There are fortune-tellers all over Manhattan. I'm not talking about the Chinese waiters who hand you fortune cookies at the end of a meal, or the newsstand lottery tickets that scream for attention, but actual neon-lit storefronts with backroom parlours, where an accented woman will read your palm for $5.

In the case of Ms Donna, the 'mystical astrologist', her accent sounds mostly like the Bronx. It's her brown eyes and tanned complexion that reveal her Roma heritage. Her entryway is decorated with signs advertising "special tea cup reading", and her door bears a painting of a red hand surrounded by astrological symbols.

Donna's pad is wedged between boutiques and sex shops, directly beneath a sushi restaurant on a very busy street in the gay quarter.

She ushers me down a narrow hallway to a little nook behind curtains. Inside there are two chairs, and so much Jesus and Mary paraphernalia that the Bibles and tarot cards need to be stacked.

I can hear noisy kids and cartoons in her living room.

We get straight down to business. For $5 she can do me a quick scan, but for $25 she will read my palm for 15 minutes. We settle on $20, and she asks me to fold the bill and clench it in my right hand while I extend my left palm for her to see.

I end up staying an hour.

It turns out Ms Donna and I know one another from a past life. She recognised me as soon as I walked in the door. At first she didn't want to say anything, because it frightened her, but in the end she felt she had to. It was fate that brought me to her.

This was some of the spiel she gave me as she moved her lips like she was reading a book, occasionally looking up thoughtfully at me to utter what she had "seen" in the palm of my hand.

New Yorkers are a cynical, sceptic bunch overall, but it's also a city of dreamers and loners, people who struggle, and just want to talk.

There are 100,000 people of Roma origin in New York. And there are approximately 200 psychic establishments in the metro area. Romas run most of them. Traditionally, this women's trade is called drabardi, and fortunes are read only to non-Roma people.

The scams can be quite elaborate and run up in the thousands of dollars, according to Mark Jacobsen from New York Metro who visited more than half a dozen New York fortune-tellers in 2003, and was offered exorbitantly expensive cures for ailments he never knew he suffered from.

This helps answer the real question on everyone's mind, which is how do these flimsy little shops manage to pay prime New York real-estate prices? "The answer," writes Jacobsen, "is that it doesn't take very many customers, provided they are the right ones."

According to local law, Ms Donna is only allowed to do what she does, because it is considered 'entertainment'. Making money by claiming or pretending to have real occult powers is a violation of New York's penal code and carries fines. In other states, like Massachusetts (home of the Salem witch trials), it's OK so long as you obtain a psychic's license. In Oklahoma, it's plain illegal.

Civil libertarians argue that people have a right to believe in their own psychic powers. And some decry bans on fortune-telling as outright discrimination against Romas. But even fortune-tellers disagree on the best approach, wrote Wendy Kaminer in Free Inquiry magazine. Licensing separates the pros from the riffraff, say some – usually the licensed tellers themselves. Kaminer, a lawyer and humanist, argues psychic powers should be considered no more unlikely or illegal than the existence of God.

During my session with Ms Donna, I am not sure how 'entertained' I feel. There is good news: I will probably be famous doing something involving writing. But the bad news is gloomy. I was a naughty child who made my parents feel inadequate. And someone has cursed me, probably by burying my hair or nails with the corpse of my mother.

Did I know who was trying to hurt me?

I shot her my blankest look and shook my head. Ironically, the main thing on my mind was not to let on what a bad actor I thought she was. She seemed really nice, and I almost felt sorry for her. Of course, I was the real sucker for handing over my money.

In the end, Ms Donna and I spent the better part of an hour chatting about her kids and what a gifted psychic she was. She told me she could move things without touching them. And she had predicted she was going to have twin boys.

The main thing on her mind was her puppy-dog, that had been lost and that she was going to retrieve from a shelter later that night. She had "known" she would find the dog, but she and her grown children had searched the cold snow for days. What does a mystic astrologer do when she is really desperate for help?

She calls a psychic.

She located a woman who specialises in wolves and dogs, and called her up. "Of course, I could do it myself, but since it's my problem it's easier for someone else," she said matter-of-factly. Could I believe the nerve of this woman who asked for $200 just to help find a puppy? My psychic was wide-eyed with indignation.

Funnily enough, it was one of the few things I could believe.

Solana Larsen is a journalist and editor based in New York