Apparently there's been an oversight/intentional sabotage/whatever for 5+ years allowing those with Xbox LIVE accounts in relatively small parts of the world like Oman to get new games for free — all you have to do is create an account for those regions (presumably using a proxy) and you're good to go.
It's been quite an open secret in some communities and an increasing number of people have been doing it because Microsoft doesn't seem to care — until now. Microsoft is currently banning any Xbox 360 consoles that've done this, leading to a hilarious amount of butthurt:
http://www.xbox360achievements.org/forum/showthread.php?t=542555
The post where one of them goes begging on the Microsoft forums offering to do a 'deal' where he deletes all the games he acquired, hahaha. Oh man I love this.
Note that it's consoles that are being banned. It looks like Xbox LIVE accounts sometimes are or aren't banned, but in all cases the physical console itself is permanently banned from Xbox LIVE LMAO.