Protection racket

A protection racket is a scheme whereby a group provides protection to businesses or other groups through violence outside the sanction of the law. 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 where the police and judiciary cannot be counted on to provide legal protection, either because of incompetence (as in weak or failed states) or illegality (black markets).

Protection rackets are often indistinguishable in practice from extortion rackets since, for the latter, there will be an implied threat that the racketeers themselves may attack the business if it fails to pay for their protection. In an extortion racket, the racketeers agree simply to not attack a business. In a protection racket the criminals agree to defend a business from any attack. Conversely, extortion racketeers will have to defend their clients if threatened by a rival gang to avoid the client transferring their allegiance.

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.

Protection racketeers operate mostly in the black market, providing buyers and sellers the security they need for smooth transactions.

Two elements distinguish racketeers from legal security firms. First is their willingness to deploy violent retribution that falls outside the limits the law normally extends to civilian security firms, going as far as premeditated murder. The other element is that racketeers are willing to involve themselves in illegal markets.

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. These territories may be geographical, or they may be a certain type of business or form of transaction.

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Wikipedia