There's a great article about prison radios and MP3 players, and a particular model of Sony FM receiver that is like 30 years old but incredibly popular in prisons due to battery life or something... Gotta track that down.
Devices need to be approved for prison use. 3G but no autoupgrades, or appstore but no external communication, sometimes the cover must be transparent. Probably no competition in that sector, therefore they can charge whatever they decide.
Hence it's not "cheap e-book reader, top of the range tablet", but "expensive e-book device, bottom of the range reader", if you follow me.
I am told that in high security prisons, you can own music CDs. BUT you must buy them from the prison's approved seller (assuming that the CD you want is in their catalog). This is apparently to stop data being smuggled in/out of the prison. I doubt they will be allowing ebooks and ebook readers anytime soon.
This company aims to provide modified iPads to prisons and jails. SF county has signed onto the scheme: http://apdscorporate.com/
This company already has a heavily locked-down tablet and provides a way for relatives to buy music for or send email or donate money to prisoners: http://blog.jpay.com/mini-tablet-for-prisons-now-available-i...
Victims' rights groups are not very happy about this: http://www.usatoday.com/story/news/nation/2013/08/17/tablets...
EDIT: I mentioned a scheme in Ohio, but associated it with the wrong link. That state uses Jpay, not the APDS system.