What does Garvey mean when he says, "If you go to jail, I won't bet a nickel on your future." and What punishment does Peter think Cole should recieve?

Peter thinks Cole should go to jail or receive the kind of beating given to him. Garvey knows that prison isn't going to help Cole, it will make him worse. Cole will become harder in prison and his bad habits will be reinforced. Cole will not deal with his pain but retreat further into his hate and frustration.