That's the point. If you can afford even a $400 tv, you won't buy this. It's for people for whom $1000 is unobtainable. So they'll watch the ads rather than risk a lawsuit and penalty.
Same, I wonder if it'll still function without internet, I'd just get a chromecast key or something on the HDMI. And just not connect the TV itself to the internet.
Granted it probably has some kind of contract that you get charged if you don't play the ad's