It happens if corruption in the country is blatant and if the guards of prison are getting such a low payment for their work so they need to rely on criminal activities to make it to the end of the month, or even improve the economical and social situation of their families.
This is something I have also witnessed here in my country. Guards are not only willing to provide with the resources for inmates to gamble within the prison, but also they would charge for anything the inmates want: fast food, air conditioning in their cells, mineral water, prostitutes, high definition televisions in their cells and whatever the drug lord in the prison allows them to sell to common criminals.
Seeing the scope of the problem I could even argue that gambling in the least of the problems in our national prison centers.

Also, even though it is kind of off topic it is also worth mentioning that many of those people who are locked up are yet waiting for their turn to get a trial, so here we have a system of getting locked up in prison first and then get a trial later, mixing people who could be innocent with literal criminals who have been found to be guilty.

Being thrown in prison in this country can be a literal nightmare.