A protection racket is a scheme whereby a group provides protection to businesses or other groups through violence outside the sanction of the law. In other words, it is a racket that sells security, traditionally physical security but now also computer 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, that distinction is moot in reality, as 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.