I don't know if it's just me but the indication of how many people are watching you seems to happen outside of the gamemode when you're just using the standard admin spy feature. Kind of defeats the purpose of spying if they know someone's watching.
I had seen this on servers before, outside of the gamemode and any minigames.
I asked, but no admin admitted to spying, but I believe they were.
At the very least, the Observer's Indicator does come up at times, listing an observer and then none (presumably when they finish spying), when outside of the karting gamemode and any minigames.