Not a rare or unusual circumstance. The usual case is that the government is not on the straight bribe program as much as controlling the place through some form of blackmail while those who frequent the crackhouse become targets of various investigations as someone else who is a regular there (or running the place) is a productive confidential informant.

A highly productive confidential informant is extremely valuable to local law enforcement and that is where you will see crimes being manufactured just to keep the productive informant out of jail and on the streets. They gain high levels of credibility with law enforcement and on the street level, can carry more actual authority than those with badges because they effectively have a license to selectively break laws and call in the law, options which regular criminals do not have day to day, but will aspire to gain. It is something that regular citizens would despise if they knew about it, but rarely get privvy to.