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A protection racket is a scheme where a potentially hazardous group guarantees protection from violence, looting, raiding, piracy, and other such threats posed by them outside the sanction of the law, to polities, businesses, individuals, or other entities and groups that pay to them in cash or kind. In other words, it is a racket that sells security, traditionally physical security. Through the credible threat of violence, the racketeers deter people from swindling, robbing, injuring, sabotaging or otherwise harming their clients. Protection rackets tend to appear in markets in which the police and judiciary cannot be counted on to provide legal protection, because of incompetence (as in weak or failed states) or illegality (black markets).
Protection rackets are indistinguishable in practice from extortion rackets and distinguishable from private security by some degree of implied threat that the racketeers themselves may attack the business if it fails to pay for their protection. A distinction is possible between a "pure" extortion racket in which the racketeers might agree only not to attack a business and a broader protection racket offering some real private security in addition to such extortion. The criminals might agree to defend a business from any attack by either themselves or third parties (other criminal gangs). However, in reality, that distinction is doubtful, because extortion racketeers may have to defend their clients against rival gangs to maintain their profits. By corollary, criminal gangs may have to maintain control of territories (turfs), as local businesses may collapse if forced to pay for protection from too many rackets, which then hurts all parties involved.
Certain scholars, such as Diego Gambetta, classify criminal organizations engaged in protection racketeering as "mafia", as the racket is popular with both the Sicilian Mafia and Italian-American Mafia.
A protection racket is an operation where criminals provide protection to persons and properties, settle disputes and enforce contracts in markets where the police and judicial system cannot be relied upon.
Diego Gambetta's The Sicilian Mafia (1996) and Federico Varese's The Russian Mafia (2001) define the mafia as a type of organized crime group that specializes in the provision of private protection.
Protection racketeers or mafia groups operate mostly in the black market, providing buyers and sellers the security they need for smooth transactions; but empirical data collected by Gambetta and Varese suggests that mafia groups are able to offer private protection to corporations and individuals in legal markets when the state fails to offer sufficient and efficient protection to the people in need. Two elements distinguish racketeers from legal security firms. The first element is their willingness to deploy violent forms of retribution (going as far as murder) that fall outside the limits the law normally extends to civilian security firms. The other element is that racketeers are willing to involve themselves in illegal markets.
Recent studies show that mafia groups or gangs are not the only form of protection racket or extra-legal protector, and another important form of protection racket is corrupt networks consisting of public officials, especially those from criminal justice agencies. For example, Wang's The Chinese Mafia (2017) examines protection rackets in China and suggests two types of extra-legal protectors, namely the Black Mafia (local gangs) and the Red Mafia (networks of corrupt government officials). Wang's narrative suggests that local gangs are quasi-law enforcers in both legal and illegal markets, and corrupt public officials are extra-legal protectors, safeguarding local gangs, protecting illegal entrepreneurs in the criminal underworld, offering protection to businesspeople, and selling public appointments to buyers.
A protection racketeer cannot tolerate competition within his sphere of influence from another racketeer. If a dispute erupted between two clients (e.g. businessmen competing for a construction contract) who are protected by rival racketeers, the two racketeers would have to fight each other to win the dispute for their respective clients. The outcomes of such fights can be unpredictable, and neither racketeer would be able to guarantee a victory for his client. This would make their protection unreliable and of little value; their clients would likely dismiss them and settle the dispute by other means. Therefore, racketeers negotiate territories in which they can monopolize the use of violence in settling disputes.:68–71 These territories may be geographical, or they may be a certain type of business or form of transaction.
Providing genuine protection
Sometimes racketeers will warn other criminals that the client is under their protection and that they will punish anyone who harms the client. Services that the racketeers may offer may include the recovery of stolen property or punishing vandals. The racketeers may even advance the interests of the client by forcing out (or otherwise hindering or intimidating) unprotected competitors.
Protection from theft and vandalism is one service the racketeer may offer. For instance, in Sicily, mafiosi know all the thieves and fences in their territory, and can track down stolen goods and punish thieves who attack their clients.
Protection racketeers establish what they hope will be indefinitely long bonds with their clients. This allows the racketeers to publicly declare a client to be under their protection. Thus, thieves and other predators will have little confusion as to who is and is not protected.
Protection racketeers are not necessarily criminals. In A Short History of Progress, Ronald Wright notes on p. 49, "The warrior caste, supposedly society's protectors, often become protection racketeers. In times of war or crisis, power is easily stolen from the many by the few on a promise of security. The more elusive or imaginary the foe, the better for manufacturing consent."
- During the late medieval and early modern era in the Scottish Marches, local farmers would often need to make payments to the Border Reivers as a form of protection money to ensure they were not attacked. These agreements were called "Black mal", where "mal" was an Old Norse word meaning agreement. The word blackmail entered the English language in 1530 as a result, but the word's meaning has changed since.
- In Melbourne, Australia, Alphonse Gangitano ran a protection racket along the famous Lygon Street during the 1990s.
- In Sicily, Italy, officials say that 80% of businesses in the city of Palermo pay pizzo, or protection money, to the Sicilian Mafia.
- In Ciudad Juárez, Mexico, when the Mexican Drug War escalated in 2008, criminal groups like the Juárez Cartel saw their financial backbone threatened and began asking for protection money from businesses ranging from convenience stores to clubs and restaurants with the threat of burning down the business, kidnapping the owners or killing everyone inside with assault rifles.
- In the early history of post-Soviet Russia, law enforcement was too underfunded and poorly trained to protect businesses and enforce contracts. Most businesses had to join a protection racket (known as a krysha, the Russian word for "roof") run by local gangsters.
- In the United Kingdom in the 1950s and 60s the Kray twins ran protection rackets in the East End of London.
Government protection rackets
Government officials may demand bribes to look the other way or extort something of value from citizens or corporations in the form of a kickback. It need not always be money. A lucrative job after leaving office may have been in exchange for protection offered when in office. Payment may also show up indirectly in the form of a campaign contribution. Stopping governments agencies as a whole, and buying protection in the government is called regulatory capture.
- Abusive power and control
- Bribe Payers Index
- Bid rigging
- Conflict of interest
- Financial abuse
- Foreign Corrupt Practices Act
- Influence peddling
- Jury tampering
- Match fixing
- Money trail - Money loop
- Organized crime
- Pay to play
- Pizzo (extortion)
- Political corruption
- Principal–agent problem
- Racket (crime)
- Revolutionary tax
- Taxation as theft
- Taxation of the Jews in Europe
- Transparency International
- Triad (organized crime)
- Gambetta, Diego (1996). The Sicilian Mafia: The Business of Private Protection. Harvard University Press. ISBN 0-674-80742-1.
- Varese, Federico (2001). The Russian Mafia: Private Protection in a New Market Economy. Oxford University Press. ISBN 0-19-829736-X.
- Wang, Peng (2013). "The rise of the Red Mafia in China: a case study of organised crime and corruption in Chongqing". Trends in Organized Crime. 16 (1): 49–73. doi:10.1007/s12117-012-9179-8.
- Wang, Peng (2017). The Chinese Mafia: Organized Crime, Corruption, and Extra-Legal Protection. Oxford, England: Oxford University Press. ISBN 978-0-19-875840-2.
- Barbara Mikkelson (April 16, 2012). "Etymology of blackmail". Snopes. Retrieved April 23, 2012.
- "Couple plans 'mafia-free' wedding". BBC News. 1 April 2009. Retrieved 11 February 2015.
- El Diario de Juarez - Suben 57% denuncias por extorsiones 10 August 2009
- The Washington Post Banditry Threatens the New Russia 2 May 1997
- Misha Glenny (2008). McMafia. Vintage. ISBN 978-0-09-948125-6
- Andrew Cockburn (October 2000). "GODFATHER OF THE KREMLIN: Boris Berezovsky and the Looting of Russia. - Review - book review". Washington Monthly.
- Metropolitan Police Service - The Kray twins - jailed in 1969 Archived 2013-02-23 at the Wayback Machine