Green’s Dictionary of Slang

1. the period a criminal spends out of prison.

1899

J. Flynt Tramping with Tramps 17: They consider a man fairly successful if between imprisonments he gets a ‘vacation,’ as they call it, of eight or ten months.

2. (US) time spent in prison.

1928		Flynn’s Weekly 4 Feb. 436/1: Big Bill Douglas was enjoying a year’s vacation from his usual haunts up at Sing Sing at the expense of the State. To his underworld associates he was doing a short bit in the Big House, or a one time loser.
1932		F. Jennings Tramping with Tramps 212: Vacation – prison.
1949		Monteleone Criminal Sl. (rev. edn).
1969		D. Pendleton Executioner (1973) 141: An occasional short ‘vacation’ behind bars.
1971		H.E. Roberts Third Ear n.p.: vacation n. time spent in jail.