Nice question. My thoughts.
There is a lack of on-line racing in LFS at the moment; I don't think that anyone can deny that. Check the most populated servers at the moment and they will be cruise servers/drift servers/ demo servers. There will be a few servers offering racing on SS or GTR's (Redline and Conedodgers), but out with those combo's very little variety on offer. Sure we have the current TBO's being raced on the RSR server, but how long will it last? With the demise of CTRA (which had good points and bad points), there is no organised on line pickup and go racing.
However, organised league racing is still as popular as ever. We have more leagues been run, with a high standard of admin and organisation in the top leagues, (and high ambitions also)
What iRacing offers is a regulated on line racing. Sure it’s not as easy getting races going as it is in LFS but the standard of racing is high, especially if you get into the high ratings the standard is extremely high (I’m not saying there’s no idiots there, but generally the standard of racing is higher than it is on a regular LFS server)
The LFS members who want good racing now have a couple of choices to make
1) Troll through the servers in LFS till you find a decent server, offering good close racing and with admins who fairly regulate the racing.
2) Join an organised LFS League, which only offers a race every 2/3 weeks/months and may not enter due to a large number of entries.
3) Join iRacing where although the racing is on a strict schedule, there’s an exact time of starting where there is likely to be a decent size grid (and if the numbers pick up then there is more of a chance of getting a full grid race)
4) Get another game that offers online play (rFactor, netKar Pro, GTR etc) however I have had little success on line with netKar Pro apart from the few weeks after the patch; rFactor is hit or miss when it comes to finding servers. I can’t comment on the online play of GTR as it’s one of the sims/games that I don’t have.
To sum up, iRacing is not the main reason to the lack of online racing in LFS, but it plays a significant part in its gradual demise. I’m not saying that LFS will die out, but it’s in danger of becoming the lesser played sim.