That would be fun but too bad Steam Deck/NDS/3DS lacks built-in GPS hardware that's needed for satnav games.
They rely on Wi-Fi/Bluetooth for location data or requires an external USB/Bluetooth/peripheral GPS receiver for precise positioning,
What about peripherals?
If it was still the NDS heyday, Nintendo could've made a GPS to fit in the GBA port, or make a GPS peripheral for the Switch, given the console was designed as both a home and portable console. But I guess Nintendo decided for it to be a mobile game, which is weird to see Nintendo make games for devices outside their own.
I mean, I get it, it's the easier option and everyone has a phone these days. But Pokémon Go! On Wii U or Switch at the time would've been possible if they were willing to make peripherals for it.
As for the Steam Deck, it does not have a GPS feature, but it can use external USB/Bluetooth GPS receivers. So it's somewhat possible.
Yeah, you're right.
They could but they wouldn't.
Best they would do is more Sonic games with guests from all other franchises
(just like Rumble and CrossWorlds).

I don't know how Nintendo does it with their Smash Bros. fighters, but perhaps Sega should uh... if they can't get the licencing or rights for their own All-Star characters, then perhaps Sega should have a contract agreement over characters they can use and to what extent, than to save the trouble of getting the licencing each time.
I dunno, I mean, Sakurai makes it look easy with Nintendo and other characters showing up in Smash Bros. games, yet Sega seem to struggle with All-Star games. I expected Sega have secured rights to their own characters just as Nintendo had for theirs. If not, then perhaps Sega should come up with an agreement of permitted use of characters and the extent of them.
For example, allow to use The House of the Dead characters, but not allowed to use "The House of the Dead" name, thus "Curien Mansion" being the alternative... which I know isn't the case, Sega All-Stars Racing games called it that for censorship reasons, but you get my point.
Or only characters from Loving Dead and Zombie Revenge are allowed, but no other game, or "cartoon" versions of G and Rogan count as seperate characters exclusive to sega All-Stars, etc.
And of course, allow for give-and-take. Yu Suzuki will allow Sega to have Ryo Hazuki and set characters appear and represented in Sega All-Stars games and in return Yu Suzuki can have Sega characters in Shenmue III or IV.
I would like to see more Sega All-Stars games. Whenever it be sports, hobbies, actual card game or "Sega Superstars VR" which i go on about. but if Sega have to ask
permission for their
own characters while Nintendo can do nelly with theirs, then perhaps Sega should come organize something benefitial for themselves and IPs.