I think that "Mortal Kombat can't be in Smash because the latest games are banned" is a reasonable argument from a likelihood standpoint, given that Smash picks (especially in DLC, where a Kombatant would likely be placed) are often meant to shill recent titles, but from a "can it happen at all" standpoint it doesn't really make sense since most legacy third party characters in Smash are based on earlier iterations, with Hero and maybe Sonic as the only outliers (even Steve kept his beard!), so they wouldn't have to research nor promote any banned games, even if not being able to do the latter could be a roadblock for Nintendo and/or WB.