Michael Spain, a board member of the MHA, recently claimed that there were no illegal taxis (or gypsy cabs) in New York City. According to him, what they have are "black cars" that are licensed only to take radio calls. Spain claims that New York's auction system has made cab medallions so valuable that the police immediately crack down on any cars, black or otherwise, that try to pick up flags without a proper license.
Since I haven't been in New York in over 25 years, I'll let others do the talking for me.
Answers.com defines a gypsy cab as "a taxicab that cruises for customers although it is licensed only to respond to calls." But maybe they haven't been to New York lately either.
A better source might be CitiDex New York City which has a section devoted to gypsy cabs on its main page. In an entry updated on July 3, 2009, the CitiDex has this to say about gypsy cabs:
"They are private cars that roam the city looking for fares. Gypsy cabs are run by individuals who use their own cars. In recent years, gypsy cab companies with radio dispatched drivers have begun operating. These services are illegal and you should avoid using them. The level of service is generally poor and getting into a gypsy cab can be dangerous."
And there also is this entry from a post titled "Perfectly Legal" in the blog NEW YORK HACK.
"As I waited outside the Delta terminal, there were about five or six car service drivers parked there, standing in front of the doors and soliciting people for rides to Manhattan. This, you should know, is totally illegal ... Car service drivers are, by law, allowed to respond only to radio calls ... And every time a car service driver breaks these rules, he not only breaks into our business (and therefore our incomes), he also depreciates the value of each and every medallion, making it a waste of money to buy or lease one."
The narrator then describes an argument she has with a gypsy driver where she threatens him by telling him that she belongs to the Taxi & Limousine Commission (TLC).
"He smirked and said, 'Why? You TLC?'"
"I said, 'Yes, I am. And you're lucky I'm not working right now.'"
"Of course," she says, "he didn't take me seriously at all. And why would he? The TLC certainly doesn't do much except ticket cabbies and cash in on corporate contracts ... . They don't give two shits if we lose money to these guys."
In sum, the illegal cab situation sounds like it's pretty much the same in New York as it is here - except that they don't have a Chris Hayashi who wants to "swoop down" on the bandit taxis, "pick 'em off one by one" and fine 'em.