A Crank Palace is a holding location for Cranks. Most major cities had such a place for citizens who contracted the Flare.
The only Crank Palace featured in the series was the one outside of Denver. Immune people were paid highly to run this facility, acting as guards to keep order and prevent escape. When Newt was sent there after being discovered in the berg, Thomas, Minho, Brenda, and Jorge came to find him. The two security guards they talked to accepted their bribe and led them to Newt.
The Denver Crank Palace was set up like a town, with huts built along streets surrounding the open center of the compound. Cranks at varying stages of the Flare roamed freely, and the guards were nervous. There seemed to have been some attempt made to give the inmates entertainment, as Thomas and the others found Newt in a dilapidated bowling alley.
Fights often broke out among Cranks, and the guards did little to stop them. They were chased by an angry mob of Cranks while Thomas was there. It did not help that in the weeks leading up to the events of The Death Cure, bounty hunters had been kidnapping Immunes, selling them to WICKED for a new round of Trials. This led to so few guards being on duty that a large group of Cranks was able to overpower them and break out, aiding in Denver's downfall.