All the R1 races are on Xbox Live, in the open-class lobbies. There are probably a dozen open lobbies on the I70 streetrace route right now.
I don't know why there aren't a few more R1 races, considering how much the game pushes you to drive A/S/R-class cars in the first place. It makes sense to see so many A-class events, because it's a great class, but I would have liked to see more B/C/D-class races.
Street circuits in general aren't the problem. In the real world, a lot of series have R1-type cars racing on street circuits. The problem is that a lot of the roads in this particular game or excessively tight courses don't work so great for top-end cars.