For sure this is happening on 3rd world country prison. Here in PH even on prison they have a drug den and private house with complete amenities for drug lord that still can operate their drug business even inside the prison.
It can happen in any part of the world, it will be wrong if you relate it to the 3rd world countries.
OP is totally right, gambling can take place anywhere, if not everywhere, as long as the necessary materials are available to them. Prison is like another home, the VIPs there will be treated fairly, with access to most of the activities they enjoy doing when they were at their homes. Including video games, women etc.