I used to see those transporting tourists (I guess) in the Times Square area. They were shut down eventually, though I'm not sure of the legal basis. The confiscated bikes sat for months outside the police precinct building, looking oddly festive in that drab environment.

One of the complaints I read about was noise -- apparently riding one of those makes people shriek with delight? Or maybe they just happened to bike past a curmudgeon.

IIRC, our main cycling advocacy group did not support the party bike.