted to a REIT in 2012 and CoreCivic followed in 2013, after the IRS issued private letter rulings clearing both conversions. As REITs, the companies were exempt from corporate-level taxation as long as they distributed at least 90 percent of income to shareholders and derived most of their revenue from real estate. In 2017 alone, GEO Group received $43.6 million in tax benefits from the structure.¹⁵ Both companies eventually abandoned it. CoreCivic reverted to a taxable C-corporation effective January 1, 2021.¹⁶ GEO Group also terminated its REIT status in 2021 and reorganized as a taxable corporation, a change that followed divestments by major U.S. banks that had faced public pressure over their relationships with the industry.¹⁷

Immigration Detention Becomes the Growth Engine

While the criminal corrections market plateaued in the 2000s as some states began reducing prison populations, immigration detention became the industry’s most reliable revenue source. The shift began with the 1988 Anti-Drug Abuse Act and accelerated after the 1996 passage of the Antiterrorism and Effective Death Penalty Act and the Illegal Immigration Reform and Immigrant Responsibility Act, both of which expanded mandatory detention for noncitizens.¹⁸ The number of immigrants passing through ICE detention facilities rose from 209,000 in 2001 to roughly 353,000 in fiscal year 2016.

By 2016, nearly three-quarters of the average daily immigration detainee population was held in privately operated facilities, and the industry managed nine of the ten largest ICE detention centers.¹⁸ Three companies (CoreCivic, GEO Group, and Management and Training Corporation) controlled more than 96 percent of all private prison beds.¹⁹

Congress reinforced the dependency. Starting in fiscal year 2010, appropriations bills tied DHS funding to a specific immigration bed quota, which reached 34,000 beds per day by 2012.¹⁸ Between 2008 and 2014, CoreCivic spent $10.6 million on immigration-related lobbying, with nearly all of it targeted at the House Appropriations Committee’s Homeland Security Subcommittee. During the 2016 election cycle, GEO Group donated more than $1.2 million to federal candidates and outside groups, and both GEO and CoreCivic donated $250,000 each to the 2017 Trump inaugural committee.

ICE contracts now dominate the industry’s finances. As of 2023, ICE accounted for 30 percent of CoreCivic’s revenue and 43 percent of GEO Group’s revenue. More than 90 percent of people in immigration detention were held in facilities owned or managed by for-profit companies as of July 2023.²⁰

Violence, Abuse, and the Cost Savings Claim

A 2016 Department of Justice Office of the Inspector General report provided the most comprehensive federal comparison to date, analyzing 14 contract prisons and 14 comparable Bureau of Prisons facilities between fiscal years 2011 and 2014. The OIG found that contract prisons had higher per capita rates of contraband (including eight times as many confiscated cell phones), inmate-on-inmate assaults, inmate-on-staff assaults, uses of force, and lockdowns, with nine times as many lockdowns as bureau-run facilities.²¹²² The report also found that the BOP’s own monitoring was inadequate, with checklists that failed to address basic medical and correctional services.

Landmark Scandals

Individual facilities generated scandals that shaped the national debate. At the Walnut Grove Youth Correctional Facility in Mississippi, a DOJ investigation announced in 2010 and concluded in 2012 found “systematic, egregious, and dangerous practices” at a facility housing youth and young adults aged 13 to 22. Staff sexual misconduct was described as “among the worst that we have seen in any facility anywhere in the nation.” Investigators also documented excessive force by guards, gang affiliations within the correctional staff, and severe deficiencies in medical and mental health care.²³ The facility, then operated by the GEO Group, became the subject of a class-action lawsuit resulting in a federal consent decree that prohibited housing children in private prisons in Mississippi and banned solitary confinement for youth.²⁴ A later FBI investigation revealed that Mississippi corrections commissioner Chris Epps had received over $1 million in bribes related to private prison contracts.²⁵

At the East Mississippi Correctional Facility, operated by Management and Training Corporation, a federal civil rights trial found that gang members were permitted to beat other prisoners, a mentally ill inmate on suicide watch managed to hang himself, and guards took nearly 30 minutes to respond to an assault caught on surveillance footage.²⁶

The most notorious scandal was the “kids for cash” scheme in Luzerne County, Pennsylvania. Judges Mark Ciavarella and Michael Conahan accepted approximately $2.8 million in kickbacks from the builder and co-owner of two for-profit juvenile detention facilities, PA Child Care and Western PA Child Care. Ciavarella shut down a county-run juvenile center to funnel youth into the private facilities, enforcing a zero-tolerance policy that sent children as young as eight to detention for minor infractions, often without legal representation. The Pennsylvania Supreme Court vacated roughly 4,000 juvenile convictions involving more than 2,300 children. Ciavarella was convicted on 12 federal counts and sentenced to 28 years in prison; Conahan pleaded guilty to racketeering conspiracy and received a 17-year sentence.²⁷ In 2022, a federal judge ordered the two former judges to pay $206 million in damages to victims.²⁸

Do Private Prisons Actually Save Money?

The industry has long argued they do, but the research is inconclusive. A 1996 General Accounting Office review of five comparative studies found “little generalizable guidance” and concluded that the research did not offer substantial evidence of savings.²⁹ The most rigorous study the GAO reviewed, from Tennessee, found “very little difference” in average daily costs: $35.39 per inmate at a private facility versus $34.90 and $35.45 at two public ones. A Texas study claiming 14 to 15 percent savings relied on comparisons to hypothetical rather than actual public facilities.

Where apparent savings did exist, the data consistently showed how they were achieved: by paying staff less and employing fewer of them. One study using 1998 data found private prisons paid new officers $15,919 to $19,103, compared to $21,246 to $34,004 in public facilities. Correctional officer turnover in the private sector was 43 percent, versus 15 percent in public prisons. Private facilities also reported roughly double the rate of inmate assaults.³⁰

Federal Policy Whiplash

The 2016 OIG report prompted the first federal move against private prisons. On August 18, 2016, Deputy Attorney General Sally Yates issued a memorandum directing the Bureau of Prisons to reduce and ultimately end its use of privately operated facilities as contracts expired.³¹ The federal prison population had declined from a 2013 peak of roughly 220,000 to about 195,000, and private facilities held approximately 15 percent of federal inmates, nearly 30,000 people. The BOP began reducing contracts, including declining to renew a 1,200-bed contract in Cibola, New Mexico.³²

The reversal came quickly. On February 23, 2017, Attorney General Jeff Sessions issued a one-paragraph memo rescinding the Yates directive. A Freedom of Information Act lawsuit seeking the evidentiary basis for the reversal turned up no research or reports, only news clips and emails.³³ Within weeks, the GEO Group received a 10-year, $110 million federal contract to build a 1,000-bed immigration detention center in Texas. The company had donated $100,000 to a pro-Trump super PAC in August 2016 and another $125,000 one week before the November election.

President Biden tried again. On January 26, 2021, he signed Executive Order 14006, directing the Attorney General not to renew DOJ contracts with privately operated criminal detention facilities.³⁴ The order had significant limits. It applied only to the DOJ (the Bureau of Prisons and the U.S. Marshals Service), not to ICE, which operates under the Department of Homeland Security and holds the vast majority of privately detained people.³⁵ It also did not touch state prison systems. Implementation was uneven even within its scope: the BOP complied and ended its use of private prisons by November 30, 2022, but the U.S. Marshals Service continued holding nearly one-third of its detention population, about 20,000 people, in for-profit facilities through waivers and pass-through agreements with local governments.³⁶

On January 20, 2025, President Trump revoked Executive Order 14006, allowing the DOJ and BOP to resume contracting with private prison companies.²⁰ The reversal does not affect ICE contracts, which were never covered by Biden’s directive.

Where Things Stand Today

As of 2023, 28 states used privately run prison facilities, housing 7.1 percent of the total prisoner population nationwide.³⁷ The footprint varies widely by state. Montana held 48.7 percent of its prisoners in private facilities, followed by New Mexico (29.2 percent), Arizona (28.5 percent), Tennessee (27.2 percent), and Wyoming (24.8 percent). Twenty-two states, including California, New York, and Massachusetts, did not use private prison facilities at all.

Several states have enacted formal bans. Illinois prohibited private prisons in 1990. New York banned private prison operations in 2007, though the law does not prevent companies from contracting with ICE to detain immigrants.³⁸ California and Washington enacted bans in 2019 and 2021, respectively, though in 2022 the Ninth Circuit Court of Appeals ruled in GEO Group, Inc. v. Newsom that federal immigration law preempts California’s ban on private immigration detention.³⁹ Minnesota passed a ban in 2023, Colorado and New Jersey have enacted restrictions, and New Mexico passed legislation in 2026.

At the federal level, there were zero inmates in private federal institutions as of March 2026, a residual effect of the BOP’s compliance with Biden’s executive order.³⁷ Whether that number rises after Trump’s revocation of the order remains to be seen. In May 2025, Representative Bonnie Watson Coleman introduced the End For-Profit Prisons Act, which would require all core correctional services for the Bureau of Prisons and U.S. Marshals Service to be performed by government employees within six years.⁴⁰ The bill was referred to the House Judiciary Committee.

The Thirteenth Amendment Exception

The constitutional provision that made the convict lease system possible, the Thirteenth Amendment’s exception allowing involuntary servitude “as a punishment for crime,” remains in effect at the federal level and continues to shape how prison labor operates today. A 2010 federal court ruling held that prisoners have no enforceable right to be paid for their work under the Constitution.⁴ Private prison companies have used “facility work programs” paying as little as 50 cents per day, and multiple lawsuits have challenged these practices under the Trafficking Victims Protection Act. In 2021, a federal jury ordered GEO Group to pay nearly $17.3 million in back pay for violating minimum wage laws at a Washington state ICE processing center.¹⁷

A growing movement has targeted the exception clause itself. Colorado became the first state to remove the slavery exception from its constitution by popular vote in 2018. Alabama followed in 2022, and similar amendments are pending in Nevada and California.⁴¹ In February 2026, a Colorado state judge ruled that the state corrections department’s inmate work requirements violated the 2018 amendment, ordering the state to stop using threats of isolation and housing changes to compel labor.⁴² The ruling, in a class-action case filed by an incarcerated man in 2022, was the first to give the constitutional change practical legal force.

1
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2
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3
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4
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31
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36
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37
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41
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42
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