Frankly, while I appreciate that MaxMind might behave a little more customer friendly, I'd say the problem here is that people don't understand what GeoIP is: A best guess. You should not send the police to a property because the IP appears in MaxMinds DB.
That is true, but in many cases, it's the only alternative that is both cheap and somewhat privacy-friendly.
If you want reliable point-of-residence control, you need to ask people about their identity and verify it. That is undesirable to both service providers and end users. Sure, in some cases, people have to reveal their identity anyway (for example when making online purchases), but not in many others. And there is still lots of potential for faking it.
I'm pretty sure RIR's would allow MaxMind to query the original source of data, either for the IP or for the AS announcing the prefix to bgp. But RIR's will charge a service fee for that - what is legit from my perspective. If MaxMind spares this fee and delivers a shitty service then, the TSP should consider to switch to a more reliable source of data - it's them who is violating SLAs with their customers.
I don't see that too much of a problem, as long as the geolocation providers don't have to shell out big $$$ to every little owner of a /28 for their location data. They're making money off that data, after all.
But, it probably wouldn't work without legislation or legal precedent. Blocked access to an online casino would probably not be enough to convince a court, but maybe there are other cases, such as news outlets.
Or maybe it would work the other way? Someone with a residence in Switzerland gains access to a casino that is barred from doing business here, because the geolocation data is incorrect? You'd be opening a can of worms there, though...