If Kraft wins, this isn't the sweeping victory against police overreach some seem to think it would be. Kraft's legal team isn't arguing the validity of the primary basis for the search warrant itself, but rather that the police did not do enough to minimize damage done to normal customers. In other words, they can put cameras in suspected houses of prostitution, you just can't record 24/7. You have to shut off if no crime seems to be occurring.
Well of course, this is an appellate court. You don't argue the meat of the case in an appellate court, that stuff is already documented from the original case and will be referred to in the arguments. It's settled fact, retreading that part of the case is ultimately seen as wasting a judge's time.
What you talk about in an appellate court is the broader implications of the case and its significance under Constitutional law. The party filing the appeal will try to find reasons that the case should be overturned and the party resisting the appeal will try to find reasons to uphold the case. This is why Brady lost his appeal, because despite the facts being on Brady's side, Goodell had the right under federal law to do what he did and upholding the case would violate his contractural rights.
The search warrant argument isn't valid for the appeals process because it's part of the meat of the case and already established as fact in the initial ruling. Neither side can dispute that part of the argument unless there's something fundamentally flawed about the findings. So of course that part of the argument doesn't come up at this time, it's part of the established facts of the case.
If you do want to dispute findings of fact in an appellate case you have to find a very roundabout way to do it, by citing procedural errors that led the court to the wrong conclusion and buidling an appeals case based on this. Bringing your own facts to an appellate hearing though is a quick path to getting your appeal thrown out. Not the time, not the place.
Anywho that's why Kraft's legal team is taking this tactic. They know their audience, and so they're bringing up broader, Constitutional objections to the way the case was prosecuted in order to point out that overturning the case would create a very bad precedent favoring the surveillance state.
So contrary to your post this would be a pretty big blow against the surveillance state if it was upheld, if only because it's another blow against government overreach in this area.