I think you're wrong about that. I also think you're wrong to conflate your apparent phobias about religion with Elf on the Shelf and government control.
Well it depends where. In US you are probably right. But! The pun works there as well. The Elf is just a pointer (or a type) to God. You know first teach them about the Elf then once that is internalized teach them about God.
The ultimate effect is to induce self-sensorship. I think that is critical. This is not unlike the Panapticon effect ( https://en.wikipedia.org/wiki/Panopticon ) described by Bentham and then expounded and implemented, one can say, by a surveilance society. Before that religion and God served as that mechanism -- induce self-sensorship and behavior control by positing an omniscient and ever vigilant God. Once you've convinced the person they are being watched. You don't have to actaully watch them.
I think you're wrong about that. I also think you're wrong to conflate your apparent phobias about religion with Elf on the Shelf and government control.