The mob doesn't need to fight all city gangs, they need to reposition themselves and become deeply entrenched in the economic and social fabric of society like before, leave the shit bag street rackets for the city gangs. Come on think big! The Mafia's economic clout and control of industries is what set them apart from street gangs, it was the defining line.
What do you think Lucky Luciano was doing before he met Arnold Rothstein? Shit bag street rackets. Where do you think the muscle comes from that racketeers need as leverage to extort industries? Shit bag street guys. There aren't a lot of shit bag Italian street guys anymore like there were up until the 80s or so. You need muscle to let the squares know you mean business. What do you think, that mob guys can just walk into some Wall Street firm today and say "hey, I'm in the mob. You've seen Goodfellas? Yeah, well I do that. So give me a cut now!". They'd call the cops.
I've seen where the Genovese family still engages in a lot of rackets like this so I'd guess they're probably the last of the families that has the brains to operate sophisticated rackets and still has enough muscle to enforce them. I think the rest, as others have pointed out, are mostly involved with gambling. And of course drugs, where the Italian mob is very low on the pecking order.
