NL Fool;
The whole Kahnawake thing is kind of complicated but you are pretty much correct. The real goofy thing about their operation is the gaming commission and the actual server farm are two separate entities. When I was there, people were hosting out of the server farm
www.mohawk.ca without actually having their license approved yet.
The way it works is the Gaming Commission gets a yearly fee for each license holder, and the server farm charges monthly for bandwidth. The server farm is definitely making money hand over fist and tries to squeeze in as many sites as they can.
As for your statement regarding nobody ever being turned down for a license. This isn't entirely accurate I do know that one very well known poker site had their license request refused because one of the principals had been charged for bookmaking.
I think they redid their application by either removing this person from the list of principals or by doing something else and eventually got it approved.
Another sportsbook that got refused ended up going to Costa Rica and running the entire operation from there.
I also know of many disreputable people who in my opinion were outright crooks and thieves who got approved so its not like they are doing a great job of policing their territory.