A racket is an illegal business, usually run as part of organized crime. Engaging in a racket is called racketeering.

Several forms of racket exist. The best-known is the protection racket, in which criminals demand money from businesses in exchange for the service of "protection" against crimes that the racketeers themselves instigate if unpaid (see extortion). A second example is the numbers racket, a form of illegal lottery.

Traditionally, the word racket is used to describe a business (or syndicate) that is based on the example of the protection racket and indicates a belief that it is engaged in the sale of a solution to a problem that the institution itself creates or perpetuates, with the specific intent to engender continual patronage. One example is computer spyware that pretends to be detecting infections and offers to download a cleaning utility for a fee, being itself distributed by the maker of the cleaning utility.

In the example of a protection racket, the racketeer informs a store-owner that a substantial monthly fee will be required in exchange for protection. The concurrent "protection" provided takes the form of the absence of damage inflicted upon the store or its employees by the racket itself.