Microsoft removed the always on-line aspect. The only time an internet connection is required is during the initial setup. You can then completely disconnect it from the internet. Without an always on connection, there is no way for them to validate your game ownership.
The system remains in a low power state so that it can respond to the initial voice command to turn it on.
I have actually gotten a ticket while performing a right turn on red thanks to one of these cameras. Came to a full stop while the light was yellow, after turning red I made my turn. About a month later, ticket in the mail.
I wasn't able to contest it. The camera had no idea I turned right, it just assumed I went straight through the light.