Who holds the legitimate right to punish criminals? While previous work has identified several factors that influence states’ decisions to delegate punishment duties to the private sector, it has not considered variation in the level of security required to implement the punishment. Delegating coercive power challenges commonly held assumptions about the appropriate locus of coercive power, and resistance is likely to be strongest when delegating highly secure services that require the greatest levels of physical coercion. Using data on American adult correctional facilities from 1990 to 2005, this article describes the current bifurcation of correctional contracting, wherein private contractors house increasing numbers of inmates in less secure correctional settings (e.g., low-security, community-based facilities) and public authorities retain near-monopoly control over inmates in highly secure settings (i.e., medium- and maximum-security prisons). Multinomial regression analyses reveal that states’ decisions to privatize highly secure facilities were associated with ideological and economic factors. However, the decision to privatize lower security facilities has become commonplace, and as a result has grown irrespective of state-level factors. These results suggest that handing over low-security services to the private sector has become a legitimate policy option, while privatizing the most secure services remains shrouded in illegitimacy.