It is a catch 22 situation. Today, everyone is looking for someone to sue. If you are engaging in an illegal street race and get hurt, you can't sue anyone.
The minute that the city gives them some place to race, different story. So then they need insurance, which means a rule book with all kinds of rules about belts, helmets, nitrous, etc. The very thing that keeps street racers from going to drag strips.
The only answer is to let them keep on doing what they are doing. Seems to have worked for generations.